The Performance Improvement Industry is full of companies and consultants with outstanding results of Performance Improvement (PI) projects they’ve undertaken and completed. By and large these results are focused upon reducing expenses and improving profit margins. There is no argument that the tools of PI are proven over the years by thousands of companies in their pursuit of excellence.
Generally the client companies are pursuing goals such as reduced labor cost, reduced cycle time, reduced lead time, improved quality, improved inventory turns, etc. Faster, better, cheaper is the battle cry heard throughout industry.
The most common reasons companies give for embarking upon the PI journey include improved competitiveness, increased customer satisfaction, customer demands, reduced waste, and improved employee morale.
From my experience over the years, the ROI of PI projects are almost never questioned. The metrics that are used to show success are generally posted on the wall and are celebrated by all.
But is that the end? Is that all there is?
I believe that there is key step missing in almost every PI project completion. And yes I do agree that PI or continuous improvement is a journey not a destination; hence the name “continuous”. The results gained have been posted on the wall of the shop floor, but often that’s where it stops.
I’d like you to think about these “results” for a moment. Is there any other value to this “asset” that the company has developed?
My answer is YES!!! Your sales and marketing team should be provided this asset immediately. Why? Because your company has improved itself and this can be significant leverage for increasing your sales and your market share. You are better than you were before, and perhaps better than your competition and can, therefore, provide a better product due to the improvements you have made. Customers and Buyers and Prospective buyers need to know this so they can make educated purchasing decisions. A better supplier or vendor means less risk, better products, potentially better costing, more responsive, and better financial health.
Today’s smart sourcing decisions are no longer based solely on price or cost. Often the lowest price is not the best price in terms of “Total Cost of Acquisition”. Total Cost of Acquisition includes many factors and one that is critically important in smart sourcing is “risk.” Risk relates to many things and is primarily boiled down to financial risk and production risk. A supplier who has done little or no PI has a higher internal cost due to inefficient processes and workflow. This affects more than just the production results; it also causes them to be less financially healthy over time, translating to higher risk. With higher risk comes a higher potential for a “surprise” to their customer. We’ve all heard the stories about the customer arriving at their supplier only to discover that the supplier has priced himself into bankruptcy and the front door is chained.
So in closing, I’ll just say that in my experience, a capable, high performing, low risk supplier is much more valuable to the customer. Armed with PI metrics, the sales and marketing folks should make full use of the potential of this company asset to help them close more sales.
Barry Neighbors has extensive experience working with OEM's and A&D Suppliers on Supply Chain issues. Focused on developing a more efficient supply chain, or helping suppliers in their business development efforts.