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Copyright © 2005 Metrilogics, LLC. All rights reserved.
Robust Production Management
Metrilogics
Front-line controls for bottom-line savings.
TM
SM
Module 12:
Selecting Viable Project Candidates
By Lance Latham
Senior Managing Partner
Copyright © 2005 Metrilogics, LLC. All rights reserved.
Metrilogics
TM
Business 101 Revisited
The primary goal of any for-profit business is to...
This is accomplished by:
maximize profit.
Operating
Cost
$Dollars$
Profit
Operating
Cost
Before After
Profit
Revenue v Increasing
revenue
v Reducing
operating costs
2
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/robust-production-management-rpm-module-12-selecting-viable-project-candidates-470
Copyright © 2005 Metrilogics, LLC. All rights reserved.
Metrilogics
TM
Project Candidates That Reduce Operating Costs (cont.)
Cost Categories Profit-Building Project Candidates
That Deliver Cost Saving Results
• Reduce production scrap
• Reduce regulatory fees
• Link team member incentives to improvements in performance (quality + productivity)
• Optimize office & warehouse space
• Schedule system & equipment maintenance to occur during non-production times
• Optimize team productivity
• Establish challenging & achievable performance standards for individual team members
• Negotiate & establish vendor price discounts
• Optimize economic re-order points
Salaries /
Benefits
Energy / Utilities
Facilities
Equipment
Materials
Taxes / Regulatory • Reduce regulatory fines
• Minimize changeover & set-up durations
• Modify work station layout to facilitate work flow
• Establish method to bill back vendors for low-quality materials received
• Negotiate & establish vendor price discounts• Identify & eliminate energy waste
• Minimize overtime costs
• Reduce taxes
• Maximize first-pass process output quality & accuracy
5
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/robust-production-management-rpm-module-12-selecting-viable-project-candidates-470
Copyright © 2005 Metrilogics, LLC. All rights reserved.
Metrilogics
TM
Module 12 Summary
v The primary mission of any for-profit business is to maximize profit.
v Profit is maximized through a combination of increasing revenue and
reducing operating costs.
v Projects should only be embarked upon if they will result in the
realization of tangible, bottom-line benefits upon their conclusion.
v Operating costs for most for-profit companies can be broken out into
6 major categories, with Salaries / Benefits representing the largest
share (≈ 45%) of a given company’s annual total.
v Projects that result in revenue growth can take a variety of forms,
beyond simply finding ways to “…sell more product!”
v In practice profitability will be driven first through cost reduction
projects (in the short term), but will then increase through revenue
growth initiatives (in the intermediate and long terms).
8
This document is a partial preview. Full document download can be found on Flevy:
http://flevy.com/browse/document/robust-production-management-rpm-module-12-selecting-viable-project-candidates-470
1
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recreating the same foundational business
documents. Our vision is for Flevy to
become a comprehensive knowledge base
of business documents. All organizations,
from startups to large enterprises, can use
Flevy— whether it's to jumpstart projects, to
find reference or comparison materials, or
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Robust Production Management (RPM) Module 12: Selecting Viable Project Candidates

  • 1. Copyright © 2005 Metrilogics, LLC. All rights reserved. Robust Production Management Metrilogics Front-line controls for bottom-line savings. TM SM Module 12: Selecting Viable Project Candidates By Lance Latham Senior Managing Partner
  • 2. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Business 101 Revisited The primary goal of any for-profit business is to... This is accomplished by: maximize profit. Operating Cost $Dollars$ Profit Operating Cost Before After Profit Revenue v Increasing revenue v Reducing operating costs 2 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/robust-production-management-rpm-module-12-selecting-viable-project-candidates-470
  • 3. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Project Candidates That Reduce Operating Costs (cont.) Cost Categories Profit-Building Project Candidates That Deliver Cost Saving Results • Reduce production scrap • Reduce regulatory fees • Link team member incentives to improvements in performance (quality + productivity) • Optimize office & warehouse space • Schedule system & equipment maintenance to occur during non-production times • Optimize team productivity • Establish challenging & achievable performance standards for individual team members • Negotiate & establish vendor price discounts • Optimize economic re-order points Salaries / Benefits Energy / Utilities Facilities Equipment Materials Taxes / Regulatory • Reduce regulatory fines • Minimize changeover & set-up durations • Modify work station layout to facilitate work flow • Establish method to bill back vendors for low-quality materials received • Negotiate & establish vendor price discounts• Identify & eliminate energy waste • Minimize overtime costs • Reduce taxes • Maximize first-pass process output quality & accuracy 5 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/robust-production-management-rpm-module-12-selecting-viable-project-candidates-470
  • 4. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Module 12 Summary v The primary mission of any for-profit business is to maximize profit. v Profit is maximized through a combination of increasing revenue and reducing operating costs. v Projects should only be embarked upon if they will result in the realization of tangible, bottom-line benefits upon their conclusion. v Operating costs for most for-profit companies can be broken out into 6 major categories, with Salaries / Benefits representing the largest share (≈ 45%) of a given company’s annual total. v Projects that result in revenue growth can take a variety of forms, beyond simply finding ways to “…sell more product!” v In practice profitability will be driven first through cost reduction projects (in the short term), but will then increase through revenue growth initiatives (in the intermediate and long terms). 8 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/robust-production-management-rpm-module-12-selecting-viable-project-candidates-470
  • 5. 1 Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com