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 benchmarks of efficiency:
Overall costs

No. Industry SIC Year Notes
1 0 2004 About 96% of the time FedEx Custom Critical delivers on time. This percentage is closely monitored by the company to meet the demanding customer's expectations.
2 0 2006 Apple, SanDisk and Google have been able to introduce innovative new products and generate profits while spending less on research and development than their peers. A study identified the traits of these successful companies. They had processes for generating and tracking ideas, systems for selecting which products to fund and mechanisms which allowed them to nurture a product or idea through development to commercialization.
3 1600 2005 The energy market is a big user of satellite guided global positioning systems, or GPS for surveying and planning construction. Because most of the global firms run several projects simultaneously across the world, they are dependent on database software that helps keep tabs on costs, logistics and productivity.
4 2000 2004 High performing companies lower the amount of time their foods spend in inventory without compromising customer service. They cut the number of stock-keeping units (they had an average of 1.4 SKUs per $1.17 million). They concentrate on their sales which results in higher volumes for each SKU. Their sales forecasts are also more accurate and they measure themselves across the supply chain.
5 2096 1998 ConAgra Inc. evaluates all of its sites according to strict guidelines for production performance, a process it calls 'facilities rationalization.'
6 2670 1992 Avery Dennison started a corporate drive to improve customer service. It developed company-wide standards that enable divisions to measure their speed in completing and shipping orders.
7 3462 1997 Alcoa instituted what it called "Quantum Leaps," in which it continually set very high-quality and low-cost benchmarks, and, from top management on, reinforced the critical need to achieve these goals.
8 3546 2007 Companies are working to improve customer service while reducing costs. New knowledge bases store frequently asked questions which provide customers with consistent answers despite high turnover rates. They can also help manufacturers detect problems with products and designs. When Black & Decker received complaints about a certain product, it was able to track and monitor them and quickly make changes to ensure the new version of the product worked properly and was not returned.
9 3600 1990 At Emerson, profit, not spending, is tallied in operations as far down the org chart as possible.
10 3674 1998 Productivity is measured as the number of wafer layers processed per operator per day, and captures differences in physical productivity-the value of output per worker is not captured by this measure.
11 3714 1993 To install activity-based accounting, Dana first had employees break down what they did each day. Accountants took the expenses normally tallied–fixed costs, supplies, salaries, fringe benefits – and spread them over the activities. The new ledger reported the cost of performing specific tasks involved in turning out the product.
12 4512 2005 Southwest Airlines will soon be competing against two major carriers, Frontier Airlines and United Airlines, as it tries to move into Denver. Southwest decided to fly into Denver when the major storm in New Orleans knocked out most of the air service to the city, leaving Southwest with 15 jets sitting on the tarmac, unable to generate revenue. Ordinarily, Southwest needs 6-9 months between announcing service to a new city and beginning flights. However, Southwest officials worked for a quick start-up and concluded the airline could keep costs in Denver to less than $9 a passenger. Although that was higher than the $5 systemwide average, it was less than the $10 Southwest was paying in Seattle. The airline figured that despite Frontier Airlines, it could set fares 30%-50% lower than rivals for certain routes in Denver, and still make money.
13 4513 2004 About 96% of the time FedEx Custom Critical delivers on time. This percentage is closely monitored by the company to meet the demanding customer expectations.
14 5311 1995 Sears pays Young & Rubicam based on performance measures that include growth in customer awareness based on surveys, growth in its apparel business, and total profits.
15 5812 1997 McDonalds has profit by line on nearly 10,000 stores, so it can categorize them by performance and learn from the best.
16 5942 2004 Amazon correctly identified near-perfect fulfillment as a core objective and developed a business model around being able to monitor this function.
17 6300 2004 Progressive's goal is to grow as fast as they can while keeping the combined ratio no higher than 96. They shorten this goal to be "96 and grow". The company uses this ratio plus three other company financial policies: a sales to capital (premium to surplus) of 3 to 1, debt to capital ratio of 25%, and an investment portfolio allocation of 85% bonds and 15% equities. The company believes if it does these things it will earn a return on equity that is higher than its cost of equity.
18 7200 2006 Artists' Frame Service is enlisting its workers to help contain company costs. To teach its workers how the firm made money – and the need to control costs – it created a game called "Showing Where the Money Goes" which showed how a $100 sale deteriorates after company costs are subtracted. Also, to raise managers' accountability for minimizing costs, AFS holds meetings with each manager to customize a "dashboard" with targets for their unit's labor costs, inventory levels, sales, and other key measures.
19 8062 2006 Veterans' Hospitals are now national leaders in efficiency and quality because of a large dose of technology. Before it was reformed, the veterans' health system was huge and under utilizing its resources. As a first step, the top dozen managers decided to carve the country into a dozen territories, each with its own budget, managers, and performance goals. Every patient got a primary care doctor. The agency shifted away from an expensive hospital-based model to one that emphasized outpatient community clinics and primary care.
20 9611 2008 Many companies show need for broader management strategy that addresses how they are creating, sharing, and using knowledge. The World Bank has nurtured a network of more than 5000 lawyers, accountants, freight forwarders, architects, and public officials across the world to create a comprehensive database of indicators, allowing it to compare the ease of starting sustaining private businesses in 178 countries. The "Doing Business Report" has become one of the most relied-upon tools in the development world.

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