The Benefits of Lean Six Sigma
Are you faced with rising costs and shrinking profits? Learn streamlined methods to boost productivity and profits using Lean Six Sigma.
Has your business grown into a cash cow? Are you comfortable with your current level of productivity and profitability? Or do you still have a nagging feeling that it could be significantly higher? Well it can be and here's why: I have found that virtually all companies grow from wobbly startups into a cash cows using trial-and-error and common sense, but then most companies simply stop improving. They reach the limit of what's possible using common sense alone. Just like the human eye can only see certain wavelengths of light and can't see deep into space or a drop of pond water, the human mind can only see obvious problems and improvements.
Most companies "hit the wall" when they reach 1%, 2%, or 3% error levels in marketing, sales, ordering, fulfilling, and billing. Across the enterprise, this adds up to 6-12-18% error. And each of these errors costs far more to fix than they did to create. I have found that 3% error (30,000 parts-per-million or 3-Sigma) is where common sense stops working. Common sense, the very thing that took you to sustainable profitability, will take you no farther. To turn your Cash Cow into a Golden Goose you will need the common science and benefits of Lean Six Sigma to rise to 5-Sigma (less than 300 PPM). Here's why:
Every company has two "factories:" one that creates and delivers your product or service, and a hidden "Fix-it" factory that cleans up all of the mistakes and delays that occur in the main factory. If you're a 3-Sigma company, the Fix-it Factory and those 30,000 defects per million (PPM) are probably costing you $25-$40 of every $100 you spend. If you're a $10 million company, that's $2.5-$4 million that could be added back to your bottom line using the common science of Lean Six Sigma. In a $1 billion company, that's $250-$400 million. And I have found that it's relatively easy to shift at least 10% out of your Fix-it factory in 12-18 months. Whether it all flows to the bottom line or you use it to grow your business is up to you. Every one penny improvement in profits per share can increase shareholder value by millions of dollars. Those of the benefits of Lean Six Sigma.
Here's what you can accomplish with Lean and Six Sigma:
- Double Your Speed - reduce delay and idle time. Most companies have extensive delays built into their processes. It usually takes no more than two days to flowchart the process, eliminate the delays, and slash your cycle time by 50% or more.
- Double Your Quality - by reducing mistakes, errors, and defects by 50% or more. Using your existing data, you can identify where to search for the hidden gold mine in your business in as little as three days. Properly focused, teams can find the root causes of common errors in one day or less.
- Increase your profits and grow your business by slashing the cost and delays associated with the Fix-It Factory. Every dollar you waste in the Fix-it Factory is a dollar you could be adding to your bottom line.