Reduce the Units of Input Not Producing Output
Reduce units of Input (I) available but not producing Intermediate Cost Drivers (ICDs). This action makes Input levels more directly variable with the quantity of the ICD by reducing the amount of the available Input that is wasted or idle. For example, an employee (I) might produce one subassembly (ICD) per day. During that day, the employee spends a total of one hour waiting for parts for the subassembly. If the Company could eliminate that one lost hour of the employee's work day by providing parts in a more timely manner, the Company could reduce the number of employees (I) needed to produce the same subassembly (ICD) by 1/8th.
A. Assist Input in increasing ICDs.
Recognize efficiency. When people understand that the company is measuring efficiency, they pay more attention to what is measured.
Add evaluation of of levels of efficiency: Compare efficiency to outside benchmarks:
|1||3663||1994||Motorola has established a 15-member council of suppliers to rate Motorola's own practices and offer suggestions for improving, for example, the accuracy of production schedules or design layouts that Motorola gives them.|
|2||3861||1986||Xerox uses benchmarking as a cost-analysis technique. It focuses on what the competitor does and how much it costs him to do it.|
|3||4833||1989||To structure its portfolio, Westinghouse calculates a "warranted equity value" for each piece of the company, so they can plan on micro basis.|
|4||6311||2003||The company set up performance measures that always measured performance from the customer's perspective.|
|5||8099||2005||As health needs surge, medical service providers are helping companies do more with less. Take American Healthways, the nation's largest disease management firm. The company helps insurers lower their health care costs by offering preventive care and support programs for chronically ill patients. American Healthways uses data from its health plans, labs, PBMS, and other health care outfits to identify people who are going to be at high risk. The company is also developing health risk assessment and physician pay-for-performance programs that address the health risks of 100% of the population – not just those with chronic ailments. This model provides employees and dependents with a personal health score and information about how to maintain or improve their health.|
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