After implementing changes to the process, validating improvement and translating the improvement to dollars, the value can then be booked.
Hard-dollar financial benefits from process improvement projects should be reported in one or more of the following categories:
- Revenue Increase
- Cost Savings / Opex reduction
- Capital Cost Avoidance
- Cost Avoidance
Revenue Increase is the creation of additional income from increased production that directly translates into sales, a price uplift, increased billable services, or profit from the sale of inventory.
Cost Savings is the reduction in expenses for running the process or the business.
Capital Cost Avoidance can include the elimination of the need to spend the capital or a reduction in the amount of capital needed.
Cost Avoidance is the elimination of budgeted future expenses.