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The Evidence-Based ROI of Continuous Improvement

Posted by Maggie Millard

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Apr 21, 2015 11:56:00 AM

If you've been following along with our blog, you likely know that continuous improvement is a powerful tool for helping organizations meet increased consumer, financial, and legal demands. Most organizations include leadership in improvement initiatives - but a true continuous improvement organization involves everyone. By engaging every employee in a culture of continuous improvement and innovation, companies achieve increased quality, improved safety and satisfaction, and a significant ROI. 

Employees engaged in continuous improvement have an average annual impact of $6,000.*

In a robust culture of continuous improvement, you can expect that: 

 1 in 3 Improvements has a 
Financial Impact *

 1_in_3_ideas_has_a_financial_impact

Keep in mind that the other two thirds of improvements are at least as important (if not more so) than those with a financial impact. Those other ideas improve things like quality of the organization's goods and services, as well as the safety and satisfaction of staff and customers. Improvements usually impact multiple areas; for example, an idea that increases revenue may also improve customer safety and satisfaction. 

54% of all improvements impact quality

13% of all improvements increase the safety of staff and customers

54% of all improvements increase staff and customer satisfaction


ROIeBookSquare
Continuous improvement organizations understand that these metrics play a direct role in ensuring thesuccess of the business, and they strive to achieve the highest safety, satisfaction, and quality possible. They know that happy customers and happy employees are critical for success. The fact that these metrics indirectly affect the bottom line is justan added bonus to continuous improvement.


13% of Improvements Save Money *

13Of all of the improvement ideas implemented by your staff, you can expect that around 13% will save your organization money.

Over 80% of that cost savings will be annually recurring, resulting in a long-term benefit and exponentially greater ROI. 

The average impact of a cost saving idea is $31,043 in its first year of implementation.

 

2% of Improvements Increase Revenue *

increase_revenue

Of all of the improvement ideas implemented by your staff, you can expect that about 2% will generate additional revenue for your organization.

Interestingly, our data shows that in this category, too, over 80% of the impact reoccurs annually.

The average impact of an improvement that generates revenue is $120,029 in its first year of implementation.

 

23% of Improvements Save Time *

time_savingsPeople are great at finding ways to increase efficiency. Approximately one in four improvements results in time savings. 

The average impact of an improvement that saves time is 270 hours in its first year of implementation.

Furthermore, this time savings is estimated to have a "soft savings" of $7,924 per improvement in the first year the improvement is implemented. 

* Are you not getting this ROI from continuous improvement in your organization?

The data in this report is based on information provided by KaiNexus customers from 2011 to the present. Because our customers use KaiNexus' continuous improvement software, they're uniquely positioned to achieve a greater ROI than organizations attempting to manage continuous improvement without such a platform. 

Learn more about the three critical elements in a successful culture of continuous improvement here. Request a free consultation for help from a KaiNexus Continuous Improvement Specialist. 

For more information about the ROI of Continuous Improvement, check out this free webinar recording:

FREE WEBINAR:

ROIofcontinuousimprovement-1

The ROI of Continuous Improvement

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  • How to measure the ROI of continuous improvement
  • How to communicate that ROI with your executives
  • Hidden places to look for additional ROI
  • The role of software in achieving, calculating, and communicating ROI

Topics: ROI of KaiNexus

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