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.

8. Accept risk of lower profits

Accept the potential of higher costs:
Substitute expensive Input for higher quality Output

No.	Industry SIC	Year	Notes
1	2300	2004	Vuitton's accessory products are more labor-intensive, and thus more exclusive than mass-produced brands. Employees work in teams of 20 to 30, focusing exclusively on one product. They are encouraged to suggest improvements and briefed on the product price, details and sales figures. Despite higher labor costs, the factories remain in France to ensure quality control.
2	3711	2004	Lexus sacrifices sales in the short term by keeping inventory low but it gains sales over the long term because dealers won't alienate consumers by using the hard sell to push slow-selling vehicles to ambivalent shoppers. Lexus dealerships are the most valuable in autoland because they sell for six times the earnings before interest, depreciation and taxes which in a good market is $25 million to $30 million. Other brands of dealerships sell for between two and five times Ebitda. With all the gross profit, the dealers can afford posh showrooms. They attract the best salesman who with the normal 25% cut of the gross profit can pocket $800 per sale instead of the $400 they might get with a typical brand. The dealers can offer perks like loaner cars and free car washes as well. One Lexus dealership spends $1,500 a week on gourmet deli sandwiches and salads that sit in a refrigerator case for customers. There are carpeted gyms at the dealership and at the service station. The mechanics' bathroom is tiled with marble.
3	8062	2007	Rapid tests for MRSA and other antibiotic resistant infections can cost $25 to $30 per test. Patients who test positive are then isolated, adding to the cost. However, some hospitals expect that the practice will prevent the infection of other patients, reduce the use of the strongest and most expensive antibiotics and reduce the length of time that a patient spends in the hospital.

<<Return to Reduce Unique ICDs in Process