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Robust Production Management (RPM) Module 2: Performance Framework

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This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go …

This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here:
http://flevy.com/browse/business-document/robust-production-management-rpm-module-2-performance-framework-460


Productivity, efficiency, unit costs. So many business performance variables - yet they're ALL directly related to each other, & they're ALL from the top of an organization, down to the person, process & penny. Learn the secrets of an effective performance framework, and how it can help you spot hard-dollar opportunities in your company or for your clients - it's all laid out in Robust Production Management (RPM) Module 2: "Performance Framework." "Performance Framework" is the second module in the Metrilogics RPM management training series - more on the way.

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  • 1. Copyright © 2005 Metrilogics, LLC. All rights reserved. Robust Production Management Metrilogics Front-line controls for bottom-line savings. TM SM Module 2: Performance Framework By Lance Latham Senior Managing Partner
  • 2. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM The Differences Between Direct vs. Indirect Time Direct Time: Paid time dedicated to performing primary or core customer work. Indirect Time: Paid time not dedicated to performing core customer work. Indirect time can include: v Project time v Meetings v System downtime v Classroom training v Sick time v Vacation v Holidaysv Equipment changeovers v Paid breaks v PTO (if paid) v STD (if paid) v LTD (if paid) Direct time is also the time over which front- line team members have the most control (i.e., during direct time, front-line team members can opt to work in a high-quality, productive manner – or not). Indirect time is the time over which managers tend to have the most control (i.e., managers allot, coordinate and schedule indirect time that front-line team members take). 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-2-performance-framework-460
  • 3. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Factoring Earned Work Credit Hours by Quality Earned Work Credit Hours represent “gross” output. When factored by quality (accuracy and completeness), Quality Work Credit and Failed Work Hours are the result. Earned Work Credit = 5.00 Hrs. x Quality score of 90% Failed Work = .50 Hrs. Quality Work Credit = 4.50 Hrs. 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-2-performance-framework-460
  • 4. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Performance Framework: Example of Tracking Hours vs. Percentages vs. Dollars Total Paid Hrs. = 2,100 Paid Time Off = 420 Hours Lost Time = 420 Hours Unearned Time = 378 Hours Quality Work = 777 Hours Failed Work= 105 Hours Total Paid Hrs. = 100% Paid Time Off = 20% Lost Time = 20% Unearned Time = 18% Quality Work = 37% Failed Work= 5% Total Paid Hrs. = $50,000 (Loaded) Paid Time Off = $10,000 Lost Time = $10,000 Unearned Time = $9,000 Quality Work = $18,500 Failed Work= $2,500 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-2-performance-framework-460
  • 5. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Example of Applying the Performance Framework Assume a single team member’s typical 8-hour work day, including a mix of completed primary customer work, direct and indirect time (and costs) incurred… Paid Time Off Lost Time Unearned Time Failed Work Quality Work KEYTotal Paid Hours = 8 8 7 6 5 4 3 2 1 0 #Hours So…did the team member have a “good” day or a “bad” day? 11 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/robust-production-management-rpm-module-2-performance-framework-460
  • 6. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Example of The Real-World Impact of Low Efficiency Total Paid Hours = $50,000 (Loaded) Paid Time Off = $10,000 Lost Time = $10,000 Unearned Time = $9,000 Quality Work = $18,500 Failed Work= $2,500 Quality Work = $18,500 Non-Value Add Cost = $31,500 Total Paid Hours = $50,000 (Loaded) $ Efficiency: = 37% $18,500 $50,000 In this example, 37% efficiency means that a company paid an employee total annual salary + benefits equal to $50,000, but the employee generated only $18,500 of quality value add work. Restated, 63% of what the employee was paid resulted in no revenue- generating output for the company. 14 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/robust-production-management-rpm-module-2-performance-framework-460
  • 7. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Module 2 Summary (cont.) v Operational savings occur when spare capacity is either: o Used in a productive manner without increasing other costs (= cost avoidance scenario), or o Eliminated along with associated costs (= cost savings scenario). v There is a direct real-world connection between a company’s efficiency and the return the company receives on the compensation paid to its employees. In a nutshell, high efficiency = “more bang for the buck.” v Efficiency reflects supervisor and manager performance, based on Quality Work Credit Hours produced vs. the combination of Direct and Indirect Hours that they manage. 17 This document is a partial preview. Full document download can be found on Flevy: http://flevy.com/browse/document/robust-production-management-rpm-module-2-performance-framework-460
  • 8. 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