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.
B. Shift demand to use unproductive resources.
The company may shift demand from one location, or time period, to another in order to take advantage of idle capacity.
Location: centralize activities
Place single finction in fewer locations:
|1||2273||1996||Shaw took a decided advantage in improved manufacturing economies by beginning its process of consolidation and rationalizing much earlier than Mohawk.|
|2||3089||1998||Rubbermaid announced it will consolidate the factories of its various divisions.|
|3||3716||1997||Within each region, one or two plants manufactured all the products within that region. There wasn’t a lot of overlap in product.|
|4||5812||2004||Dunkin' Donuts is beginning to transfer its production out of stores into nearby central kitchens that can serve a whole district of Dunkin' shops. And it's pushing the new espresso products to price-sensitive latte sippers while still offering its old reliable cups of joe. Rather than pay baristas to craft lattes, like Starbucks, Dunkin' hired Swiss manufacturer M. Schaerer Ltd. to produce an idiot-proof $8,000 machine. It churns out consistent cappuccinos in less than a minute. This combination of speed, consistency, and a lower price is winning converts. The new beverages already account for up to 10% of store sales. And they're the prime focus of a new ad campaign, which aims to get consumers to stop by for an afternoon pick-me-up. Next summer, Dunkin' will roll out Turbo Ice – iced coffee with a shot of espresso – as a freshly made alternative to Red Bull and other energy drinks. The broader mission is to improve the image of Dunkin's coffee. The December Consumer Reports rated Dunkin's ground coffee a "Best Buy," and far higher than Starbucks', which it found "burnt and bitter."|
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