- Documentation and streamlining of processing steps enables the out-sourcing of non-critical functions, allowing
the company to focus their efforts on customers’ needs
• Reduction of turnover and the resulting attrition costs
• The implementation of job standards and pre-employment profiling ensures the hiring of only “above average”
performers – envision the benefit to the organization if everyone performs as well as the top 20%!
Strategic Improvements
Many companies who implement Lean do not adequately take advantage of the improvements. Highly
successful companies will learn how to market these new benefits and turn them into increased market
share. One specific example involves a midwestern manufacturer of a common health care product. Of
approximately forty U.S. competitors, the third largest company in the industry decided to implement
Lean manufacturing principles. The industry average lead-time was fifteen days, and this company was no
different. At the end of the project, Company #3’s average lead-time was four days, with no products
shipped in less than seven days. In order to capitalize upon these improvements, the company began a
marketing campaign, advertising that customers would receive the product in ten days, or the order would
be FREE. Sales volume increased by 20% almost immediately. After making the appropriate
improvements to handle the new demand, they company initiated another marketing campaign; for only a
10% premium, they would ship within seven days. Again, sales volume increased (by only 5%) because
new customers wanted the product within seven days, but more than 30% of existing customers also paid
the premium, even they were already receiving the product in less than seven days. The end result was
that the company increased revenues by almost 40% with no increase in labor or overhead costs. Another
key benefit was that the company was able to invoice customers eleven days sooner than before, greatly
improving cash flow.