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Risk Costs

12/29/2022

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Risk Costs
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​  One element of holding costs is risk.  Risk costs are the risk that is assumed when inventory is acquired.  In addition to this risk costs refer to loss of inventory value.  This is often referred to as the shrinkage that occurs within inventory.

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Red Tagging

8/15/2022

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Red Tag
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  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. 

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Raw Material

12/16/2021

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  A raw material is any purchased, supplied or extracted item that will eventually be transformed via a manufacturing or transformative process.  The raw material or materials are generally converted into components or a finished product.  

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Reduce Methodology

5/3/2021

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REDUCE Methodology
  The reduce methodology is a more detailed method of performing quick changeover or setup improvements.  REDUCE is based on the SMED System which was created by Shigeo Shingo.

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RPN Number

4/5/2021

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  The RPN or Risk Priority Number is a quantitative assessment of risk that is assigned to a process or product function as part of a failure modes & effects analysis.  Individuals or teams assign the RPN based on an established criteria measuring the severity of impact, frequency of occurrence and the likelihood of detection.

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Revision

10/14/2020

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Revision
  A revision is a number, letter or other identifier that shows the current level of the part drawing.  revision levels show the number of times a part or drawing has been changed.

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Root Cause

10/7/2020

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Root Cause Analysis
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   A root cause is the beginning or initiating cause of either a condition or a chain that leads to an outcome or effect.  The root cause analysis is often referred to as a weed, if we don’t get to the root and remove the root, the weed will grow back again.  A root cause analysis digs below the surface or the effect in order to discover the initial cause of the effect.  Often times a root cause analysis will travel through levels of causation as it digs towards the root cause. ​

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RunTime

4/27/2020

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​RunTime is the time needed or required to process an item.  It is part of the actual operations time and usually is defined or specified inside of the routing.  The runtime is dependent on the volume or the qty of parts that you are producing.

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R-Bar Chart

10/24/2019

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Control Chart
  The R-Bar chart is another control chart which is used to monitor control of a "range".  The R-Bar control chart tracks the difference between the maximum and minimum values in a subgroup. 

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RACI Matrix

10/23/2018

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RACI Matrix
Download a RACI Matrix by clicking on the photo.
  The RACI matrix is a matrix/tool that is used to track and increase accountability within a project.  RACI stands for Responsible, Accountable, Consult and Informed.  The model is used to organize and clarify projects by listing action items and the responsible individuals.
DOWNLOAD A RACI TEMPLATE
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Regression Analysis

6/13/2018

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Regression Analysis
Photo Credit: BMJ Journals, Practical Neurology.
  Regression analysis is a technique that can help us understand the relationship between two variables.  

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Reverse Logistics

6/7/2018

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Reverse Logistics
  Have you ever had to return a product?  Chances are you have.  Reverse logistics is the supply chain concept that your returns follow.  Rather than following a normal supply chain flow the reverse logistics supply chain focuses on improving the reverse flow.  The focus of the reverse supply chain is to support customer returns, repair of damaged items, remake or remanufacturing of designs that might not meet the customers expectations and recycling materials.  The reverse supply chain can in fact be designed in such a way that it operates at a profit, recovers costs and best of all creates loyal customers. 

Challenge

  In the comments section below share some ideas that you have that might help returns be a better experience for customers.

Reference: What is reverse supply chain? and Principles of Supply Chain Management.
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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
Click here to download a free infographic.
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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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Rolled Throughput Yield

11/7/2016

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Picture
  A rolled throughput yield is a percent that measures the probability that a unit can "roll through"  a process without defects.  The rolled throughput is calculated by determining the throughput yield (first pass yield, first time yield) of each process step and then multiplying those throughput yields (first pass yield, first time yield) by each other in order to obtain the cumulative or "rolling" throughput yield.  This measure takes into account rework and scrap providing an organization with a more accurate assessment of internal waste and or hidden costs.  
Download a Yield Calculator for RTY Here.
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Routing (Product/Service)

9/1/2016

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Picture
  Production routings, routings and or service routings is information that specifies the steps or methods that are used to manufacture a product or complete a service. 

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