Implementing a Lean Front-End  How Do You Measure Success?

Learn how front-end process optimization contributes to establishing a customer-centric value stream, and use the following KPIs to measure the success of your company's lean front-end initiative and its impact on overall business performance.


Learn how front-end process optimization contributes to establishing a customer-centric value stream, and use the following KPIs to measure the success of your company's lean front-end initiative and its impact on overall business performance.

Lean manufacturing arrived on the scene several years ago as a result the success Toyota and other Japanese manufacturers were having with this system as Womack and Jones described in their revolutionary book The Machine That Changed the World. A growing number of companies are now adopting kaizen initiatives for continuous improvement, kanban replenishment and demand-driven flow manufacturing processes based on a "pull" rather than "push" philosophy. The purpose of lean manufacturing is to eliminate waste, reduce inefficiencies and inventories, and improve on-time delivery rates.

The success of implementing lean techniques and technology solutions for back-end production and fulfillment processes has spurred an extension of the lean philosophy, as many manufacturers have begun to apply lean strategies beyond the shop floor. Manufacturers are now applying lean thinking to streamline their front-end selling processes, from opportunity to order. This includes automating product selection and configuration, pricing and quoting, and order processing. By applying lean thinking and web technology, manufacturers can eliminate the delays and errors inherent in the cumbersome front-end processes typically used to sell complex products across multiple channels. Just as they have done on the back-end, manufacturers must eliminate front-end "waste" to remain agile and competitive in today's global economy.

A recent study conducted by AMR Research, a leading manufacturing industry analyst, indicates that maintaining quote and order accuracy using a manual, spreadsheet-based quoting process for configurable products across multiple sales channels is a huge challenge and typically leads to high quote error rates, invalid configurations and extensive intervention by engineering and customer service resources. Frequently the net result is lengthy quote response times and low quote-to-order conversion rates.

To alleviate these "pain points," manufacturers of configure-to-order (CTO) and engineer-to-order (ETO) products are increasingly turning to Web-based sales solutions in the hopes of achieving the business benefits made possible by a lean front-end. This article examines how front-end process optimization contributes to establishing a customer-centric value stream and describes several key performance indicators (KPIs) by which a company can measure the success of a lean front-end initiative and its impact on overall business performance.

Measuring the Effectiveness of Front-end Processes

What you do not measure, you cannot improve. The reason that front-end processes are especially vexing for producers of complex industrial and technology products, as well as for manufacturers with large, complex sales and distribution channels is because front-end inefficiencies directly impact the customer's experience and resonate across the entire supply chain, affecting quality, customer service levels, and, ultimately, profit margins and profitability.

Speed, cost and quality are the most critical metrics in determining customer value. Additional metrics for the manufacturer include customer retention and revenue growth. Front-end processes are typically the least optimized of any segment in the value chain, since lean thinking has not yet been rigorously applied to sales processes. Consider how the following scenarios — all common experiences in a host of manufacturing environments — result in less-than-optimal performance in each of these critical sales order-processing areas.

* Inconsistent quoting and frequent pricing errors due to a lack of standardized practices and over-reliance on tribal and key individual knowledge result in lost profits and/or dissatisfied customers.

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