Creating and unlocking value in an organization starts with knowing precisely where things stand, and where the opportunities for improvement lie. To help, SAP’s Performance Benchmarking group publishes a short analysis each Monday, highlighting hot industry topics and high-impact strategies. This week’s analysis focuses on quantifying the impact of lean manufacturing principles on operational efficiency and is written by Jasjeet Singh.
KEY QUESTION: How ‘lean’ are your manufacturing processes?
Source: SAP Performance Benchmarking
KEY TAKEAWAY: The ultimate goal of lean manufacturing is to achieve a balanced and smooth production flow. The effort, however, is far-reaching—spanning product design, process design, organization design, and manufacturing planning and control.
When done right, benefits of lean manufacturing operations have a direct impact on the bottom line—for instance, through higher quality, increased equipment utilization and productivity, reduced inventory levels and lead times, less scrap and rework, and lower space requirements.
In fact, according to cross-industry analysis by SAP Performance Benchmarking, organizations that have developed best-practice lean manufacturing capabilities report, on average, 25 percent lower days in inventory and 18 percent better production plan adherence, compared with other companies. The result? Best-practice companies produce the same or greater output with lower working capital, and spend less time on unplanned change-overs—increasing both inventory velocity and overall manufacturing throughput.
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Note to ASUGNews.com readers: SAP’s Performance Benchmarking program is a strategic service sponsored by its Value Engineering organization. Originally launched in 2004 together with ASUG as a forum to exchange metrics and best practices, the program today has grown into a global effort and one of the largest such programs in the industry—with more than 12,000 participants from more than 4,000 companies and studies available in 12 languages. Participants receive—free of charge—customized and confidential benchmarking comparisons against industry peers as well as aggregate analyses. To participate in the SAP benchmarking program, visit https://valuemanagement.sap.com.