Reduce Unique ICDs by Redesigning the Product or the Process

The objective of this activity is to reduce the number of ICDs by reducing the occurrence of an ICD in producing a unit of Output, or by reducing the number of separate ICDs used in the Output. A unique ICD is one of the key activities in the work center's contribution to the final product (O). It is separate and distinct from any other activity in the work center. For example, the fastening of a part onto a subassembly and a quality control check of the subassembly would be unique ICDs.

B. Redesign the process of producing the ICD or Output

Change the process used to produce the ICD or Output to eliminate activities.

Warnings and advice

No.	Industry SIC	Year	Notes
1	0	1986	Authors note disadvantages of per-unit cost-reduction efforts: they deal with each major company function in relative isolation; they don't change the ways in which overhead resources will be managed in the future and thus can't prevent creepback.
2	0	1986	An emphasis on direct labor costs drives behavior toward simplistic goals that represent only a small fraction of total costs while the real costs lie in overhead and purchased materials.
3	0	1992	Drucker: Cutting staffs to cut costs is putting the cart before the horse. The only way to bring costs down is to restructure the work, which will then result in reducing the number of people needed to do the job.
4	0	1996	Author argues that you should approach process innovation as you would product innovation, including experimentation and iterations instead of expecting "big bang" breakthroughs.
5	0	2001	Nonmanufacturing concerns can also greatly benefit from lean manufacturing…especially with labor-intensive businesses. "There's been so much automation and investment in manufacturing that total payroll as a percent of total costs is down to 7-10%. Whereas in the service industry the total payroll as a percent of total cost is 25-30%."
6	0	2003	Productivity leaders focus on improving the productivity of their core business processes because investments in secondary ones yield little return and often complicate the overall business system. Once the leaders determine which processes drive the productivity, they decide where to match and where to lead and then build a competitive edge through continual improvements. Productivity leaders have adopted an integrated, end-to-end approach which includes process innovation and redesign, targeted application of IT, and outsourcing arrangements.
7	0	2003	IT only plays a role in organizational, behavioral, and business process changes. These companies need a commitment from the top to view productivity as a strategic necessity and to realize the company's agreed-upon process priorities.
8	0	2003	The first thing a company must do to improve its productivity is to establish which business processes have the largest impact on the economics of its subsector. Then, the company must find where its performance is lacking in those key processes. The final step is to find the process that the company can utilize to develop innovations that will make it a leader in productivity.
9	0	2004	Customers frequently prefer some channels to others for certain transactions, and specific channel combinations often engender loyalty or create cross selling opportunities.
10	0	2004	Incentives frequently combine a carrot and a stick. The carrot is something that customers value highly and receive only when they use the preferred channel. The stick might be fees or reduced service, both of which work best when they are reasonably opaq and switching costs are embedded in the product or service.
11	0	2004	No matter how good a company's channel migration strategy may be, it can founder if customers think that service is deteriorating or if problems with channel partners and employees emerge.
12	0	2004	Internal communication is vital as well. Often, the migration of customers to new channels forces companies to redeploy personnel, redefine roles, and realign incentives.
13	0	2004	Since customers jump between channels as they move through the purchase process, companies can guide them effectively only by understanding economics of each channel at every stage of sales and service. To learn this companies must have transaction-level cost and revenue figures or, if data are hard to find, estimates.
14	3600	1990	At Emerson, cost reduction is part of the 5-year planning cycle, not the annual budget. This is because real savings come from investment in new processes or equipment. Quick fixes don't so much cut costs as defer them.
15	6300	2003	A lean-production team is advantageous because it can intro a lean system without significantly disrupting operations. The key is to adopt what most lean-production advocates prescribe: the "model cell" rollout, in which a company sets up, in one area of its business, a fully functioning microcosm of its entire process.
16	6300	2003	Lean production is built around the concept of continuous flow processing a departure from traditional production systems, in which large batches are processed at each step and are passed along only after an entire batch has been processed.

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