Deployment & Master Plan

 25/01/2019
By Dr. Alin Posteucă
From Multiannual and Annual Productivity and Costs Policy Deployment to Productivity Master Plan

As presented in the previous episode, Aligning Profitability and Productivity Scenarios and Strategies to Productivity Core Business Goals (PCBG), after setting the two profitability and productivity scenarios (in case of increase or decrease of sales) and the three inter-related strategic levels of productivity meant for the increase of the stability level of the company’s processes and achieving an acceptable level of costs in accordance with customer needs, the next step is the development of the systematic and systemic planning process of alignment of multiannual and annual profitability and productivity scenarios, strategies and of PCBG to daily activities of all employees in the company and beyond. A weekly and daily central question for middle managers and for the implementation teams is: How to implement profitability and productivity scenarios and strategies through Kaizen and Kaikaku projects and through daily improvement?

Current Conditions and Challenge

The process of translation of multiannual and annual scenarios, strategies and objectives into concrete actions (policy deployment or targets and means deployment) at the level of the entire company requires systematic and systemic improvements at all levels of the organization, both short-term and especially on medium and long term.

Our Approach

Meeting company policy requires careful setting the levels of targets and means performance for achieving the targets. Multiannual Productivity Policy Deployment involves setting business targets based on means, and one of its main goals is the continuous fulfillment of a competitive cost and the continued growth of the ability to produce quality products. For this, using a participatory catchball process, a network of measurements to continuously capture the current level of profitability and productivity is developed (see figure below):

  • to set objectives and targets of each measurement at each management level in order to improve their profitability and productivity (Plan),

  • to establish the feasible activities for the systematic and systemic improvement necessary to achieve PCBG (Plan),

  • to implement the systematic and systemic improvements (Do),

  • to verify whether the results after improvements achieved PCBG by the newly created standards (Check) and to verify if the daily problem management solved everyday problems to the standards set in advance (Check) and

  • to extend horizontally the results from a consistent standardization or after a valid solution to solve a problem (Act).

If the feedback is not the expected one, the PDCA cycle continues until it reaches the PCBG fulfillment of effectiveness and efficiency of growth – of course, during the target time imposed by the specific business situation.

(I) Multiannual and Annual Productivity and Cost Policy Deployment

So, Multiannual and Annual Productivity and Cost Policy Deployment involves:

  1. the definition of targets and means for the Overall Management Indicators – OMIs;

  2. the targets and means for each of the Key Performance Indicators (KPIs) – OMIs related KPIs;

  3. the targets and means for each of the Key Performance Indicators (KPIs) related to Cost of Losses and Waste (CLW);

  4. the targets and means for each of the Key Performance Indicators (KPIs) related to Critical Cost of Losses and Waste (CCLW);

  5. developing and implementing the Manufacturing Improvement Budgets (MIB): (a) Improvement Budgets for Existing Products; (b) Improvement Budgets for Future Products and (c) Cash Improvement Budgets;

  6. developing and planning targets and means for Kaizen and Kaikaku indicators (KKIs) of CCLW;

  7. planning and implementing means for Kaizen and Kaikaku indicators (KKIs) of CCLW;

  8. performing daily, weekly and monthly control of accurate Manufacturing Cost Improvement targets for each Product Family Costs (PFC) and total company through Kaizen and Kaikaku for Manufacturing Cost Improvement (MCI) – external and internal annual profit plan, and

  9. performing daily, weekly and monthly control of accurate Manufacturing Cost Improvement targets for each Product Family Costs (PFC) and total company through Daily Management Indicators (DMIs) including for Manufacturing Cost Improvement (MCI);

  10. continuous feedback to Overall Management Indicators – OMIs.

(II) Productivity Master Plan (PMP)

Based on Multiannual and Annual Productivity and Costs Policy Deployment, productivity master plan for each product family costs (PFC) is developed and continuously updated. A weekly central question for middle managers, implementation teams and every employee is: How to implement productivity and cost policy (targets and means) in my area?

The productivity master plan for each product family cost (PFC) will help fulfill the KPIs by understanding the current and future state and by designing the ideal and future state that will meet customer needs. The aim of productivity master plan for each product family cost is to reduce the time required for fulfilling orders for customers of the product family cost (PFC). In this context, the owner of each product family dedicated strategy will try to carry out the strategy set by detailing productivity master plan for his product family cost (PFC). So, PMP performance is the ongoing task of all people within and outside the company, for all products and for all main processes of each PFC.

Expected impact: Feedback to Vision and Mission of Productivity

Finally, the last step of the Productivity Business Model (PBM) is the feedback. This step assesses the performance achieved by profitability and productivity policy deployment and associated productivity master plan by accomplishing the productivity vision through annual operating profit. Periodically, the results are evaluated to verify the continuous compliance with PCBG and, implicitly, fulfilling the operating profit (internal and external profit). The central question for middle managers for the implementation teams and for any employee is: How well was profitability and productivity policy met in my area and across the company?

This is the time for assessing senior managers’ performance in front of the board of directors, more precisely the activities and actions of productivity continuous improvement approved by them to support multiannual and annual operational profit (internal and external profit).

Dr. Alin Posteucă is the founder and CEO of Exegens®, a global consulting firm specializing in operational excellence, cost improvement and business performance improvement. He helps his customers create and implement profitable strategies and cost improvement programs that ensure a unit cost improvement of at least 6% per year for each of the next 5 years by maximizing the efficiency and effectiveness of operations.

He is the author of the Manufacturing Cost Policy Deployment (MCPD) concept published in three books at Productivity Press - Routledge/CRC. The latest, Manufacturing Cost Policy Deployment (MCPD) Profitability Scenarios, centers on his core belief that annual and multiannual target profit can be achieved regardless of the evolution of sales volumes, increasing or decreasing.