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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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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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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**
Click here for available templates
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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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:
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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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Master Production Schedule (MPS)

11/14/2016

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The Master Production Schedule (MPS) is best defined by The Apics Dictionary, which is cited below.
​  A line on the master schedule grid that reflects the anticipated build schedule for those items assigned to the master scheduler.  The master scheduler maintains this schedule and material requirements planning.  It represents what the company plans to produce expressed in specific configurations, quantities and dates.  It is not a sales item forecast that represents a statement of demand.  It must take into account the forecast, the production plan and other important considerations such as backlog, availability of material, capacity and any other management policies and goals.

​Ref: Apics 
For more information on MPS contact us!
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Door to Door Value Stream

11/14/2016

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  The door to door value stream refers to a value stream map or value stream process of internal operations/activities as they pertain to an organization.  The door to door value stream stretches from the very first process step to the last activity within the organization.

​Example: 
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  Organizations will generally start their lean journey or identification process from the door to door level.  This is because the organization has more influence on internal activities than they do at any other level of the value stream.

Question:
  What is the very first step within your organization?  What is the very last step within your organization?

**Place answers in the comments tab**
For more Info. on assessing your VSM visit here.
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Enterprise Resource Planning (ERP)

11/14/2016

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  Enterprise resource planning (ERP) is a software that gives organizations to define, standardize and manage business processes.  ERP is used to support planning and control of information throughout an organization so that they can use internal knowledge to achieve external advantage.  ERP systems track resources such as: Cash, materials, capacity, orders, purchase orders and payroll.

Examples of ERP Systems:
  1. SAP
  2. Oracle
  3. Epicor
  4. Sage

  For more information on ERP systems check out the book ERP, by: MHE.  Apics is another organization that provides extensive knowledge in materials management and supply chain management.  You can visit their website here:  Apics

​
  **For more information on streamlining and optimizing your erp system message us below.**
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Pull System

11/14/2016

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  A pull system is a technique used to produce only what has a demand attached to it.  Pull systems are also used to replace inventory items or information which may have been taken to fulfill a demand.  Pull systems use triggers to notify individuals when a demand or a need has been generated for the part or service.  

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Dashboard

11/14/2016

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  Dashboards allow the appropriate party to see at a glance, Key Performance Indicators (KPI's).  

Examples of Dashboards:
  1. Speedometer
  2. Website dashboards
  3. Analytics

Qualities of a good dashboard:
  1. Easy to understand and provides simple communication.
  2. To the Point.
  3. Data is relevant and useful.
  4. Visual.

  For more information on Dashboards visit our recommended reading:  The Balanced Scorecard: Translating Strategy into Action, by Robert S. Kaplan and David P. Norton.
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Secondary Metrics

11/11/2016

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  Secondary Metrics are the additional metrics are the additional measurements established to help interpret the results of the primary metrics.  Secondary metrics are often described as circumstantial evidence, despite this common reference, secondary metrics ensure that problems do not just change forms or move from one place to another.

Example

  If you were attempting to reduce a cycle time on a service orientated project your cycle time reduction would be the primary metric.  But the secondary metric may be customer service or employee satisfaction.
Learn More about Metrics Online Today!
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Actuals

11/11/2016

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  Actual measurements are the measurements as they exist in fact.  They are real measurements that are accompanied by objective evidence.

Example
  Samantha went to the store to buy Michelle her favorite popsicles while she was sick.  Michelle asked Samantha how much money she would need.  Samantha answered "about $5.00."  After Samantha went to the store, Michelle asked for the change and the receipt.  The receipt showed the popsicles were $3.50 and the change was $1.50.

  What two amounts are considered "actual" amounts?  **Place answers in comments below** 
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Forecast

11/10/2016

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  A forecast is a prediction of something to come or in the future.  A forecast would take place before any type of action or activity happens.  Forecasts are almost always wrong but they can be used to define a hope-for, goal, target or condition that you believe is attainable based on analysis and assessment.

Examples of Forecast

1. Educated Guessing
​2. Estimating
3. Forethought
4. Foretelling

  For further learning on forecasting techniques the book entitled Forecasting Methods and Applications gives good insight.
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Estimate

11/10/2016

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  An estimate is defined as an approximate judgement, calculation or opinion regarding time, size, weight, worth etc.  A good source to read about project estimating is the book titled project estimating and cost management.
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Project Budget

11/10/2016

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  A project budget is a comprehensive assessment or estimate of all costs related to a project.  The project budget is more detailed than a high-level budget that may have been developed in the initial stages of project development. 

