Book description
Implement demand driven smart metrics to drive and sustain dramatic gains in flow and improve ROI performance
What if the objective of minimizing unit product cost that is hard coded into all reporting and measurement systems is simply "bad math" that drives decisions and actions that destroy ROI?
In today's volatile, globally competitive environment, new decision-making tools are required to monitor, measure, and improve total organizational performance. Adherence to "old" operational rules, tools, and behaviors is killing competitiveness in most enterprises. A fundamental shift is required. Cowritten by internationally recognized experts in the field, Demand Driven Performance explains why current measurement forms must be replaced. The authors present a demand driven blueprint and the smart metrics to maximize flow and ROI.
"The methods described in this book worked in one of the most complex manufacturing operations that you can imagine with very effective results." -- From the Foreword by Dan Eckermann, former President and CEO, LeTourneau Technologies, Inc.
THIS PRACTICAL, TIMELY GUIDE OFFERS:
- The case against conventional unitcost-focused metrics, and proof of their negative effects
- The new rules needed to succeed in the complex and volatile global demand and supply landscape
- Historical perspectives on flow, cost, and rise and demise of management accounting
- The evolution of flow and ROI as strategy
- A case study--the Boeing Dreamliner
- Instructions on how to design and implement a demand driven information system
- The smart metrics required to sustain and drive improvements in demand driven operating models
Table of contents
- Cover
- Title Page
- Copyright Page
- About the Authors
- Contents
- Foreword
- Preface
- Acknowledgments
- Introduction: Deep Truth
- Chapter 1: The Need to Get Smarter
- Chapter 2: Install Thoughtware in the Organization
-
Chapter 3: Becoming Demand Driven
- Push and Promote to Position and Pull
- Accepting the Changes Inherent in the New Normal
- Embracing Flow and Its Implications
- Designing the Demand Driven Operating Model
- A Decoupling and Control Point Example
- Protecting Decoupling and Control Points
- Bringing the Demand Driven Model to the Organization
- Operating and Sustaining the Demand Driven Model
- Chapter 4: Introducing Smarter Metrics
- Chapter 5: How Do We Know What’s True?
- Chapter 6: Efficiency, Flow, and the Right Measures
- Chapter 7: Our Current Accounting Measuring Mess
-
Chapter 8: The Evolution of Flow and ROI as Strategy
- The Birth of Product Costing
- The Birth of Decentralized Management
- An Accelerant—Andrew Carnegie
- The Rise of Wholesale Distribution and Large-Scale Retail
- The Birth of Conglomerates and Management Accounting
- Automation and the Death of the Craftsman
- Ford versus General Motors—A Lesson of Relevancy
- How Did GM Beat Ford?
- The Birth of Push and Promote
- Systemizing the Management of ROI
- The Emphasis on GAAP and the Rise of Unfocused Improvement and Outsourcing
- Chapter 9: A Case Study—The Boeing Dreamliner
-
Chapter 10: Complexity Science and Supply Chains
- The Newtonian Way
- The Push beyond Newton
- Complexity
- Chaos and Complexity Theory Maturation
- Supply Chains as Complex Adaptive Systems
- The Move beyond Complexity Theory—Complex Adaptive Systems (CAS)
- A Complex Adaptive System Example—Company Normal
- A Reference Example for Complex Adaptive Systems
- Connections and Interactions in Nonlinear Systems
- CAS and the Demand Driven Operating Model
- Summary
- Conclusion
-
Chapter 11: Smart Metrics
- Managing in a Pareto World Calls for New Thinking
- The Power of Pareto and Strategic Buffers
- Stock Buffers, Pareto Analysis, and Smart Metric Objectives
- The Purpose and Size of Each Strategic Stock Buffer Zone
- Strategic Stock Focused Improvements
- Flow Indexes
- Capacity Buffers, Pareto Analysis, and Smart Metric Objectives
- Our Reference Environment
- The System and Paretian View of Resource Capacity
- The Implications of the Sales and Operating Plan for Strategic Capacity Investment
- Cost, Volume, Profit Relevant Range Is Defined by the Scarce Capacity Resource
- Allocating Scarce Capacity to the Market Based on Strategic Contribution
- Prioritizing the Product Mix by Throughput Dollar Rate Changes the CVP Graph
- Calculating the Value of Finding More Lathe Capacity
- Relevant Information for Strategic Outsourcing
- The Case for Acquiring Internal Lathe Capacity
- A Summary of the Financial and Nonfinancial Factors of Outsourcing or Capital Investment
- The Third Alternative—Using Smart Metrics to Find Capacity
- Summary on Strategic Investments in Capacity and Stock
- The Scheduling Implications of Stock Buffers
- Stock Buffers’ Role in Execution
- Control Points and Resource Scheduling
- Time Buffers and Reliable Schedule Execution
- Time Buffers as the Execution Feedback Loop for Manufacturing
- Time Buffers Require Ten Zones
- Time Buffers During Work Order Execution
- Minimizing Control Point Disruption
- Schedule Execution Coherence and Priority Alignment
- Assigning Roles and Responsibilities
- Larger, More Complex, Multisite System Control Requirements
-
The Cheat Sheet for a Demand Driven Performance System
- Ask and Answer Five Key Questions Hourly, Daily, Weekly, and Monthly
- Ensure the Five Critical Data Capture Points to Provide the Smart Metric Answers are Timely
- Plan an Executable Schedule Focused on System Flow and the Market Lead-Time Strategy
- Expect Reliability, Stability, and Speed
- Remove Cost-Centric Competing Measures
- Chapter 12: Summary
- Appendix A: More on the Strategic Replenishment Buffers of Demand Driven MRP (DDMRP)
- Index
Product information
- Title: Demand Driven Performance
- Author(s):
- Release date: October 2013
- Publisher(s): McGraw-Hill
- ISBN: 9780071796101
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