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.
Time: shift demand for ICDs to reduct peaks:
Arrange schedule to spread demand more evenly
|1||0||2007||Large companies are investing in clean technology to reduce their energy costs and fund new technologies. Honeywell international partnered with several utilities to manufacture and install thermostats which would send messages to customers when prices are high or low.|
|2||2611||1996||Weherhaeuser plans to close several plants for maintenance during this quarter, something it often does when prices fall.|
|3||3357||1990||To stop drain of trained workers during recessions, Corning made a deal with unions: when times get tough, outside contractors will go 1st. Idle Corning workers will clean the factory, manicure the grounds, and paint the halls. The hours will be cut.|
|4||5211||2001||Home Depot introduced a new service program: employees restock at night instead of driving forklifts through aisles while shoppers are around. It is safer and employees now spend 70% of their time with customers and 30% to restock instead of the reverse.|
|5||5311||1994||Tuesday Morning stores are open only 4 times a year for a total of about 30 weeks: mid-Feb/Mar, May/June, mid-August/September and mid-Oct/Nov/Dec, which are considered peak retail selling seasons.|
|6||6300||1986||Geico found that its "insurance counselors" taking phone orders during the graveyard shift had a lot of downtime. Management got them to fill idle time with clerical work.|
|7||6311||1988||By quelling intracompany turf wars, Met Life enabled managers to shift backlogs among processing centers around the country, speeding payments to customers.|
|8||6311||2003||In balancing loads, the company sought to balance work evenly among employees. The company did this by adopting a sequential, rather than an alphabetical method for assigning work so that every team received the same number of applications.|
|9||7832||1994||Regal cinemas generate EOS by "multiplexing"–bunching several screens under one roof. EOS on number of employees needed to run concessions, projectors, etc. Regal cinemas holds down staffing by staggering its starting times so that as few as ten employees can handle the facility.|
|10||8062||2001||A hospital can also reduce variance by applying systematic, policy-oriented methods. It can establish narrower windows of time for physicians' rounds or discharges of patients. A limit on the length of time allowed for cleaning and preparing operating rooms will also reduce variations.|
|11||8062||2001||One hospital saw a large demand for cardiovascular surgery on Fridays which was causing a large bottleneck and costly overtime staffing. Upon further analysis, it was discovered that the lab processed a large number of cases on Wednesday and Thursday because a lot of patients experience heart pain over the weekend and then went to see their doctors on Monday or Tuesday. The hospital was able to move catheterizations to early the following week to spread out demand.|
|12||8062||2007||As the financial and human costs of medical errors become apparent, some hospitals are working to improve their system and reduce costs. Cincinnati Children's changed the way surgeries were scheduled. Previously urgent cases like a broken bone were squeezed in beside surgeries that had been scheduled for months. Surgeons padded the time of their operating slots to compensate for the inevitable delays. To reform the system, two operating rooms were set aside for urgent cases, an additional room was assigned to cases that needed to be done within a week.|
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