What is included in a project budget?

1. Labor or manpower costs.
2. Material costs.
3. Direct costs such as training
4. Equipment costs including ongoing equipment fees.
5. Overhang and consulting fees
6. Project reserves or contingency planning
7. Subcontracting costs or vendor fees.      

  There may be other costs unique to your project.  Keep in mind the project budget is your best estimate of how much the project will cost and ultimately determine the initial cost to benefit analysis for sponsorships decision.    
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Strategic Planning

11/10/2016

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 Strategic planning is the process of developing a strategic plan.  The strategic planning process is used to prioritize, focus, strengthen and ensure everyone is aligned towards a common goal.  The disciplined activity of strategic planning produces actions and decisions that help form, shape and guide how the organization is defined, who it serves and what the organization's purpose is.

General Steps of Strategic Planning

1. Analyze and or assessment of where the organization currently stands.
2. High level forming and framework
3. Execution
4. Evaluation

  Hoshin Kanri is one type of strategic planning.
developing your strategy visit the ©VISION!
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Control Phase

11/9/2016

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  The control phase is the final stage of the DMAIC methodology.  It ensures that the improvements made continue to work and meet the requirements of the customer.  The control phase all documents are finalized and monitoring plans are put into place along with response plans in order to ensure that everyone knows what to do if a process falls out of control.
Learn more about the DMAIC method Online!
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Control Plan

11/8/2016

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Control Plan
  The control plan is a tool used in the control phase of the DMAIC method. The tool is used for documenting the functional elements of quality control that are to be implemented in order to ensure that quality standards are met for a particular product, process, project or service. The intent of the control plan is to formalize and document the system of control that will be utilized in such a way that everyone can understand, while minimizing and controlling variation in the process, product or service.
Click here to download your template!
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Cost of Poor Quality

11/8/2016

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  The cost of poor quality are the costs associated with providing poor quality products or services either internally or externally.  There are four categories that costs can be placed in: Internal Failure costs, External Failure Costs, Appraisal Costs and Prevention Costs.  Read more in our recent post on The Cost of Poor Quality.

Understanding the cost of poor quality:

  The iceberg is a great representation to use when understanding the cost of poor quality.  The visible portion of the iceberg is often depicted as the visible costs associated with poor quality, such as:
  1. Repairs
  2. Rework
  3. Rejections
  Then there is the part of the iceberg we do not always see.  These are the less visible or less obvious costs associated with poor quality which are often referred to as, the hidden factory.  Some examples of these types of costs are:
  1. Lost sales
  2. Late delivery
  3. Long Lead/Cycle times
  4. Long setup/changeover times
  5. Muda

Discussion Opportunities (Comment Below Please)
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Metrics

11/8/2016

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  Business Metrics are a system for collecting, measuring and benchmarking a measure to an established standard or a specific objective for a department, operation, product, service, business, organization etc. A good performance metric will establish criteria, a standard or desired level of performance and a measurement.  One of the greatest books on Metrics is; Metrics, how to improve key business results.
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Line Haul Costs

11/8/2016

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Line Haul Costs
  Line haul costs are the basic costs of carrier operation.  This includes driver's wages, wear and tear or usage depreciation of the vehicle and any costs associated moving containers or materials.  The costs often vary or change based on mileage, distance shipped and the amount of weight that is carried.  Click on the link below to download a free line haul cost template for your organization.
Click here to download your template!
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Product Family 

11/8/2016

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Product Family
  A product family are products which pass through similar processing steps and share common equipment prior to leaving your company (shipping to customer).  In general product families share about 80% or more processing steps or equipment.  The significance of the "product family" as it relates to lean or six sigma is that the value streams of our organizations are in some way related to a product/service, when we group them into product/service families we are then able to see which product/services share the same processes and which value stream will be the greatest improvement opportunity for the organization.  
Learn more online!
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Hidden Factory

11/7/2016

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  The "hidden factory" is the set of activities in a process or value stream that result in the reduction of quality or velocity of a business process.  The reference to hidden insinuates that the process is not known to individuals who might be seeking to improve the process.  

Examples of the Hidden Factory Concept

1. Rework
2. Muda
3. Workarounds
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