Brainstorming and Cost Improvement
The brainstorming technique is attributed to Alex Faickney Osborne as explained in his 1953 book, Applied Imagination. The technique arose from frustration with the inability of employees to develop creative solutions for problems. Personal experience suggests this is a valuable tool when deployed appropriately and the guidelines are followed. If we populate the team with diverse backgrounds we can see ideas build on other ideas very rapidly.
To really find the areas for cost improvement we must let go of our mental impediments to uncovering these opportunities. It is very probable that there are plenty of cost improvement possibilities. However, in our daily work execution we may not find the time to free our minds to consider these possibilities. A brainstorming exercise can go far to fuel the imagination, to open a “space” to think laterally at what may be possible. We have successfully employed this technique to:
Reduce costs Generate intellectual property Reduce weight for … Continue reading
To really find the areas for cost improvement we must let go of our mental impediments to uncovering these opportunities. It is very probable that there are plenty of cost improvement possibilities. However, in our daily work execution we may not find the time to free our minds to consider these possibilities. A brainstorming exercise can go far to fuel the imagination, to open a “space” to think laterally at what may be possible. We have successfully employed this technique to: Continue reading
Below is an excerpt from our book Pries, K., & Quigley, J. (2013). Classical Techniques. In Reducing process costs with lean, six sigma, and value engineering techniques (pp. 135-138). Boca Raton, FL: CRC Press.
This is the second part, part one is located here.
Miles also identified the concept of basic and secondary functions. Basic functions are the fundamental reason the customer is willing to buy the product or service. The basic function of an automobile is to transport the customer. The basic function of a shoe is to “protect foot.” Secondary functions are those functions for which the designer has the flexibility to find an effective solution. A secondary function supports the basic function. Miles discovered that secondary functions are often a huge component of the total cost of the product.
A simple plan for proceeding through the Miles approach is as follows:
1. Separate the functions (we can use a spreadsheet format to capture our preliminary ideas). … Continue reading
Below is an excerpt from our book Pries, K., & Quigley, J. (2013). Classical Techniques. In Reducing process costs with lean, six sigma, and value engineering techniques (pp. 133-135). Boca Raton, FL: CRC Press.
FAST is an acronym for functional analysis system technique. FAST allows us to reduce ambiguity in the definition of a functional product or a functional process (and probably fro some dysfunctional one also!). Value of a product is interpreted differently by different customers. Characteristics that are common to value are high level of performance, capability, emotional appeal, and style relative to its cost (see figure below). Value is generally expressed in terms of maximizing the function of a product relative to its cost:
Value = (Performance + Capability) / Cost
Value = Function / Cost
Value is not minimizing cost. Though, for some cases, we can influence the value of a product by increasing its function (performance or capability) and cost as long … Continue reading
We see some company responses to economic downturn are to eliminate staff as if that were the only way to become a viable company once again. We wonder if these companies have some cost improvement methodology behind them that would give their management other options than summarily removal of personnel. Continue reading
A cost reduction as we have already defined it in a previous blog results in an improvement against budget. A plethora of cost reductions can result in a significant reduction in overhead, which is increases the margin of every product in the building. Cost reductions immediately affect the bottom line.
Cost reduction work has the added benefit of also getting our employees invested in their own company—they become partially responsible for the success of the firm. We suggest that any implemented cost reduction be rewarded with some small token and be celebrated publicly.
Profit improvements also affect margin, although sometimes only for this accounting period. No matter: we are still improving the situation of the firm and enhancing our ability to compete. If we have sufficient capital accumulation we do not need bankers’ covenants and other impedimenta of the financial world. We are not obligated to somebody who holds part of our destiny!
Publicly held firms can also distribute dividends, … Continue reading
When working for a company that takes cost reductions seriously, we can expect to see some categories repeated. Let’s take a look at these and what they are:
Cost reduction: we spend less on a line item than our budget Cost avoidance: we choose to spend and then decide not to (often occurs with capital expenses) Profit improvement: we sell something One shot sale of surplus equipment Regular “garage” sales Myth: floor space, for example. Floor space is only significant in terms of cost savings if we shut down utilities to a closed area or we rent or sell the space.
Our accounting department prefer true cost reductions followed by profit improvements (make sure we don’t distort depreciation!). Cost avoidances are generally not considered to be savings, even when they appear in a capital budget. However, we suggest that validated cost avoidances are a sign of good stewardship—sometimes our needs change between the time we specify the capital expense and … Continue reading
The Seven Circles approach (De la Maza, Michael. Rapid Chess Improvement, 2002) uses a repetitive approach to developing automaticity in chess strategy. For those in the automotive world, it resembles a layered process audit somewhat. It requires different levels, different speeds, exercises, and more. We suggest this approach is a good way to intensively educate ourselves in just about anything we choose to study.
We can also use this approach (64 days, 32 days, 16 days, 8 days, 4 days, 2 days, 1 day) to perform audits, quality checks, and so on. Indeed, we can also turn the sequence around and go from very short periods to longer periods to verify sustainability of a process change.
A Web check of the Seven Circles method will find some evidence of controversy, at least part of which is attributable to the high level of intensity required to move our chess scores from dismal to expert or master. Hence, before using a method … Continue reading
The real kaizen is all about the 10,000 things. Maasaki Imai’s description of relentless, creeping quality improvement is apt. It also fits with the comprehensive philosophy of total quality management (TQM). We say “real” kaizen because we have so-called kaizen events that have nothing to do with inexorable cultural change and a whole to do with flash and get-it-done-now sudden transformation. We question the sustainable results of kaizen blitz (mixed metaphor there in two languages).
Kaizen can start anywhere, including person effects in our own offices. We can declutter, simplify, throw away, and pass on materials that don’t seem so useful anymore. Do they really help us think with enhanced clarity or does all the junk simply provide more chances for distraction? One of the great Taoist examples is the power of water as it erodes rock over eons—the soft cutting the hard.
Cultural change is difficult and implementing kaizen patiently is also difficult. We need to hold ourselves to … Continue reading
The sooner you move away from project management activities based upon hope, the sooner your organization makes a recovery to the efficient enterprise you desire.
I have noticed a rash of project schedules wherein each task lays end to end as if the prediction of the; task start, progress, and completion times are known without question. When asked how the project team arrives at the schedule, invariably the tasks must fit like this to make the delivery date. Asking what information they have to support the duration estimates, for example, historical record, no one can provide any such information. This method of project management delays disappointment and ultimately is not a recipe for continued success.
Use what you learn as you execute the individual activities within the project. Learn of the possible duration from the previous work history. If you do not have the history because this is a new activity there are other solutions to the “fixed date debacle” … Continue reading