Manufacturing Cost Reduction Policy Deployment - Introduction

Lesson  of  Industrial Engineering ONLINE Course.

Lesson  of  Productivity Management Module.

Know-how to reduce waste and losses. Do you have it? If not acquire it. 

Go Through Industrial Engineering FREE ONLINE Course. 1000 persons accessed in the first year 2020-2021.

https://nraoiekc.blogspot.com/2020/05/industrial-engineering-online-course.html

Manufacturing Cost Reduction Policy Deployment - Manufacturing Cost Reduction Planning and Execution System

Cost reduction policy is part of Productivity Management

One of the focus areas of manufacturing management and manufacturing engineering is manufacturing cost reduction. Number of improvement techniques developed in Industrial Engineering (IE), TQM, TPM, JIT etc help in reducing costs. Yamashina and Kubo (Y-K, 2002) came out with a methodology of establishing a cost reduction program for a planning period that takes into account the potential benefits for various improvement techniques and the cost or investment required for implementing those techniques.

The basis for cost reduction in this model called manufacturing cost deployment is waste elimination or loss elimination at various production facilities or work stations in the plant. The losses at various facilities are identified in the model using the concepts developed in TPM literature.

The losses at the facilities are categorized as causal losses and resultant losses. Causal losses cause losses further down the line at other facilities. Eliminating causal losses eliminate resultant losses also. So one should not make efforts to eliminate resultant losses but has to focus on causal losses. The other point of emphasis is that the losses in the facilities have to identified with components of manufacturing cost (cost factor). This will ensure that when the loss is eliminated, there is definite reduction in manufacturing cost.

In the paper published by them in International Journal of Production Research, Y-K gave formulas for calculating each type of loss and associating the loss with the cost factor.

For each loss identified at each facility, techniques that eliminate the loss are identified if they exist and the period it takes to implement them and cost or investment required in each period to implement them are estimated. At this stage, the cost associated with improvement activity and the benefit are available.

Y-K formulated the problem as an integer programming problem, but concluded that it can't be solved analytically. They proposed an heuristic that first calculates benefit-cost ratio for each loss type and based on this ratio selects the improvement techniques to be undertaken in each sub period (for example each month in an annual plan).

For a list of different types of losses - Manufacturing System Losses Idenfied in TPM Literature

The details of the project undertaken by Yamashina and Kobo with funding from Grants-in-Aid for Scientific Research(KAKENHI) Program. Information from the database:  Kaken, Japan.

https://kaken.nii.ac.jp/grant/KAKENHI-PROJECT-12490021/

The cost deployment aspect in WCM and TPM was discussed in a recent conference paper 2012
http://www.wseas.us/e-library/conferences/2012/CambridgeUSA/MATHCC/MATHCC-59.pdf

COST DEPLOYMENT IMPLEMENTATION: A CASE STUDY, 

Giovando, Guido; Crovini, Chiara; Venturini, Stefano,  

Department of Management, University of Turin, Turin, Italy.

Proceedings, 10th Annual Conference of the EuroMed Academy of Business 642 - 654

(Paper to be read and summarized)

Speed-Based Target Profit: Planning and Developing Synchronous Profitable Operations

Alin Posteucă

CRC Press, 19-Nov-2020 - Business & Economics - 346 pages

Profitable production planning is and will remain an eternal challenge to ensuring the prosperity and dignity of companies in a global market. There are different approaches to improve productivity. But an approach to achieve  the target profitability through productivity in the production planning stage is not available so far.  Alin Posteucă, a researcher and consultant working in the area of manufacturing cost policy, now presents the system called speed-based target profit (SBTP) that will provide the method for planning profit along with production for the year.

SBTP is the profitable production management and manufacturing improvement system that approaches production planning to achieve unit speed of target profit for target products through manufacturing cost improvement and bottleneck profitability control for required takt time. Managers and practitioners within manufacturing companies will discover a practical approach for cost down and cash up by applying a powerful operational profitable production planning formula to meet profitability expectations through productivity based on strong leadership with the help of a specific system for feedforward, concurrent, and feedback control. 

