OUR CUSTOMERS’ FEEDBACK
A project is a full success when the performance objectives are achieved and our customer can work in autonomy with the new settled tools.
Here are a few customer testimonies on flow management and performance improvement.
They are representative of the missions we lead on several activity fields, whether it be SMB,
Which Return on Investment?
At the end of a flow optimization project with WIPSIM, the average profits on works in process are between 20% and 60% thanks to a lead times reduction to the same extent.
Thus, the works in process reduction releases a cashflow according to the pieces cost, but always superior to the project’s cost.
So, a flow improvement project is self-funded in cashflow.
Moreover, the annual competitiveness profits are generally much superior to the implementation costs, and the ROI is inferior to one year.
A ROI example in Mechanics
Here is the real case of a mechanics company equipped with a CONWIP pull flow management system.
The production process involves about twenty internal steps including cutting, forging, grinding, milling, deburring, assembly, control, subcontracted heat treatment operations.
The annual turnover amounted to 10 million euros and the production had a 40 days’ lead time. The implementation of a CONWIP pull system allowed to reduce the lead time by a 30%, being 28 days.
The cost of a CONWIP project amounts to 25.000 euros for the company. This includes the flow analysis, the simulation-based calculation of the tickets number and of the orange and red thresholds, the modeling of the CONWIP control panel, and the training of future users. This last step could be part of a professional training program.
The work in process valuation is worth 1 million euros. Its decrease is proportionally related to the lead time reduction, being a 30%. This generates 300.000 euros in cashflow. The CONWIP project is therefore widely auto funded in cashflow.
Return On Investment:
The productivity gain associated to CONWIP is here around 3%. It considers the overtime reduction and the decrease of temporary work. Based on a 1million euros workshop payroll, it provides a 30.000 € annual profit. The project is therefore profitable in less than a year; and generates 30.000 euros of profit each year.
This 3% number in productivity is a lower cautious limit. We achieved +30% profits on production lines of precision mechanical component.
In addition, there are other non-quantifiable profits: delivery delays and order delays reduction, better response to the demand versatility, quick detection and decrease of the scraps, less meantime between design and product marketing…