Top 4. What if waste reduction can reduce enough cost?
This question assumes the organization has an active waste reduction program that is continuously searching for an eliminating waste. There are times when the resulting cost savings are not enough. Perhaps an organizations revenue is dropping faster than their costs? Or the revenue is growing but its costs are stubbornly growing faster? For either of these situations its necessary to revisit the organizations value equation. The Lean Office Glossary defines the value equation as… Received Value = Created Value Created Waste If everything that can be done is being done to reduce the costs of Created Waste, then the areas to focus on are Received Value and Created Value. If revenue is dropping it is because the customer no longer sufficiently values the product or service being received. If the sales and marketing organization cannot reverse this perception then it becomes necessary to reduce the Created Value of the organization. Costs rising faster than revenue is essentially the sam
