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Tip: Use Lean to Position as Low-Cost, Not Low-Price

Lean initiatives can do more than lower a company's internal costs.

Lean is not just about streamlining operations. Lean can also help a company position as a low-cost distributor rather than a low-price distributor, says Joe Gallagher, president of Gallagher Fluid Seals Inc., in Case Studies: Strategies for Recovery.

Lean initiatives help companies identify and eliminate inefficiencies, reducing costs for customers and the company alike. For example, Gallagher Fluid Seals, King of Prussia, PA, reorganized parts of its warehouse to decrease the distance employees have to go each time they need a fast-moving item.

The company has also examined simple tasks, such as the transfer of information from the office to the warehouse, to see if those can be done more efficiently and allow employees to focus on other more profitable activities.

But the benefits also extend to how the company can be sold to customers, Gallagher says.  The distributor's lean initiative gives employees a better understanding of the costs of each activity within the firm, Gallagher says. This has helped the company provide more accurate information to customers based on what it will actually take to fill their orders.

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