Colfax Corporation, a company that specializes in developing fluid-handling solutions for a variety of industries, recently released its fourth quarter earnings report. Although it fell short of established targets, the firm was able to make substantial progress toward improvement plans and growth initiatives. In a conference call with investors, the company's chief executive officer Steven Simms credits this progress to the implementation of the Colfax Business System (CBS), which is heavily based on Kaizen.
For example, one of the first places CBS was implemented was at one of Colfax Corporation's Glasgow, Scotland, plants. In February 2012, the company kicked off a series of Kaizen events that were focused on reducing lead time and inventory levels by prioritizing set-up reduction, standard work, transaction process improvement and demand pull.
As a result of these Kaizen events, the Scotland plant was able to reduce lead time by 33 percent for custom products and 30 percent for standard products. Additionally, inventory levels were cut by 40 percent, which resulted in a reduction of working capital of $3.4 million by November 2012. The factory continues to implement Kaizen mindsets and practices, and management is optimistic of continuous improvement throughout 2013.
Similarly, another Colfax business in Scotland was able to develop new processes for the management of cash throughout the contract life cycle. Once again, this led to a reduction in working capital.
“While each of these examples is impressive, what's perhaps more encouraging is that we literally have dozens of such activities occurring around the company on a weekly basis,” Simms explained. “From our perspective, the cumulative impact of hundreds of associates using CBS to drive process improvements in every area of the business will ultimately result in dramatic gains in quality, delivery, cost and growth for our customers and shareholders.”
Using Kaizen to benefit all parties
As Colfax has shown, Kaizen integration has multiple benefits. Of course, it enables businesses to reduce costs and improve efficiency, which often translates to greater profits. However, the focus on quality control and efficiency also translates into better products and services, which makes customers more satisfied. On the other end of the spectrum, generating more revenue and improving customer satisfaction leads to higher stock prices, which is good for investors.
Kaizen has a multitude of benefits, so businesses need to keep that in consideration as they contemplate going Lean.