Executives who attend Lean Training for Lean Thinking seminars provided by management consulting firm R. Michael Donovan & Company Inc. are asked to list any concerns or questions they want answered during the seminars. At a recent seminar, one executive asked: “We need to grow revenue, can lean manufacturing contribute to our growth and marketshare objectives?”
According to management consultant R. Michael Donovan, “The most common view of lean manufacturing at the executive level is that lean tools are for tactical cost reduction by middle and lower management levels,” says Donovan. “Lean Thinking when strategically adopted by manufacturers can dramatically improve overall business performance including revenue growth. Manufacturers who are ‘lean prolific’ experience the ‘mushroom effect’ in business performance improvement. Unfortunately, more than 95 percent of lean initiatives never achieve the potential business performance improvement that’s possible.”
Here are five ways lean manufacturing can help a company grow revenue:
· More free cash flow to develop new products, make acquisitions and/or increase marketing activities.
· Lean manufacturers are highly flexible and quickly respond to customer needs faster, better and cheaper than the competition yielding upward momentum in marketshare.
· Current customers give the best suppliers more orders and often earn sole source status.
· Develop a ‘cost to produce’ advantage that provides more pricing flexibility to gain more sales.
· When the marketplace heavily weighs quality, dependability and, quick response then, the sales organization develops the “lean value proposition” and perspective customers listen and act accordingly.
“Lean manufacturing is often thought of in terms of just cost reduction rather than as an overall business strategy that can assist with revenue and many other goals.” Donovan continues, “Revenue growth from current or new products is earned from present customers, by obtaining new customers and/or through acquisitions.”
Jack Rink, a lean consultant and lean training specialist with R. Michael Donovan & Company, says, “Lean manufacturing is about building an agile, flexible enterprise that can produce high-quality products using the least amount of resources in a cycle time short enough to manufacture to customer demand. Lean manufacturing, when done right, easily pays for itself and very quickly.”
R. Michael Donovan & Company is an international management consulting and education firm that provides manufacturers and distributors with lean thinking and lean enterprise business performance improvement services on a focused, enterprise-wide, or entire supply chain basis. Its Web site is http://www.rmdonovan.com.