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.


* Revenue Growth. Automating quote follow-up and improving quote management through accurate real-time reports can increase quote conversion ("hit rates") by several percent. Improved price control, up sell and cross-sell capabilities can increase average order value by 10 percent.

Early Adopters of Lean Front-End Strategy Report Dramatic Results

Streamlining their front-end business processes has helped many manufacturers significantly improve their quote-to-cash speed and accuracy and enabled them to present one face to customers, despite the complexity of their product lines or sales channels. In addition, in many cases, integration of their lean front-end solution has enhanced the performance of their existing enterprise resource planning (ERP) systems.

Following are a few real-world examples of early adopters' lean front-end optimization results:

* A leading manufacturer of process equipment reduced quote and order cycle times by 50 to 80 percent, reduced order and BOM errors by more than 90 percent, and improved on-time delivery performance by 12 to 17 percent — with order-to-shipment cycles dropping by an average of four days. The company also was able to integrate its lean front-end application with its AutoCAD system and enhance the quality of its proposals with dynamically generated computer-aided design (CAD) drawings. As a result of these improvements, the firm has reduced misapplications and warranty costs and significantly improved customer satisfaction.

* A major supplier of fluid handling equipment systems applied value stream mapping, lean thinking and a lean front-end technology solution to improve its customer service process. Not only did the firm manage to reduce customer care steps from over 50 steps to just three, but also increased sales by 30 percent while improving customer service productivity by more than one-third.

* A major supplier of plastics processing auxiliary equipment reduced sales costs by nearly four percent of revenues. The company was also able to compress its ERP system's 12,000 configuration rules into less than 1,000 rules nested wholly within its lean-front end database and portal.

* A leading manufacturer of fluid handling systems for industrial applications realized a 50 to 70 percent reduction in quote generation time and application engineering resource utilization, while achieving 100 percent quote accuracy.

Leveraging the channel management component of its lean front-end solution to encourage online orders, the same company now receives over 80 percent of sales channel orders via the Web, since its manufacturer's representatives can configure, price, quote and order mixers and parts completely online. These orders flow directly into the manufacturer's enterprise system and onto the shop floor without any manual processing.

* A global provider of complex water treatment systems and filtration equipment implemented a lean front-end strategy and technology solution supporting multilingual and multi-currency requirements. The company succeeded in reducing engineering time per proposal from over four hours to about 40 minutes — and has also increased the average value of quotes by nearly 10 percent using cross-selling and up-selling tools for related parts and accessories.

Lean Thinking: A Process of Continuous Improvement

Adopting a lean philosophy across the enterprise, including critical customer-facing front-end processes, makes good business sense in both the short- and the long-term. As one industry analyst recently noted, relative to targeted process improvements, such gains are not measured in mere basis points but in orders of magnitude. This is borne out by the operational and business improvement examples discussed here.

Challenged to increase earnings in relatively stagnant economic times, manufacturers cannot rely on the market alone to drive growth. Today, many manufacturers are turning to mergers and acquisitions, global outsourcing and/or penetration into high-growth global markets such as China and Eastern Europe. Depending on a company's size and market position, these growth strategies can turn out to be costly and their outcome uncertain. Implementing a lean front-end, however, presents a more cost-effective, less risky opportunity to drive out bottom-line costs and pave the way for organic top-line growth.

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