Lean Enterprise Benefits Analysis

Overwrite the existing numbers and enter your current Dollars, Headcounts, Sq Footage, and Machine Downtime in Column "C"
Program will calculate savings in four payback categories: Poor 5%, Fair 10%, Good 15%, Excellent 25%
Use this information to help estimate payback from a Lean implementation.

Lean Enterprise Implementation Results

Current Poor Fair Good Excellent
Category Amount 5% 10% 15% 25%

Inventory $ 800000 40000 80000 120000 200000

Annual Savings @ 25%

Inventory carrying costs 10000 20000 30000 50000

Headcount - MFG Direct # 50 2.5 5 7.5 12.5

Headcount - MFG Indirect # 11 0.55 1.1 1.65 2.75
Headcount - ADMIN Direct # 25 1.25 2.5 3.75 6.25

Savings @ $25K per head 107,500 215,000 322,500 537,500

Space Sq ft 18000 900 1800 2700 4500

Overheads - MFG Fixed $ 300000 15000 30000 45000 75000

Overheads - MFG Variable $ 175000 8750 17500 26250 43750
Overheads - Administration $ 180000 9000 18000 27000 45000

Total Savings from OHD

Reductions $ 32750 65500 98250 163750

Machine/Line Changeovers 2000 100 200 300 500

Machine Downtime Hrs 750 37.5 75 112.5 187.5

Summary

Total Savings $ $150,250 $300,500 $450,750 $751,250

Space Savings Sq Ft 900 1,800 2,700 4,500

Machine time gained Hrs 37.5 75 112.5 187.5

Increased Machine # 100 200 300 500

Changeovers

Some Typical Lean Enterprise Benefits

* Improve productivity substantially .

* Significantly reduce manufacturing space requirements.

* Reduce inventory levels to a few days supply instead of a few months supply.

* Improve cash generation through lower inventories and lower capital investment.

* Eliminate defects while improving product quality and reliability.

* Reduce lead time and improve on-time shipments performance.

* Design products that use simplified manufacturing techniques and that have Six-Sigma quality levels designed in.

* Have everyone in the organization involved in a continuous improvement activity, permanently.

* Reduce your monthly accounting close to a couple of days instead of two weeks.

* Run your machines for months or even years without unscheduled downtime.

* Reduce your set-up times and produce smaller and more frequent lots.

* Have a facility that is a showcase and can be used as an effective marketing tool.

The extent of the savings gained will depend on current status and commitment to the Lean program and the % returns used are for estimation purposes only.
This spreadsheet is to be used as a guide only for estimation purposes and implies no definitive payback or guarantees of any kind.