From time to time, new or prospective clients ask me about the kinds of results they might expect to achieve from their Lean transformation. Since I don’t personally consult in this area I’m usually hesitant to quote specific numbers, because as they always say, it depends. It depends on the quality and comittment of the Lean leadership team. It depends on top management participation. It depends on…well, so many factors.
But, I’ve talked to enough senior company leaders over the last 20-some years to have a sense of what’s been possible in their organizations. And I’ve also had many disucssions with my consulting friends during which we’ve examined some of the results they’ve seen in the client companies with which they’ve worked. So, here’s my stab at addressing the issue. If you get numbers like these consider yourself best-in-class. But be careful what and how you measure. And remember: “mileage may vary” and “past performance is no guarantee of future results.”
•Customer service levels at (never seen a 100): 95-99%
•Customer retention: 90% or better
•Lead times: 25% to 50% of the average in your industry
•Productivity/throughput improvement: 15+% per year (over year, over year…)
•Inventory turns: Greater than 24 per year
•Sales growth rate: 300% to 500% your industry average
•Earnings growth rate: 200% to 400% your industry average
Astonished? Me too. But take a look at Danaher Corp. and check out some of the numbers they report publically. Or head over to ITW (Illinois Tool Works) and do the same. Better yet, find someone who can introduce you to a middle-market privately held (not private equity) company CEO, and ask her. You’ll be astonished too.
Makes it much easier to think about investing in the best and brightest Lean Leaders you can find, doesn’t it? Talk about ROI… The right Lean leaders can not only help your company survive today’s rocky times, but also thrive and grow with increased market share, achieving the kind of competitive advantage which your competitors will be unlikely to match. Yes, it is all about the people.
I’m Adam Zak. I can help get you there. Call me.
