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Robust Production Management (RPM) Module 9: Measuring "Before and After" Savings
 

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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 here:

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-9-measuring-before-and-after-savings-467


So you've completed a process or performance improvement project at work, and now management wants to gauge the financial benefit of the project's "after" state. This was once the challenging, and often daunting, phase of a project - but no more! There are a variety of ways to demonstrate hard-dollar benefits of almost any project, and Robust Production Management (RPM) Module 9: "Measuring 'Before and After' Savings' will show you how. Module 9 is full of examples and templates featuring definite ways to show how your project has "moved the needle" for the organization in a positive direction. "Measuring 'Before and After' Savings" is the ninth module in the Metrilogics RPM management training series - more on the way.

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Robust Production Management (RPM) Module 9: Measuring "Before and After" Savings Presentation Transcript

  • 1. Copyright © 2005 Metrilogics, LLC. All rights reserved. Robust Production Management Metrilogics Front-line controls for bottom-line savings. TM SM Module 9: Measuring “Before and After” Savings By Lance Latham Senior Managing Partner
  • 2. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Importance of Quantifying “Before” and “After” States v Generate initial support for the project among internal sponsors and stakeholders thru a strong cost/benefit analysis business case. v Solidify participation and increase focused engagement among project participants, operations managers and front-line SME’s. v Facilitate evaluation of the project’s progress to objectively answer the question, “Is the project on track to deliver the promised bottom- line results?” For any operational performance improvement initiative, it’s necessary to first quantify the issues and costs surrounding the current state, and the benefits to be achieved in the post-project state. The ability to put numbers to the “before” and “after” operating states will: v Provide a solid foundation for determining cash bonus payouts to project participants at the project’s successful conclusion. 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-9-measuring-andquotbefore-and-afterandquot-savings- 467
  • 3. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Example of Time Studies Before After The “Before” scenario depicts relatively lower task rates and longer task durations than in the “After” scenario, because the “Before” scenario includes both required quality process steps + controllable waste. In the “After” scenario – when the controllable waste is removed – hourly output volume increases by 32%, while corresponding process durations decrease by 24%. 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-9-measuring-andquotbefore-and-afterandquot-savings- 467
  • 4. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Example of Performance Distributions (Productivity) Before After Note that in the post-improvement “After” scenario, the consolidated team (down 33% from 73 team members to 49) is much more productive, with an average Productivity rate of 74.18% (significantly better than the “Before” scenario’s average team Productivity of 49.25%). 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-9-measuring-andquotbefore-and-afterandquot-savings- 467
  • 5. Copyright © 2005 Metrilogics, LLC. All rights reserved. Metrilogics TM Module 9 Summary v To ensure early buy-in, commitment and follow-through on any performance improvement initiative, it’s important to first quantify “Before” operating issues and costs, and track “After” progress and bottom-line benefits. v Each of the tools discussed and depicted in RPM Modules #1 - #8 can be used individually to quantify “Before” and “After” operating states. v When used together, RPM tracking tools can be cross-referenced to reinforce the success of any operational cost savings initiative, and keep project sponsors, operations managers and team members engaged in on-going performance improvement. 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-9-measuring-andquotbefore-and-afterandquot-savings- 467
  • 6. 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