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Hard vs. Soft Savings

By AICC Staff

April 6, 2016

When it comes to savings, there are two types: hard and soft. Both are important to have on the lean journey, and your current position on that journey will define where your savings focus should be.

Hard savings are bottom-line dollars. These savings are easy to quantify and something your CFO or controller are going to be very focused on. A common statement of a hard savings focus sounds like this: “We just spent thousands of dollars on lean training. What is the ROI on the training investment?” Patience, grasshopper! When someone first learns a new sport, are they a professional right away? Of course not. It takes practice and time, and lean is the same. You won’t get large and quantifiable hard savings right away.

A focus on hard savings alone will not generate the needed support from the team. Why? Most people in your company—depending on the size of the business, of course—have no concept of hard savings or what they are. Moreover, these same people who don’t understand hard savings are the key people in driving and sustaining your lean journey; they are your front-line staff. What they do know is whether they like their job or not. If lean can have any influence on making their day less waste-filled and more enjoyable, then they will be better stakeholders in sustaining lean.

“When someone first learns a new sport, are they a professional right away? Of course not. It takes practice and time, and lean is the same. You won’t get large and quantifiable hard savings right away.”

This is where soft savings come in. Soft savings are the feel-good savings of jobs made easier, reduced stress, job satisfaction, clarity of processes, broken-down silos, and all the other “fluffy” savings that will create the culture needed to sustain a lean journey. Soft savings can be challenging to quantify, and I would recommend not spending too much time attempting to quantify them, because this could lead to waste (overprocessing). Although not hard dollars, soft savings are savings that will make people immediately happy, or happier, once realized.

At different stages of the lean journey, your focus on soft versus hard savings needs to shift over time.

In the beginning of a lean journey, praise and reward the soft savings. People are still trying to understand what this “lean” is that the company is doing, and they’re hoping it’s not the next flavor of the month. With a hard-savings focus in the beginning, I can guarantee lean will turn into the flavor of the month. At the start of a lean journey, people are wondering, “What does lean mean to me? Am I going to lose my job? Will my job be changed?” If on top of the uncertainty you throw in a focus on hard savings that people already don’t understand, then they’re going to be turned off quite easily. Early in the lean journey, a focus on hard savings should be kept to high-level team members or leaders only. Show patience with the learning of the lean skills and methods. Usually, some of the first lean activities will be simple 5S kaizen (improvements), which are not easy to attach a hard savings to, and that’s OK.

As you progress with lean, there should be a gradual shift to a focus on the hard savings. Your lean knowledge is improving, kaizen events are having a larger scope, and calculating hard savings should be getting easier as a result. But again, the focus on hard savings should be kept to the leaders. Moreover, I offer a caution: Do not press hard savings onto front-line staff. Hard savings should always be kept and the manager level or higher. Leaders need to find a way to translate the drive for hard savings into a soft savings message when facilitating kaizen.

Whether hard or soft savings, one of my big recommendations with respect to savings is to track it. As soon as the lean journey is started, you should track how much time, money, space, distance, and all other savings have been achieved. Be lean, generate savings, and increase value to your customers.

MikeMike Nunn is vice president of operations at Ideon Packaging and is Lean Black Belt–certified. He can be reached at 604-524-0524,, or followed on Twitter @mikednunn.

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