Case Studies

Improving Margins

Revenue is up. Margin isn't, and cash is tied up in the work.

How we approach it

Find where margin and cash leak out of the operation, fix the cause, and keep the gain.

Every case here ran on A3 thinking, from the problem to the fix:

  1. Define

    Pin the problem down with data: what's happening, what should be, and how big the gap is.

  2. Diagnose

    Get from what to why, until the root cause is backed by evidence.

  3. Fix

    Turn the root causes into tests, run them, and watch the number.

Methods used in these cases: A3 thinking, gap analysis, root cause analysis, Kaizen.

Results

Where we've fixed this

Restaurant AP automation

From 20% to 70% gross margin

Watch how margin went from 20% to 70%

Gross margin: ~20% → ~70%

March to October 2016

The problem

An invoice with line items cost $3.34 to process, all of what it brought in. Gross margin sat near 20%.

The diagnosis

A3, root cause analysis

Every line item was typed by hand, twice, then checked line by line. Invoices waited in batches, and only one person on one shift could verify them.

The fix

  • Built extraction into the app, so a processor typed 3 fields instead of a whole invoice
  • Moved from batches to one invoice at a time, first in, first out
  • Trained the night shift to verify, so two shifts worked the queue
  • Invoice with line items, all-in$3.34 $0.97
  • Line-item turnaround24 hours under 30 minutes

Read the full case study →

Cheetah · Warehouse

Margin up 15 points, with better quality

Gross margin: ~10% → 20–25%

The problem

A manager checked every picked cart, item by item: about 13 minutes per order, and roughly 7 in 10 carts still had an error.

The diagnosis

A3, Kaizen

Quality was inspected at the end of the line instead of built into the pick. With no data on who was reliable, the only safe policy was to check everyone, every time.

The fix

  • Tracked each picker's error rate and speed in the app
  • Paid a bonus on both, earned only when a cart shipped clean
  • Checked 1 in 10 carts for pickers under 1% errors, and put anyone who slipped back on full checks
  • Carts with a picking error~72% ~10%
  • Carts requiring QC100% 30%
  • Gross margin~10% 20–25%

Read the full case study →

Cheetah · Finance

Cutting the cash float 90%

Watch how the cash float fell 90%

Cash fronted for product: ~100% → ~8%

The problem

The company paid its supplier almost at once but was paid by customers 3–4 days later, fronting the cash on about 70% of revenue. A $200K supplier credit line capped growth.

The diagnosis

A3, gap analysis

Supplier payments weren't linked to customer billing. The data to link them already existed; nothing connected it.

The fix

  • Split each payment at delivery: the product share went straight to the supplier, matched to its invoice
  • Gave the supplier a portal showing each payout against its invoices, to the cent
  • Reconciled monthly and automated every mismatch away
  • Working capital freed~$1M
  • Supplier line of credit$200K, maxed out no longer needed
  • Delivery to cash3–4 days 1–3 days

Read the full case study →

See all case studies →

From case study to program

We built these methods into the 8 Weeks to Higher Margins program

The method behind these results, A3 thinking from the problem to the fix, is what we run with you in the 8 Weeks to Higher Margins program. A Waya expert guides you through your own margin problem while you learn alongside other operators doing the same.

Lean AI keeps the method running after the eight weeks end.

See the 8 Weeks to Higher Margins program

Have a problem like this?

Talk to us about working through it together.

Schedule a Call See all case studies

Early Access

Run these methods with Lean AI

Leave your details and we'll reach out about getting you connected to Lean AI.