The uniqueness of the book is reinforced by a detailed presentation of the successful application of the SBTP system in two case studies, as a way of life and a unit speed of target profit improvement ethos at all hierarchical levels, in two multinational manufacturing companies operating in highly competitive markets in order to address the synchronous profitable operations.

By adopting the SBTP system, your company will be able to consistently achieve unit speed of target profit in the bottleneck process for fulfilling annual and multiannual target profit as a unique and effective way through a new profitable production planning paradigm.

https://books.google.co.in/books?id=01YAEAAAQBAJ

Manufacturing Cost Policy Deployment (MCPD) and Methods Design Concept (MDC): The Path to Competitiveness

Alin Posteuca, Shigeyasu Sakamoto

CRC Press, 27-Mar-2017 - Business & Economics - 434 pages


Providing a reasonable level of profitability through productivity is - and will remain - one of the fundamental tasks of the management teams of any production company.

Manufacturing Cost Policy Deployment (MCPD) and Methods Design Concept (MDC): The Path to Competitiveness contains two new methodologies to improving the productivity and profitability of production systems that continuously increase competitiveness: Manufacturing Cost Policy Deployment (MCPD) and Methods Design Concept (MDC). Both MCPD and MDC are the result of long-time synthesis and distillation, being implemented successfully, totally or partially, in many companies. The MCPD system, developed by Alin Posteuc?, is a manufacturing cost policy aimed at continuous cost improvement through a systemic and systematic approach. The MCPD is a methodology that improves the production flow driven by the need for Manufacturing Cost Improvement (MCI) for both existing and future products through setting targets and means to continuously improve production process productivity for each product family cost. The MDC, developed by Shigeyasu Sakamoto, design the effective manufacturing methods using a tool of engineering steps identifying ideas for increasing productivity called KAIZENSHIRO (improvable value as a target). The MDC results on production methods lead to effectiveness of work measurement for performance (P) and to knowledge and improvement of production control and planning as utilization (U), in order to achieve labor target costs.

The combination of MCPD and MDC methodologies can provide a unique approach for the managers who are seeking new ways for increasing productivity and profitability to increase the competitive level of their manufacturing company.

https://books.google.co.in/books?id=r0WEDgAAQBAJ

Manufacturing Cost Policy Deployment (MCPD) Transformation: Uncovering Hidden Reserves of Profitability

Alin Posteuca

CRC Press, 31-Jan-2018 - Business & Economics - 314 pages

Achieving a long-term acceptable level of manufacturing profitability through productivity requires the total commitment of management teams and all staff in any manufacturing company and beyond.

Awareness and continuous improvement of manufacturing costs behind losses and waste is the core goal of the Manufacturing Cost Policy Deployment (MCPD). Achieving this goal will continually uncover the hidden reserves of profitability through a harmonious transformation of the manufacturing flow, coordinated by the continuous need to improve manufacturing costs. Setting annual targets and means for manufacturing costs improvement (more exactly for costs of losses and waste, and the exact fulfillment of these) requires mobilization of all people in the company to carry out systematic improvement activities (kaizen) and systemic improvement actions (kaikaku) of the processes of each product family cost. The MCPD system was born out of careful observation of the challenges, principles, and phenomena of manufacturing companies and the profound discussions with the people in these companies at all levels.

