Franklin

Demand driven performance : using smart metrics / Debra Smith, Chad Smith.

Author/Creator:
Smith, Debra, 1954- author.
Publication:
New York : McGraw-Hill Education, [2014]
Format/Description:
Book
1 online resource (1 volume) : illustrations
Edition:
1st edition
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Subjects:
Production management -- Statistical methods.
Industrial management -- Statistical methods.
Performance.
Costs, Industrial.
System theory.
Form/Genre:
Electronic books.
System Details:
text file
Summary:
Implement demand driven smart metrics to drive and sustain dramatic gains in flow and improve ROI performance What if the objective of minimizing unit product cost that is hard coded into all reporting and measurement systems is simply "bad math" that drives decisions and actions that destroy ROI? In today's volatile, globally competitive environment, new decision-making tools are required to monitor, measure, and improve total organizational performance. Adherence to "old" operational rules, tools, and behaviors is killing competitiveness in most enterprises. A fundamental shift is required. Cowritten by internationally recognized experts in the field, Demand Driven Performance explains why current measurement forms must be replaced. The authors present a demand driven blueprint and the smart metrics to maximize flow and ROI. "The methods described in this book worked in one of the most complex manufacturing operations that you can imagine with very effective results." -- From the Foreword by Dan Eckermann, former President and CEO, LeTourneau Technologies, Inc. THIS PRACTICAL, TIMELY GUIDE OFFERS: The case against conventional unitcost-focused metrics, and proof of their negative effects The new rules needed to succeed in the complex and volatile global demand and supply landscape Historical perspectives on flow, cost, and rise and demise of management accounting The evolution of flow and ROI as strategy A case study--the Boeing Dreamliner Instructions on how to design and implement a demand driven information system The smart metrics required to sustain and drive improvements in demand driven operating models
Contents:
Cover
Title Page
Copyright Page
About the Authors
Contents
Foreword
You Can Do This-a CEO's Perspective
About Dan Eckermann
Preface
About This Collaboration
Acknowledgments
Introduction: Deep Truth
Chapter 1: The Need to Get Smarter
Are We Even Playing by the Right Rules?
Area 1: Planning and Materials Management
Area 2: Costing Systems
Area 1 + Area 2 = Big Problems
The Rise of the New Normal
The Push-and-Promote Problem
The Need for Flow
Variability-Enemy Number One of Flow
The Types of Variability
Demand Variability
Supply Variability
Operational Variability or "Murphy"
Management Variability
Getting Smarter-A Basic Blueprint for Change
Step 1: Install the Right Thoughtware in the Organization
Step 2: Become Demand Driven
Step 3: Deploy Smart Metrics-Rules for the Smarter Way
Chapter 2: Install Thoughtware in the Organization
Can Our Organizations Think Systemically?
Modern Organizations-Conflict Factories
Conflicts and Oscillation
A Short Story about Oscillation
The Real Definition of Waste
Chapter 3: Becoming Demand Driven
Push and Promote to Position and Pull
Accepting the Changes Inherent in the New Normal
Embracing Flow and Its Implications
Designing the Demand Driven Operating Model
Placing Decoupling Points
Placing Control Points
A Decoupling and Control Point Example
Protecting Decoupling and Control Points
Demand Driven Stock Buffers
Demand Driven Time Buffers
Demand Driven Capacity Buffers
Bringing the Demand Driven Model to the Organization
Operating and Sustaining the Demand Driven Model
Chapter 4: Introducing Smarter Metrics
The Search for a Deeper Truth
Quantifying the Performance Gap
Smarter Metrics
Company 1: Oregon Freeze Dry
Company 2: Jamestown Container Company.
The Results
Company 3: LeTourneau Technologies, Inc.
Company 4: M.C. Gill Corporation
Lessons from the Four Companies
Chapter 5: How Do We Know What's True?
The Scientific Method
Monthly Meeting of "Company Normal"
Using Consistent Terminology
What Is a Scientific Fact?
What Is a Theory?
What Is Proof?
What Is Scientific Proof?
