Looking at each Lean tool (Quick Change Over, Cell Design, Mistake Proofing, exc…) What could be some of the many possible “types” of cost savings?
I'm not a big fan of the "tool based approach" when considering the various elements that make up TPS (Toyota Production System). While that may be the way that many consultants and individuals such as Womack tend to describe Lean, I believe it is also for this very reason that most companies still can't gain any momentum in their journey.
Eventually I am going to create a excel sheet where after we come out of a Kaizen event saving: XX feet, reducing XX hours of internal and external time, free up XX manufacturing/press hours which lets us bring back in outsourced product, reduce over time, scrap, exc. exc… to type into an excel sheet that will get you a EBIT hard/soft dollar value.
Just a quick word of advice, be sure you have a chat with your Controller, CFO, etc., before you start trying to drill the savings down into EBIT. The change is not always going to be a dollar-for-dollar (or whatever currency you choose to use) conversion of savings into EBIT. Technically, I prefer EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) since these factors are typically beyond the control of the average employee.
Some of the elements you describe need to be thought of carefully, because a savings on the surface may not equate into a savings overall. A prime example is when people claim they have saved XXX square feet. The harsh reality is that the cost for that floorspace still needs to be paid for, so no savings is really gained, unless you leasing a building that is no longer needed. Otherwise it will still be heated, rent paid on it, etc. What they have created is an opportunity. What happens to that opportunity is for management to decide.
As far as bringing back in outsourced products/services, all I can say is look at the "total cost". Of course, this should be done even before outsourcing. Depending on the accounting system in place, it can make the allocation of overhead costs easier by spreading out those costs over a wider range, but that is just an accounting mechanism and may or may not present the best choice in the long run.
But first looking at some of the tools outline on the right side of the “Kaizen Tool Brain Jogger” thread, what would be all possible type of savings this tool could obtained/achieve.
The results produced would a be a by product of two factors: the Leader, and the condition of the area or business. It's an inverse relationship, the worse the current state is, the greater the opportunity for improvement.
Wayne
