The Value Lean Six Sigma Brings

After I wrote my article on Lean Six Sigma benefits for Small to Medium Businesses, I thought it would be beneficial to write about the hard facts with Lean Six Sigma. It is essential to understand the ROI and value  Lean Six Sigma brings, regardless if you hire a consultant or implement a program within your own company. 

Before diving into the numbers, we should recap some of the benefits of Lean Six Sigma.

Hard Benefits

The hard benefits are generally tangible things, for example:

• Reducing processing cost
• Increasing revenue
• Improving cash flow
• Eliminating the need for capital expenditure
• Faster quote to cash
• Reduce the need to hire additional employees
• Reducing operating costs
• Reduce the need for extra inventory
• Reducing machine operating time
• Reducing overtime hours
• Reducing cycle time to deliver the service or creating the product

Soft Benefits

LSS soft benefits do not have the same tangible effect as hard benefits.  However, these soft benefits are beneficial for the business.  Examples of soft benefits are:

• Customer focus
  • The focal point becomes the customer instead of the company
  • Happy customers usually lead to more revenue
  • A good and bad review can make or break a business
• Improved employee morale
  • Happy employees enjoy coming to work every day
  • Happy employees treat customers and other employees with respect
  • Unhappy employees can result in high turnover and loss of talent
• Improved employee effectiveness
  • Employees perform better when they are happy
  • Better performance means satisfied customers
• Leading by fact and alignment
  • LSS provides a way for owners, leaders, and managers to manage the company based on facts
  • LSS eliminates the need for guessing
  • LSS provides critical measurements for a business to define success

What is the value of Lean Six Sigma?

So what does all of this mean in the terms ROI and the bottom line?  Let’s dive into the numbers I compiled from some research and my success.

The numbers below I gathered through my research:

• Allied Signal – Over the past 12 years, cost savings over $800 M
• US Army – Cost savings around $2B in 2019
• UCSD Medical Center – $ 4M in savings
• Ford Motor Company – $300M in savings
• Agilent Technologies – $ 2B in streamlining their Supply Chain

Sources: https://educhapter.com/2019/01/09/financial-benefits-of-lean-six-sigma/ and https://goleansixsigma.com/success/ and https://www.achieveprocessexcellence.com/support-files/continuous-improvement-success-stories-by-industry.pdf

Within my 12-year career in Lean Six Sigma, I have saved companies ~$14 M + in revenue and savings. Some individual examples of my successes are:

• Reduce the time and improve the quality to post a job for external recruiting from 1 month to 4 days –
  • ~$800K in savings
  • Improved employee morale
• Improved quality of client reports and services
  • $ 2M in revenue
  • Enhanced client relationships and employee morale
• Improvement of two products cycle time and quality
  • $3.5 M in operating cost savings and revenue retention
  • Improved employee morale and customer satisfaction
• Improvement in delivery cycle time for an international product
  • Improved employee morale and customer satisfaction
  • $5M in increased revenue and operating cost savings
• Improved sales cycle time and quality
  • ~$1.5 M in revenue
  • Improved Sales employee morale
  • Improved communication with potential and new clients

What does this all mean?

Lean Six Sigma is beneficial to any business, no matter the size or industry.  The numbers above are only scratching the surface.  Just based on these numbers, it is easy to see the ROI on Lean Six Sigma and how it affects a business’ bottom line. 

If we look past the hard numbers, we can also see how Lean Six Sigma does have soft benefits.  Just the increase in customer satisfaction, customer loyalty, and employee satisfaction provides better brand awareness and improved market share.  These soft savings contribute to the overall bottom line.

Everything adds up to help create a successful business.  Any type of business, regardless of size or industry, can benefit from Lean Six Sigma to help them grow and become successful.

Have you or your company utilized Lean Six Sigma?  What are some of the benefits that you have seen from using Lean Six Sigma?

If you want o use Lean Six Sigma within your business, Contact Me.