Manufacturing Cost Policy Deployment (MCPD) Transformation: Uncovering Hidden Reserves of Profitability is organized in three sections. The first section presents the concept and the need for an MCPD system from a managerial perspective. In the second section, the transformation of manufacturing companies through the MCPD system is presented, more precisely the details of the initial steps of the implementation of the MCPD, the three phases and the seven steps of the MCPD, and the elements necessary for a constant and consistent application of the MCPD. In the last section, there are two examples of the MCPD implementation in two different types of industries, namely, manufacturing and assembly industry and process industry, and two case studies for the improvement of manufacturing costs for each (cost of equipment setup loss, using kaizenshiro; replacement of bottleneck equipment and associated costs of losses, using kaikaku; cost of quality losses with improving operators’ skills to sustain quality, using kaizen; and cost problem solving with the consumption of lubricants for one of the equipment, using A3).

https://books.google.co.in/books?id=6jcPEAAAQBAJ

Manufacturing Cost Policy Deployment (MCPD) Profitability Scenarios: Systematic and Systemic Improvement of Manufacturing Costs

Alin Posteuca

CRC Press, 09-Oct-2018 - Business & Economics - 328 pages

This book shows how to consistently obtain annual and multiannual manufacturing target profit regardless of the evolution of sales volumes, increasing or decreasing, using the Manufacturing Cost Policy Deployment (MCPD) system. Managers and practitioners within the manufacturing companies will discover a practical approach within the MCPD system that will help them develop and support their long-term, medium-term, and short-term profitability and productivity strategy. The book presents both the basic concepts of MCPD and the key elements of transforming manufacturing companies through MCPD system, as well as supporting the consistent growth of external and internal profit by directing all systematic and systemic improvements based on meeting the annual and multiannual Manufacturing Cost Improvement (MCI) targets and means for each Product-Family Cost (PFC).

This book is unique because it presents two types of systematic and systemic improvement projects for MCI that have been applied over the years in various multinational manufacturing companies operating in highly competitive markets, in order to address the consistent reduction of unit manufacturing costs by improving the Cost of Losses and Waste (CLW).

Readers will discover the practical approach of MCI based on a structured approach to MCPD system beyond the traditional approach to manufacturing improvements based mainly on improved time and quality. Therefore, from the perspective of the MCPD system, the multiannual manufacturing target profits are met while the annual and multiannual manufacturing target costs are a predetermined stake and not a result of the improvements already made.

https://books.google.co.in/books?id=3UjpDwAAQBAJ

Paper

MANUFACTURING COST POLICY DEPLOYMENT 

Abstract. It is obvious that the gap between the need to reduce manufacturing costs and the level that manufacturing companies can achieve is large and often companies do not know how to cope with this situation.  Moreover, this gap is widening for many companies. There are  different pathways such as: Industrial Engineering (IE), Total Quality Management (TQM), Total Productive Maintenance (TPM),  Just-In-Time (JIT), Lean Manufacturing (LM), Six Sigma and World Class Manufacturing (WCM). However, these approaches have to be combined as an improvement portfolio to derive the benefit of targeted manufacturing cost reduction.  Publications on the Manufacturing Cost Policy Deployment (MCPD) system by Alin Posteuca provide a methodology for setting targets and means of reducing unit costs.  MCPD system establishes competitive cost targets and expected profit targets, breaks down cost improvement targets at the level of products, processes, departments and individuals and aligns systematic and systemic improvement activities accordingly. The three phases and the seven steps of the MCPD system and an example of applying the MCPD system are provided in the paper. 

Ro. J. Techn. Sci. - Appl. Mechanics, Vol. 65, No 1, P. 136-150, Bucharest, 2020

https://rjts-am.utcluj.ro/journal/rev2020-2/RJTS-AM_2020_65_2_a3_Posteuca.pdf

Cost Deployment Tool for Technological Innovation of World Class Manufacturing

Luan Carlos Santos Silva, João Luiz Kovaleski, Silvia Gaia, Manon Garcia, Pedro Paulo de Andrade Júnior

Department of Production Engineering and Technology Transfer Research Group, Federal University of Technology—Paraná (UTFPR), Ponta Grossa, Brazil
Journal of Transportation Technologies
Vol.3 No.1(2013)
http://file.scirp.org/Html/2-3500094_27019.htm

