Robust Production Management (RPM) Module 1: Performance Culture

Copyright © 2005 Metrilogics, LLC. All rights reserved.
Robust Production Management
Metrilogics
Front-line controls for bottom-line savings.
TM
SM
Module 1:
Performance Culture
By Lance Latham
Senior Managing Partner

Metrilogics
TM
Two Definitions of Culture
v Traditional definition: “The ideas, customs, skills, arts, etc. of
a given people in a given civilization; socially refined ways of
thinking, talking and acting.”
v Organizational behavioral model definition: “The
combination of desirable behaviors that an organization
cultivates and rewards, and the undesirable behaviors that
are deemed detrimental to the organization’s success, and are
discouraged.”
For the purposes of this module, we will focus on the organizational
behavioral model definition of Culture (the second bullet, above).
2
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Performance Culture Element #2:
Includes the effective coordination of both direct and
indirect time.
Direct Time:
Paid time dedicated to
performing primary or
core customer work.
Indirect Time:
Paid time not dedicated to performing core
customer work. Indirect time can include:
v Project time
v Meetings
v System downtime
v Classroom training
v Sick time
v Vacation
v Holidaysv Equipment changeovers
v Paid breaks
v PTO (if paid)
v STD (if paid)
v LTD (if paid)
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5

Func. a Func. b Func. c Func. d Func. e Func. f Func. g Func. h Func. i Func. j
Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Unit 6 Unit 7
Dept. A Dept. B C Dept. D E
CC I. CC II. CC III.
Team
Leader /
Supervisor
Manager /
Sr. Manager
Director /
Sr.
Director
VP /
Sr. VP
KEY
= Metrics are
accurate, complete,
fully-defined
= Some metrics
available,
but others are
missing or
incomplete,
categories are
mixed, etc.
= Metrics completely
missing, not tracked
Roll-Up
Gap
Corp.
LOB
C-Level
Officers /
Board
• Data Is DESCRIBED INTERCHANGEABLY
Using Line of Business vs. Product vs. Co. vs.
System Names Across Functions and
Management Levels
• Data Is Assigned
• Differing Reporting FREQUENCIES (some data
is reported daily, some weekly, some monthly,
some quarterly)
• Differing Reporting FORMATS (graphs vs.
reports)
• The Automated Reporting and Graphing Tools
(and Corresponding User Skill Sets) That Do
Exist Reside In Areas EXTERNAL to
Operations and Sr. Management
Poor Bottom-Up Operations Data and The “Roll-Up Gap”
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TM
Weak and/or
incomplete
operational data =
ineffective top
management that’s
out of touch with
the organization.
• Operational Definitions Differ Across Functions As
To WHAT To Count and Report
• Operational Definitions Differ Across Functions As
To HOW To Count and Report
• Operational Definitions Differ Across Management
Levels As To HOW To Count and Report
• Metrics Data Resides In MULTIPLE LOCATIONS,
Across Depts.
• Erroneous, Incomplete Data
• Under VARIOUS COMPANY NAMES (e.g., pre-
acquisition vs. post-acquisition)
8

Real-World Examples of “Before and After” Benefits
of a Strong Corporate Performance Culture (cont.)
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Before After
In terms of team
payroll $’s spent by
category in the
“After” scenario…
vStraight time costs
vOvertime costs virtually
disappear
vTotal payroll costs
11

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Real-World Examples of “Before and After” Benefits
of a Strong Corporate Performance Culture (cont.)
AfterUnit Cost Dollars Before
…Unit Costs
As Quality,
Productivity, and
Efficiency ...
14

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Preview of Module 2: Performance Framework
In the next module we will look at an effective framework that
enables managers to accurately assess their organization’s
true performance, and identify and quantify cost-saving
operational improvement opportunities. Module 2 will examine:
v Direct vs. Indirect time
v The concept of Earned Work Credit Hours (sometimes referred
to as Standardized Hours) and how to calculate them
v How to calculate performance, including the difference between:
o Productivity
o Efficiency
17

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Robust Production Management (RPM) Module 1: Performance Culture