Chapter 3. Use the Voice of the Customer to Identify Cost-Cutting Opportunities
With Ken Feldman
A pharmaceutical manufacturer was required to provide production samples to a regulatory agency in order to gain certification of a certain manufacturing line. The company decided to provide 100 samples, taken hourly over the course of one week. After doing this a number of times, one employee got the idea to actually question the regulatory agency as to what the company needed to submit. The regulatory agency had no intention of specifying a particular sample size or sampling scheme. It only wanted statistically valid proof that the product was safe.
A Master Black Belt then calculated what would constitute a statistically valid approach and discovered that the manufacturer could significantly reduce its sampling plan—and significantly cut the cost of sampling, as well as reduce the time to validation so the product could get to market sooner. Direct dollar savings through reduced quality assurance (QA) lab costs was $125,000 annually. (The company didn't calculate the value of getting the product to market earlier as a result, but obviously it could realize earning earlier.)
As with this pharmaceutical company, it's likely that your company is rife with cost-cutting opportunities with respect to many of your customers. The key is making sure that the steps you take to cut costs don't harm your customers and, ultimately, your business. Throughout Part 1 of this book we focus on eliminating ...