Best Practices in Lean Six Sigma Process Improvement: A Deeper Look

Chapter 3. Big Question: Does Lean Beget Financial Success?

Cliff Ransom, vice president, State Street Research in Boston, "is one of two or three stock analysts whose understanding of lean manufacturing gives them an edge analyzing manufacturing companies. Now and then Cliff participates in a shop floor kaizen event himself." With that introduction, Target magazine reported on an interview with Ransom, asking what he looks for in a manufacturing company. Ransom replied, "Investors prefer to see rising returns on their money. While there are various ways to measure that, I look for cash flow. Next to inventory measures, cash doesn't lie."^[30]

There's one in almost every audience: the wise one who wants to know, and may finally call the question. It may be phrased something like this: "All well and good. But what is the financial impact of lean [or JIT, or world-class manufacturing, or process improvement]? Is there research, are there studies to prove bottom-line benefits?"

The question is exasperating to the presenter. Why don't they get it? Lean is common sense. It's continuous improvement. There's no big capital investment involved. It can be done piecemeal, in any order. It embraces the best instincts of the work force. It melds beneficially with a flock of other improvement campaigns from total quality to six sigma to plant maintenance to supplier partnership.

Still, the almighty dollar (pound, yen, mark) rules, especially among chief decision makers. So we see where the question ...