Reduce the Units of Input Not Producing Output
Reduce units of Input (I) available but not producing Intermediate Cost Drivers
(ICDs). This action makes Input levels more directly variable with the quantity of the ICD by reducing the amount of the available Input that is wasted or idle. For example, an employee (I) might produce one subassembly (ICD) per day. During that day, the employee spends a total of one hour waiting for parts for the subassembly. If the Company could eliminate that one lost hour of the employee's work day by providing parts in a more timely manner, the Company could reduce the number of employees (I) needed to produce the same subassembly (ICD) by 1/8th.
A. Assist Input in increasing ICDs.
Train employees in efficiency. The company may incur costs to train employees in the expectation that these expenses will result in even greater cost savings through better efficiency.
Publish best practices:
For overall performance
| No. | Industry SIC | Year | Notes |
| 1 | 5000 | 2003 | Large chain retailers can boost their near-term revenues by 5 to 8 percent with a new, more refined approach to sharing best practices. 1) Assign stores to peer groups and assess overall performance. Peer-group segmentaion by local market demographics, competitive density, store location, size, and age. 2)Go beyond traditional performance metrics. Within each group, managers can meaningfully compare the drivers underlying typical performance metrics, such as average price per item sold. A comparison of sales of high-priced clothes reveals targeted improvement opportunities for store. 3) Identify and disseminate peer-group best practices. Ascertain how top managers promote sales for each type of high-priced item. Develop ways in which peer stores can emulate best practices of top managers. Share processes with all managers in peer group. |
| 2 | 5812 | 2003 | To become a franchisee for Culver's, one must work 60 hours in one of the restaurants and then go to boot camp for four months (which costs $20,000) to learn mopping, accounting, and food making. |
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