Lean Processes Can Add to Your Company’s Value, Regardless of Size
August 25, 2015
Wiremold’s Enterprise Value Increased by 2,467% Using Lean Methodologies
As the summer winds down and Connecticut business owners and executives get ready to plan for next year’s growth, it’s time to think about how Lean processes can lead to increased profits, decreased waste, and more capital for growth initiatives.
Earlier this summer, CONNSTEP held one of our biggest events of the year, where Art Byrne, author of Lean Turnaround and former CEO of Wiremold, talked about how he increased the enterprise value of Wiremold by 2,467% using Lean methodologies.
In addition to increasing Wiremold’s value, Art also:
- Decreased lead time from 4-6 weeks to 1-2 days, which led to shorter sales cycles
- Improved productivity by 162 percent, accomplishing more with less
- Grew sales from $100 million to $400 million, increasing the overall value of the organization
- Increased operating income by 13.4 times, making them more profitable
- Nearly doubled their customer service satisfaction (from 50 percent to 98 percent), creating a competitive advantage
Results like these may seem too good to be true. But Lean principles, executed correctly and strategically, have been proven to create massive gains in profitability and growth potential for manufacturers of all sizes. In Art’s book, he explains how employing a Lean strategy can transform any company and produce great financial results.
At a minimum, you can achieve the following:
- Lead times cut from weeks to days — Allows you to shorten your sales and billing cycles and create a competitive edge with speed
- Inventory turns doubled in two years and quadrupled in four — This increases sales and adds massive value to the organization
- Annual productivity gains of up to 20 percent — Vital to any organization because it allows you to accomplish more with less
- A 50-percent reduction in defects per year — Improves your product offering and reduces unnecessary expenses
- A 50-percent reduction in floor space in two years — Increases productivity, efficiency, and reduces waste
The June 9 program also featured Brian Montanari, President and CEO of HABCO Industries, who described his own personal Lean voyage and how Lean methodologies helped him increase profits and provide the funds needed for business growth funding at HABCO.
Brian used Lean at HABCO (28 employees, $6 million in sales) to help plug the leaks in his organization before addressing bigger challenges. These initiatives at his company freed up funds that allowed Brian to tackle more complex issues that he wouldn’t have been able to fund otherwise.
What Brian learned:
- There was hidden “leaking” money from:
– No real bill of materials
– No purchasing systems
– No inventory management
– No formalized processes to follow
– Inaccurate costing
– Low traceability
- These “leaks” resulted in:
– Underbidding jobs and “eating margin”
– Losing jobs because we overbid
– Expedite charges
– Premium freight charges
– Ordering material that was already in house
– Ordering “packs” vs “each”
– Rework was part of the process and not viewed as “evil”
– Undoing what was just done
– Good being good enough
- Average of 50% erosion in profitability
By uncovering and addressing the profit leaks due to waste, companies are able to gain capacity, hire and train staff, buy equipment, utilize consultants, pass savings on to the customer, and/or create a profit share.
It’s easy to say that Brian Montanari lives “Lean.” Under his leadership, Lean has influenced everything that HABCO does as a manufacturer, with an overall mission of providing customers with the highest level of operational readiness and safety.
The June CONNSTEP program also featured Dave Emott, former CFO of Ensign Bickford and author of Practitioner’s Complete Guide to M&A’s: An All-Inclusive Reference, and Ed Miller, President of Strategy Development Services, LLC, and former Vice President of Marketing & Sales for Wiremold, who talked about their Lean successes before moving into an engaging panel discussion.
In that panel discussion segment of the program (which featured all the presenters), audience members asked questions about Lean and received expert opinions on how to strategize and improve profitability within their organizations.
The results of implementing Lean will always speak for themselves. In Lean Turnaround, Art observes that companies increase their value and grow exclusively by delivering more worth to their customers over long periods of time vs their competitors. In order to deliver value to your customers, you have to improve your value-adding activities.
What are you waiting for?
Lean principles can increase velocity and customer value to drive results. Here are 12 takeaways from our June 9 event that can help you jumpstart your own Lean journey:
If you want to learn more about eliminating waste and improving your business, contact us for a personalized session. If you didn’t attend the June event, we’ll even bring you a copy of Art Byrne’s Lean Turnaround.
Take a look at some of the photos from the day’s event:
“CONNSTEP solved a huge problem for us and helped us bring our delivery rate to 100%. As a direct result of that, we have been awarded with an increase in business which, ultimately, will also benefit (our supplier) Har-Conn.”
“I see great value in the new experiences and perspectives CONNSTEP brings to our business, at reasonable prices. They’re not like consultants, they’re like partners in the business – willing to roll up their sleeves and help.”
“CONNSTEP has proved to be a tremendous resource for ESI. CONNSTEP has helped us to adapt to today’s marketplace and remain a quality minded, competitive global player. Our ISO/TS16949 implementation process was efficient and rewarding. I look forward to our future projects with CONNSTEP.”
“CONNSTEP worked with FuelCell Energy to educate and facilitate Lean initiatives and to help meet our needs to establish an overall production improvement plan. This plan has been utilized over a period of time as a ‘guiding light’ to spur numerous improvements that dramatically reduced our product cost.”
“CONNSTEP is a valuable partner to Hologic, providing the expertise and ‘outside eyes’ everyone needs to keep their continuous improvement on track. We are now well-positioned on a dynamic growth path and look forward to a long-term relationship with CONNSTEP.”
“Our experience working with CONNSTEP has brought us benefits we never expected. It’s a great team to work with!”
“The goals of the team were to reduce manufacturing lead-time, reduce floor space utilized, and increase worker productivity. All the goals were met. CONNSTEP helped us to better compete.”
“The Business Growth Program is working well for us. We enhanced our website following the meetings to improve our SEO and become more visible to search engines. The segment on negotiating … promoted changes in our thinking and improved how we interact with customers. The mentoring between sessions was helpful in boosting our progress.”