Expert: Firms should measure return-on-investment of lean manufacturing

By Bill Bregar
Senior Staff Reporter

Published: March 5, 2012 6:00 am ET

Related to this story

Topics Injection Molding, Blow Molding, Film & Sheet, Pipe/Profile/Tubing, Rotomolding, Thermoforming

TAMPA, FLA. (March 5, 12:15 p.m. ET) — Lean manufacturing and Six Sigma programs are certainly popular, but manufacturers often don’t measure their bottom-line effectiveness — measured in dollars-and-cents payback, according to a speaker at the Plastics News Executive Forum.

“We ultimately believe that lean and Six Sigma should be treated like any capital investment,” said Andrew Csicsila, a Chicago-based director in the business consulting firm AlixPartners LP.

Csicsila presented results of the firm’s survey last year of 100 respondents. Eighty-five percent of them had some type of formal program.

A key finding: Most companies are getting a poor return on investment from lean and Six Sigma, and a surprising number of executives don’t even know the ROI or even have a specific target.

“One thing that we feel is the benefit of lean and Six Sigma is actually the return on investment in these programs,” he said. “Where’s the cash?”

Csicsila outlined several findings from the survey. Expectations were very low at more than half of the companies, where officials targeted savings of 5 percent or less per year from lean or Six Sigma—and most companies failed to meet even those low targets.

Only one fourth of the respondents realized a payback in a year or less. Surprisingly, Csicsila said, more than 40 percent were unsure of the ROI.

When it comes to Six Sigma and lean, Csicsila said the survey showed there is a “large perception gap and a lack of understanding of return on investment.” He reported a big disconnect, as officials reported widespread satisfaction with their efforts. At the same time, nearly 60 percent of people responding to the survey said that less half of any reported savings shows up on the bottom line and is sustained over time.

Csicsila gave suggestions on how to improve performance. Measuring the payback in cash—not the number of black belts—is the way to gauge the effectiveness of money spent, he said.


Comments

Expert: Firms should measure return-on-investment of lean manufacturing

By Bill Bregar
Senior Staff Reporter

Published: March 5, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Alex Brands buys iconic Shrinky Dinks toys

December 19, 2014 3:15 pm ET

First Slinky, now Shrinky Dinks. What will toy and games investment firm Alex Brands buy next?    More

Image

Judge limits scope of jury verdict against JM Eagle

December 19, 2014 2:30 pm ET

A federal judge in Los Angeles said Dec. 18 that last year's jury verdict issued against J-M Manufacturing Co. — now JM Eagle — for...    More

Image

Jarden hiring for new plastics plant

December 19, 2014 1:45 pm ET

Consumer products conglomerate Jarden Corp. is hiring plastics technicians for a new operation in Erlanger, Ky.    More

Image

The return of HPM's big presses

December 19, 2014 11:47 am ET

HPM is back in big injection molding machines.    More

Image

Amcor buys Chinese flexible packaging plant

December 18, 2014 1:47 pm ET

Australian-based global packaging company Amcor Ltd. is buying a Chinese flexible packaging business for 211 million RMB (US$31.4 million).    More

Market Reports

Flexible Packaging Trends in North America

Our latest RESEARCH report examines trends in FLEXIBLE PACKAGING impacting the North American market including a review of economic conditions, key drivers of growth, materials pricing, M&A activity, sustainability challenges and the outlook for 2015.

Learn more

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events