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.

C. Eliminate customer activities with low value to the customer

Reduce ICDs by eliminating activities for which customers either will not pay or will not pay enough to cover their costs.

Warnings and advice

No.	Industry SIC	Year	Notes
1	0	1988	Basic manufacturing principle: The organization must be focused on customer value and competitive advantage. The job of manufacturing is not to run machines, keep people busy, or make products; it is to satisfy customers' needs.
2	0	1989	3 clues as to when to abandon research: when there are no more significant improvements, when new products no longer come out of managed evolution, and when long years of research produce only "interesting" results.
3	0	1989	Rule of Research: Since every new product begins to become obsolete the day it first breaks even, the only way to prevent your competitor from making your product obsolete is to do it yourself.
4	0	2005	Best Buy Co. is experimenting with intimate, 3,500- to 5,000 sq. ft concept stores that target more specific groups. The concept stores are the latest move on Best Buy's part to reshape its customer base. Last year, it created a furor in retailing by embracing a strategy that shuns the 20% of customers who cost it money. The effort paid off. In the quarter ended Feb. 26, sales at stores embracing the new strategy rose 8.4% compared with a gain of just 2.3% at existing stores.
5	0	2004	Marketers generally have two options for achieving their portfolio goals. First, they can restructure their brands by repositioning those that have lost relevance to the target segments, by consolidating two or more mature brands competing for the same consumer or by divesting a brand that absorbs more resources than it contributes and holds little promise of a turnaround.
6	0	2004	An ever growing number of brands imposes complexity costs affecting the entire life cycle, from product development and sourcing to manufacturing and distribution.
7	0	2004	If marketers are to thrive, they must resist the compulsion to launch new and protect old brands and instead shepherd fewer, stronger ones in a more synchronized way. Anheuser-Busch, for example, uses a coordinated approach. It recognizes that customers shift to different beers and its portfolio strategy aims to keep those customers within its family of brands when they do so. Procter & Gamble has phased out more than 1,000 brands over the past five years as part of a successful global rationalization.
8	0	2004	Once a company makes its apples-to-apples comparison of the cost of serving similar customers across various channels, it should take into account differences in the quality of customers drawn to them.
9	2000	2007	Researchers found that companies actually lose money when an ad is seen by the lightest user of a product once marketing and manufacturing costs are factored in.
10	2052	1998	When Nabisco's Snackwells stopped selling, the company cut ad spending to meet earnings targets. Soon, supermarket displays were being ignored. Keebler, meanwhile, was building a sales force to ensure optimal product placement.
11	3711	2007	Ford, once the most efficient American automaker, is struggling to compete with efficient Asian manufacturers. The UAW is encouraging workers to cooperate with initiatives by Ford, realizing that a collapse of the company would be catastrophic for employees and retirees. Ford has successfully persuaded UAW locals at 33 of its 41 plants to accept new agreements which would loosen some complex and often costly work rules, including the hiring of non-Ford workers for unskilled positions and shifts in scheduling. However, health care and retirement costs are not included in the negotiation and some restrictive work rules remain in place. Ford encouraged the move by threatening to shutter factories should costs fail to decrease.
12	4512	2004	Over the past three years, discounter airlines have seized the opportunities creates by the crisis roiling traditional airlines and, in doing so, exacerbated their woes. Many of their advantages will last a long time. Consider the impact of the industry crisis at AirTran, which got its start in 1986 trying to fill the void left by the demise of Eastern Air Lines and grew fitfully over the ensuing 15 years. Shortly after 9/11, US Airways started closing down money-losing operations, including its hub at Baltimore-Washington International Airport. Within days, AirTran announced a flurry of new flights there, creating a replacement hub. US Airways had people on airplanes. The problem wasn't traffic, it was cost. AirTran now has 34 departures a day in Baltimore and carries 10% of the traffic there, second only to Southwest.
13	4812	2003	The value of this approach, known as customer lifetime management (CLM), has been proved by several leading financial-services players. CLM involves capturing and analyzing data about customers for the purpose of marketing to and serving them on the basis of the value they are expected to create during their "lifetime" with they company.
14	7372	2002	Traditionally, costs had been allocated by the amount of product sold, which sometimes led to such anomalies as labeling products that made money as loss leaders. Activity based costing improved that situation somewhat but still used after-the-fact allocation of such plantwide operating costs as total energy and raw materials.

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