The model of Fiat Group Automobiles Production System (FAPS) is a structured set of methodologies and tools whose application spread across the enterprise through the involvement of all employees. It is based on Yamashina's WCM approach. It promises  a radical improvement for the performance of the production system, optimizing all production processes and logistics with focus on the key factors: Quality, Productivity, Security and Upkeep of the equipment, and Delivery. The implementation support is done by a system of Audits and it is structured by goals whose achievement is measured by performance indicators

It has 10 pillars and two of them are directly related to cost reduction and productivity improvement. WCM advocates total industrial engineering which promises total productivity management and total cost management. Total industrial engineering involves the efforts of industrial engineers and operations managers, engineers, supervisors and operators and it also implies all methods of industrial engineering - product IE, process IE, IE optimization, IE Statistics, IE Economic Analysis, Human Effort IE, IE Measurements, Productivity Management.  Total productivity management focuses on productivity of all resources used in the production - logistics or production - distribution system. Total cost management focuses on rational planned cost for the total enterprise as well as each product giving optimum unit cost for all products produced and sold by a company.

The following two pillars are directly related to Total IE, Total PMgmt, and TCM.

2) Cost Deployment—aims to identify problems that increase costs; Approves projects to decrease costs.

3) Focused Improvement—aims to develop the know how to reduce costs by using appropriate methods; Proposes projects to reduce costs.

The concept of technological innovation can be understood as the expansion of production capacity (more machines) and the increase of new products. The company may  think about producing products which are being produced by other manufacturers or competitors. Innovation also includes creation of new products and improving products or processes that are currently in use to make more profits. Innovation is to produce and distribute products and services, which  the company did not deliver before. Innovation is  generally understood as expanding capacity installing more machines, and  to install more modern machines to produce more quantity of products. Many times innovation increase in  productivity and decrease in costs, which result in increase of the production and sale.

(A. Caron, “Technological Innovations in Small and Medium Industrial Enterprises in Times of Globalization: The Case of Paraná,” Thesis (Doctoral in Production Engineering), Curitiba, 2003.)

Cost Deployment allows defining improvement programs that have an impact in reducing losses, everything that can be classified as wastes or non-value added in a systematic way.

 This is accomplished through:

1) The study of relations between the cost factors, the processes that generate wastes and losses in its various ways

2) The evaluation of know-how to reduce waste and losses: Is it already available with the organization or it should be acquired;

3. Making an estimate of costs and benefits of cost reduction projects and establishing a priority of projects to reduce waste and losses.

4. Monitoring of progress and results of improvement projects.

https://www.business-improvement.eu/worldclass/Unilever_World_Class_Manufacturing_Yamashima2.php

https://michelbaudin.com/2015/10/26/unilevers-new-program-for-wcm-business-improvement-eu-jan-van-ede/

WCM Software

https://mynext.it/industry-4-0/?lang=en

What Does World Class Manufacturing Look Like in a Connected Worker World?

Jaime Urquidi

December 18, 2019

https://parsable.com/quality/what-does-world-class-manufacturing-look-like-in-a-connected-worker-world/

Parsable for Connected Work in Production

A smarter strategy for driving productivity.

https://parsable.com/production/

Good information in
https://alfraleanadvisors.com/wcm-cost-deployment/

Data Science with Cost Deployment

Kevin Joinson

Mar 2, 2020 

https://medium.com/gsktech/data-science-with-cost-deployment-1dd9c6a9c98a

https://better-operations.com/2016/09/15/manufacturing-cost-deployment/

https://parsable.com/quality/what-does-world-class-manufacturing-look-like-in-a-connected-worker-world/

Updated  4.3.2022, 17 July 2021, 4 Feb 2021,  11 July 2020,  19 February 2017,  20 April 2012

Original Knol - http://knol.google.com/k/narayana-rao/manufacturing-cost-deployment/ 2utb2lsm2k7a/ 3364