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 levels of efficiency: Establish internal benchmarks of efficiency:
Employee costs

No. Industry SIC Year Notes
1 3632 1987 Warranty claims at Raytheon's Amana Refrigeration Inc. have dropped more than 50% in the last five years while it has eliminated half its quality inspectors. Pres. attributes the gains largely to worker involvement and well-defined, highly visible goals right down to the individual employee.
2 3674 1988 Gould Semiconductor uses statistical process control techniques in administrative areas. It finds out the cause of errors so they can be corrected.
3 3674 1991 Cypress has a project-tracking setup that allows employees to set their own goals and deadlines; management receives a list of those with high numbers of delinquent goals. Said to improve morale.
4 4512 2003 Rather than stepping away to find a tool, mechanics stay by the aircraft and visually signal their tool and part requirements. Well-defined, standard work practices make more rigorous scheduling possible. Standard completion times and best-quality sequences help operators divide and balance their workloads so that they can choreograph aircraft movements during nightly A-checks.
5 4512 2005 Southwest Airlines is spearheading some of the most aggressive moves that the low-fare king has made in years. It plans to increase capacity at least 10% this year, adding 29 planes to its fleet of 417. Southwest needs healthy expansion to help keep its own unit costs under control. It boasts the richest wages for pilots of narrow-body jets – 38% above those at United Airlines Inc., after that carrier's deep pay cuts. By growing, Southwest averages in new lower-paid employees and spreads its costs over more seats. At the same time, it's pushing for higher productivity from its already highly efficient workers. Southwest's pilots say they're being asked to fly 70 hours a month, up from about 65. Pilots at the traditional carriers average less than 60.
6 4512 2006 Through thick and thin, Southwest Airlines keeps expanding its available seat miles and routes because of its ability to maintain low operating costs. Part of the efficiency plan is to use fewer employees to take care of a single plane. Four years ago, Southwest had 91 employees working various duties on an aircraft. At the end of the second quarter, that dropped to fewer than 69.
7 4513 4 A system of computers immediately alerts a driver if he falls more than fifteen minutes behind schedule. To keep the product personal, FedEx broke the company into Customer Assistant teams, each of which always deals with the customers in the same area.
8 4513 1991 AmEx has a Service Tracking Report that looks at 100+ tasks, from how quickly phones are answered to the accuracy of monthly statements. A tool for constant quality improvement.
9 4800 2007 Several new technologies can allow in-the-field service providers to increase productivity. GPS systems can track the locations of technicians in real time, particularly when they have long assignments or the time needed to complete the work is unpredictable.
10 5311 1991 Dillard watches the productivity of every sales clerk and every manager. Dillard has grown without accumulating hierarchy. Still no central personnel or PR department.
11 5812 2006 Restaurants are working to improve the performance of their staff through positive measures. Avero's software was created by the CFO of a small restaurant group to provide detailed performance metrics. This allows managers to compare servers' performance and encourage underperformers to improve.
12 6300 2003 The lean team collected four weeks' worth of data in the new cell and established baselines from which cell managers could set goals for the new processes.
13 6300 2003 JPF displayed the cell's hourly productivity rates along with the company's expectations. The numbers were posted on large white boards so that all employees could see when and where and therefore why — performance was suffering. Employees understood that they would be evaluated on and rewarded for objective results they would track themselves–rather than by their bosses' subjective observations.
14 6300 2003 The company had traditionally measured the time from when an application arrived at the new-business processing center to when the approved policy was printed and bound. JPF switched to measuring the gap between when the application is mailed to the company and when the adviser receives a completed policy, which is how its customers assess the company's speed.
15 6300 2004 Progressive's second major source of competitive advantage is claims handling. The company has 400 claims offices spread across the U.S. and it expects them each to compete on cycle time reductions. The company gives each policy holder a wallet card with an 800 number for reporting losses 24 hours a day.
16 6311 2003 In segregating complexity, the company clustered tasks of similar levels of difficulty into separate groups with their own separate performance goals.
17 6311 2003 In setting a common tempo, the company adopted the concept of task time, which paces work according to customer demand. In this case the New Business unit needed to process ten applications per hour so the task time was one application every six minutes.
18 6331 2005 Philadelphia Consolidated Holding insurer gets a leg up from its marketing strategy. It uses its own sales force to go after business, making about 30,000 calls a week to targeted prospects and keeping close watch on all that activity as well. The company is hyper-vigilant about setting standards and monitoring against those in real time. The company always knows exactly how many calls are made in what areas, when.
19 7011 1993 S-K-I has successfully reduced its dependency on natural snow by manufacturing its own. It has also been strong on cost control. Variable costs, like a part-time staff, are monitored and adjusted to remain synchronous w/ business conditions.
20 8742 2006 Consulting company, Accenture Ltd., is a virtual company run by executives on the fly. Technology helps keep the virtual company on track. Every day, Accenture employees log onto the company's internal Web site to record where they are working. Documents and financial data are shared through Accenture's internal Web sites. When the executives want to see, as well as hear, each other, videoconferences are conducted.

<<Return to Reduce Input Not Producing Output