Adopting Lean practices can provide significant financial benefits for organizations. General Electric realized $1.75 billion in earnings after investing $1 billion in Lean over two years, achieving a return on investment within 9 months. Motorola's return on investment was achieved after 2.5 years, resulting in $2.2 billion in financial benefits. The Bank of America reported saving hundreds of millions in expenses and improving customer satisfaction ratings after launching Lean efforts less than 3 years prior. Adopting Lean can lead to reductions in work-in-progress, improvements in cycle times, and more efficient processes overall.

1. 0
Financial impact of adopting it
Significant benefits can be realised, sustained and continuously improved: quality
saves money
Examples of achieved benefits from Lean
Some examples of financial benefits
■ During the period 1996 – 1998 General Electric (GE), the world‟s well-known
user of Lean, invested about 1billion dollars in adopting the approach. Their
earnings in the same period were 1,75 billion
dollars. The ROI-period was 9 months
■ For Motorola, one of the founders of Six Sigma, the ROI took 2.5
year, but the effect was even larger: 2.2 billion
dollars
■ The Bank of America stated in 2004: “since launching our Lean efforts less
than 3 years ago, we’ve saved hundreds of millions of
dollars in expenses, cut cycle times in numerous areas of the
company by half or more and improved the percentage of customers who rate
their satisfaction at 9 or 10 on a 10-point scale form 41% to more than 50%, an
increase of almost 2,5 million customers”
■ Red Cross Hospital Beverwijk saved €310,000 in
their first half year of working with Lean (September 2002 – February
2003)
■ Philips Lighting saved more then € 2 billion in Black
Belt projects since the start of the program
Achieved
Short term
Long term
85%
185
100
22
13
50
0 50 100 150 200
Potential
productivity
Better value chain
alignment
Flexible planning
Smarter process
Productivity at
start pilot
Productivity
■ Stork Fokker reported a decrease in work in progress of 80% and a cycle time
improvement of 25% at the production of Cessna-airplane tails by using Lean
Manufacturing
■ Boeing has implemented a Lean program years ago and gains high savings and
higher employee satisfaction
■ Toyota has developed his own Lean derivate, this has made it one of the biggest
automobile manufactures in the world, with high quality products

2. 1
In practice: financial impact of adopting it
Significant benefits can be realised, sustained and continuously improved: quality
saves money (cnt´d)
Process redesign
■ Measurement and
analyse
■ Definition of „waste‟
■ Design new
process
■ Implement new
process
Continuous
improvement
■ Continuous measurement,
analysis and control
■ Proactive employees
■ Makes use of the
knowledge in the
organisation
Structural EBIT
improvement
through cost
efficient
processes