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.

Eliminate unexpected downtime. The company may know that it will have occasions of unplanned downtime and may take steps to reduce or eliminate this loss of efficiency.

Reduce turnover

No.	Industry SIC	Year	Notes
1	2834	1988	Merck has invested in work and family benefits, as result of exhaustive study of turnover costs.
2	3220	1988	Corning measured expenses associated w/ turnover, such as interview costs and hiring bonuses. New policies on flexible scheduling & career development have led to cost savings.
3	3400	2008	Van Meter Industrial Inc. and other employee-owned companies are setting up education committees to teach their employees what each of them can do to raise their stock price and their own net worth. Van Meter's profits and stock price are up significantly now because employees feel it's their role as owners to find new ways to cut costs and boost sales. The stock price increased 76% for 2006 and employee turnover has fallen to less than 8%, from an annual rate of 18% a few years ago.
4	3728	1986	All workers, from the chairman to groundskeepers, get the same percentage of their base salaries as bonus. The bonus is in addition to company-paid haircuts, physicals, dentist and doctor visits, legal, tax, financial and spiritual counseling, all on premises.
5	4213	1997	J.B. Hunt announced that, beginning in February 1997, it would increase its driver pay by around 33%, on average. While the entire TL industry seems to be taking a "wait and see" attitude with respect to this issue. JB Hunt increased driver pay by 33% in order to off-set the driver shortage.
6	4213	1998	Although its labor is non-union JB Hunt pays it drivers more than other TL carriers in order to reduce turn over.
7	4213	1998	In the third quarter of 1997, the Company initiated an ongoing training program for all of its employees with the aim of improving productivity and reducing turnover. American Freightways estimates total costs of a penny per share per month for training.
8	4213	1998	To retain drivers Werner and US Xpress are using technology to get their drivers home on a regular basis and keep drivers in communication with the dispatcher and their families.
9	4213	2004	Officials at Celadon put a big focus on keeping their people happy. "There's an endemic driver shortage in the over-the-road trucking business." Celadon provides long-haul, full truckload services between the US, Canada, and Mexico. Its annual driver turnover is 70%. The industry average is 115%. "They pay a lot of attention to their drivers. They provide excellent equipment. They do their best to get drivers home as rapidly as they can."
10	4513	2006	In industries from airlines to glass-making, companies are curbing usage, revamping machinery, and shifting production schedules to offset energy costs. United Parcel Service Inc. managed to report higher first-quarter profit fueled by accelerating volume in most of its markets. One of UPS's innovations is a network of "electronic logbooks," which track preventive maintenance for each delivery truck. The company found a blanket maintenance schedule was wasteful, since maintenance needs vary depending on the size and even the type of tires on a truck. The logbooks are already saving the company an estimated 330,000 quarts of oil a year.
11	4812	2007	The manager of T-Mobile's sales and customer service division is in charge of more than 15,000 employees, many of them happy to serve her. T-Mobile emphasizes quality customer service and smart branding to gain market share. The division boosted salaries, increased training and created quantifiable ways to measure success. High performers are rewarded with promotions and perks. This resulted in reduced absenteeism, lower turnover and greater employee satisfaction.
12	5812	1996	Chick-fil-A looks for character and values in applicants. If a promising applicant lacks skills, it teaches him. Result is an annual turnover of 4-6%, compared with 40-60% in fast-food industry as a whole.
13	5812	2006	Restaurants are working to improve the performance of their staff through positive measures. Morton's encourages workers to stay with the company, offering hefty rewards to celebrate their 10-year anniversary with the chain, including a cash bonus and a free luxury trip to Chicago.
14	7011	2001	Marriott's employee incentive program is a "double win." Incentives bring in higher retention and higher profits. 25,000 people are on incentive and bonus plans right now but by 2003, the company plans to have everyone on some type of plan. The result of all this is happier, more loyal employees.
15	8062	2004	Province Healthcare owns and manages hospitals in mostly non-urban U.S. markets. In late 2002 the hospital was not up to date on what its doctors were doing, staff defections became big problems and some 51 doctors half of whom were surgeons or specialists left the firm. Going back to the inception of the company in 1996 the largest risk factor was the loss of physicians in a small community hospital. To fix the problem from 2002 the company has added a vice president of Physician Relations and they instituted a system of monthly reports from local hospitals to monitor how new doctors are reaching medical staff and their communities.
16	8742	2007	Deloitte & Co. has hired career coaches to find places for frustrated but competent employees within the organization. The career coaches are paid for by Deloitte and employees can use them free of charge. This reduces employee turnover and the resulting recruiting and training expenses. Deloitte has reduced turnover from 20% to 15%, the industry average.

<<Return to Reduce Input Not Producing Output