These measures of performance vary significantly across manufacturers, yet lean manufacturing initiatives share a common basis in core areas of measurement. These common areas of measurement to evaluate the performance of lean manufacturing initiatives include company-specific, Sales, Quote and Order, Customer Service, and Warranty & Returns (Hallgren, Olhager, 978, 979). Depending on the intersection of lean manufacturing process and level of product customization as defined by to-order strategy a subset of the metrics shown in Table 3: Comparison of Lean Manufacturing Metrics and Performance are often used.
Table 3: Comparison of Lean Manufacturing Metrics and Performance
Areas of Measurement
Baseline: What is Measured
Resulting Performance
Company-specific
Project costs and expenses
Use as a baseline for defining ROI
Number of orders per year
Determine configuration's impact on inventory turns
Current inventory and costs
Inventory turn savings
Customer Data
Lifetime cost per customer; avg. deal size by customer
Sales
Order cycle time
Order cycle times reduction of 37% or more recorded with mftrs contacted
Cost of Sales
Days Sales Outstanding reduction from 54 to 24 days on average
Cross-sell and up-sell revenue
Increase of 47% on aggregate
Average sales price per order
Increase from 6% to 31%
Quote and Order
Average costs to complete an order
89% reduction in cost per order
Special Pricing Requests
Over 90% ROI on automating Special Pricing Requests
Bad or incomplete orders
Incomplete order reductions of 36%
Customer Service
Number of customer complaints
82% reduction in cost of simple requests
Revenue lost to churn
69% when cross-selling is used with quote-to-order
Number of calls on order status
Median level of 16,000 per week to 100
Warranty and Returns
Reduction in warranty cost on customized products
13% reduction at a minimum
Labor cost reductions
Decrease order re-work from 17% to 2%
Conclusion
The use of lean manufacturing strategies inducing Six Sigma is successfully being used for the continual improvement of mass customization, build-to-order, configure-to-order, and engineer-to-order strategies in manufacturers globally (Reidenbach, Goeke, 49). The integration of Six Sigma-based lean techniques into the PLM strategies of companies also is showing significant potential for the development of metrics-based reporting that ties performance to lean process improvement outcomes (Hallgren, Olhager, 998). The development of mass customization strategies that seek to be agile enough...
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