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Business Case

11/30/2016

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The business case is a high level statement which is used to convince upper management, executives, stakeholders and often times sponsors of a specific improvement opportunity.  It is the heart of a project charter and all other elements of the charter should be in support of your business case.  Generally your business case will define how the customer or the organization is being impacted in terms of quality, cost or scheduling at a minimum.  It is important to note the case may be negative impacts or it could be opportunity based.  The business case will then identify the benefits and or the risks of either moving forward with a project or initiative or not moving forward.  The  final absolutely critical quality of a strong business case is that it aligns and supports the company's strategic direction while helping to fulfill the mission and supporting the values of the business.
Learn more about charters online!
Business Case
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Inventory Turnover

11/28/2016

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  Inventory Turnover is the number of times your inventory cycles or turns over in a year.  Inventory turnover can help an organization understand how efficiently their inventory is supporting sales.  The inventory turnover number implies how often inventory was bought and sold throughout the year.  Low inventory turnover numbers often hint at overstocking, obsolescence or unstable processes.   A high inventory turnover can also be dangerous if it is depleting reserves to quickly.

How to calculate:
  Inventory turnover is calculated by dividing the cost of goods sold by the average amount of inventory.


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Return on Investment (ROI)

11/27/2016

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  The return on investment is a relative measure used to show either the "gain" or the "loss" that occurs on an investment in relation to the amount of money invested.


Why is it used?

  The ROI is generally used because it is a very flexible measurement.  The return on investment can be used to show cost to benefit which allows users to make better investment decisions.

How is it Calculated?

  ROI is generally shown as a percentage and is calculated as shown below:

ROI = (net profit/Cost of investment) x 100.

  To use the ROI for cost to benefit analysis the formula is shown below:
Cost to Benefit ROI
  This formula will show you the net value created from the investment.

​**Template available for download here**
Return On Investment
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Red Tagging

11/25/2016

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Red Tag
  Red tags are a visual tool that is used during the sorting phase of a 5S initiative.  In the sorting phase of 5S, items are either gotten rid of, kept or placed in a red tag auction area.  The red tag is used for items that are either gotten rid of or placed in auction.  Please note we suggest if a clear decision has been made to "get rid" of the item, just get rid of it.  

General process of red tagging items:
  1. Identify items that team members can not classify as keep or get rid of.
  2. Fill out the 5S red tag.
  3. Log items in a red tag register.
  4. Move to holding area for auction.
  5. Review items in auction area.
Learn more about 5S Online!
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Best Practice

11/25/2016

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Best Practices
  ​Best Practices are a technique used in benchmarking.  The technique measures similar items, activities or services and is used as a measurement or performance standard.  Defining best practices is often used in continuous improvement to set new standards or improve on current practices.
For benchmarking opportunities please message our team here!
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Return on Assets (ROA)

11/24/2016

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  Return on assets (ROA) is one way we can tell how profitable our company is relative to the total assets.  The ROA provides insight as to how well assets are being used to generate earnings.

How to Calculate?
  • ROA = Net Income / Total Assets

**Template available for download**
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Return on Assets (ROA)
Download a template for calculating ROA here.
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Hard Savings

11/23/2016

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  Hard Savings are the tangible and identifiable savings as opposed to that realized from not spending.  If we look at hard savings from a project perspective it can be defined as those savings that allow the organization, team or department to do "more" or the "same" amount of work with the same or less resource use.  

Examples of Hard Savings:
  1. Reduced cost of operations.
  2. Reduced cost of production related to units.
  3. Reduced overhead.
  4. Increased revenue with same resources.

Question:  What is one other type of hard savings that you can think of?  Have you ever had to document hard savings?

**Place answers in the comments tab.**
For more information on Savings Enroll Online!
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Soft Savings

11/22/2016

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  Soft savings are the intangible benefits that result from projects or initiatives.  Soft savings are much harder to quantify than hard savings.  

Examples of soft savings:
  1. Improved customer satisfaction
  2. Improved employee morale
  3. Reduced cash flow
  4. Reduced need for working capital.

Note:

  Soft savings can often be made harder.  While the savings are hard to quantify soft savings can often add up and if all the dots are connected correctly and your audience can understand, they sometimes can be as valuable as hard savings.
For more information on savings enroll online!
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Baseline

11/21/2016

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  A baseline refers to a measurement that establishes a basis for other future state measures.  The baseline is usually the initial set of measurements, observations or data collected which is used for a comparison or a benchmark for improvements.  It is sometimes referred to as as a current state.

Example:

  Susan needed to be able to type 90 words per minute to qualify for the job she wanted.  In order for her to see where she was at currently her husband established a baseline measurement by having her type as many words as she could in one minute.  Susans average score was 94 words per minute.

Question:
  
  Tim was tasked with improving the cycle time of the shops ID and Pack process.  His goal was to improve the time by 2 minutes which would make the new cycle time 3 minutes from the baseline.  
    Select Tim's baseline measurement below.
Submit
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Supplier

11/15/2016

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  A supplier is any party that provides or supplies goods or services.  Suppliers can be both internal, meaning that the supplier is upstream of your process step or external like in the case of a contractor, subcontractor or vendor.  Suppliers provide specialized inputs or deliverables to downstream process steps.

Example:
Picture
Question:

  John makes valve covers and passes them onto Bill who then polishes the valve covers.  Bill then sends the valve covers to Martha who packages the valve covers and ships them from Valves Made Easy to Valve's R' Us.  Who are the Internal Suppliers in this process and who is the External Supplier in the Process?

**Place answers in the Comments Box Below**

Learn more about Suppliers Online!
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