Back to the Scientific Method
Unit Cost-Centric Efficiency-A Deep and Universal Truth
Chapter 6: Efficiency, Flow, and the Right Measures
The "Right" Measures
Defining Cost
Chapter 7: Our Current Accounting Measuring Mess
Reason 1: The Proliferation of ERP/MRP II
Reason 2: The Growing Distance between the Front Office and Operations
Reason 3: The Fading Away of Management Accounting
Gap Explanation 1: An Increase in Complexity
Gap Explanation 2: The Shift from Linear to Nonlinear Systems
Silo Thinking
Challenging a Deep Truth by Definition Shakes Up the Status Quo
Chapter 8: The Evolution of Flow and ROI as Strategy
The Birth of Product Costing
The Birth of Decentralized Management
An Accelerant-Andrew Carnegie
The Rise of Wholesale Distribution and Large-Scale Retail
The Birth of Conglomerates and Management Accounting
Automation and the Death of the Craftsman
Ford versus General Motors-A Lesson of Relevancy
How Did GM Beat Ford?
The Birth of Push and Promote
Systemizing the Management of ROI
The Emphasis on GAAP and the Rise of Unfocused Improvement and Outsourcing
Chapter 9: A Case Study-The Boeing Dreamliner
The Boeing Dreamliner
Chapter 10: Complexity Science and Supply Chains
The Newtonian Way
The Push Beyond Newton
Complexity
Chaos and Complexity Theory Maturation
Supply Chains as Complex Adaptive Systems
The Simplicity in Complexity
Understanding Complex Systems.
What Makes a System Complex?
Complex Systems are Nonlinear
The Move beyond Complexity Theory-Complex Adaptive Systems (CASs)
Boundaries
Coherence
The Edge of Chaos
Self-Organization and Emergence
Emergence and Innovation
Self-Balancing Feedback Loops Maintain Stability
Resilience and Rigidity
A Complex Adaptive System Example-Company Normal
Reference Examples for Complex Adaptive Systems
Connections and Interactions in Nonlinear Systems
CAS and the Demand Driven Operating Model
Data Collection and Feedback Loops
Demand Driven and Resiliency versus Rigidity
Summary
Conclusion
Chapter 11: Smart Metrics
Managing in a Pareto World Calls for New Thinking
The Power of Pareto and Strategic Buffers
Stock Buffers, Pareto Analysis, and Smart Metric Objectives
The Purpose and Size of Each Strategic Stock Buffer Zone
Strategic Stock Focused Improvements
Flow Indexes
Capacity Buffers, Pareto Analysis, and Smart Metric Objectives
Our Reference Environment
The System and Paretian View of Resource Capacity
The Implications of the Sales and Operating Plan for Strategic Capacity Investment
Cost, Volume, Profit Relevant Range Is Defined by the Scarce Capacity Resource
Allocating Scarce Capacity to the Market Based on Strategic Contribution
Prioritizing the Product Mix by Throughput Dollar Rate Changes the CVP Graph
Calculating the Value of Finding More Lathe Capacity
Relevant Information for Strategic Outsourcing
The Case for Acquiring Internal Lathe Capacity
A Summary of the Financial and Nonfinancial Factors of Outsourcing or Capital Investment
The Third Alternative-Using Smart Metrics to Find Capacity
Summary on Strategic Investments in Capacity and Stock
The Scheduling Implications of Stock Buffers
Stock Buffers' Role in Execution.
Control Points and Resource Scheduling
Time Buffers and Reliable Schedule Execution
Time Buffers as the Execution Feedback Loop for Manufacturing
Time Buffers Require Ten Zones
Time Buffers During Work Order Execution
Minimizing Control Point Disruption
Schedule Execution Coherence and Priority Alignment
Assigning Roles and Responsibilities
Larger, More Complex, Multisite System Control Requirements
The Cheat Sheet for a Demand Driven Performance System
Ask and Answer Five Key Questions Hourly, Daily, Weekly, and Monthly
Ensure the Five Critical Data Capture Points to Provide the Smart Metric Answers are Timely
Plan an Executable Schedule Focused on System Flow and the Market Lead-Time Strategy
Expect Reliability, Stability, and Speed
Remove Cost-Centric Competing Measures
Chapter 12: Summary
Performance Measurement Built on a New Deep Truth
The Need for Steady Feedback
Focus on Improvement
A Final Thought on Information Technology
Appendix A: More on the Strategic Replenishment Buffers of Demand Driven MRP (DDMRP)
Sizing Buffers
Green Zone
Yellow Zone
Red Zone
Planned Adjustments
Supply Order Generation
Index.
Notes:
Description based on print version record.
Includes index.
Contributor:
Smith, Chad, 1971- author.
ISBN:
0-07-179610-X
OCLC:
988838976