MCPD Glossary

Annual Manufacturing Cash Improvement Budget (AMCIB) is an element of the third step of the MCPD system. It is an extension of the annual manufacturing improvement budget (AMIB) for existing and new products and an extension of the company’s conventional cash flow. The role of AMCIB is to support the annual stake of MCPD for all product family costs, respectively of the annual MCI goal, by planning and evaluating in money and gains obtained as a result of meeting the annual MCI means targets.

Annual Manufacturing Improvement Budgets (AMIB) is an element of the third step of the MCPD system. They are the approach of all PFC of the company with the aim of planning and controlling the level of the annual MCI goal by: (1) annual manufacturing improvement budget for existing products, (2) multiannual manufacturing improvement budget for new products.

Critical to Annual Manufacturing Profitability Tree (CAMPT) is the tool for selecting, planning and targeting all kaizen and kaikaku improvement projects to achieve annual MCI goal.

Critical Costs of Losses and Waste (CCLW): see matrix 4 (Analyze and Establish Critical Costs of Losses and Waste).

Costs of Losses and Waste (CLW): see matrix 3 (Continually Converting Losses and Waste into Manufacturing Costs).   

Company Productivity Mission (CPM) is the company productivity vision (CPV) extension and is the second step of the productivity business model (PBM) – the MCPD system framework. It is the manufacturing capacity required to be provided by the company manufacturing system for the next 5-10 years and is the task of senior managers.

Company Productivity Strategy (CPS) is the extension of productivity core business goals (PCBG) and is the fourth step of the productivity business model (PBM) – the MCPD system framework. It represents the detail of the PCBG goals and directions and how the basic productivity strategy, the departmental productivity strategy and the family product productivity strategy will contribute to the achievement of annual and multiannual manufacturing profit targets. It is the task of senior and middle managers.

Company Productivity Vision (CPV) sets out the visionary directions to make profit through productivity and is the first step of the productivity business model (PBM) – the MCPD system framework. It is the Board of Directors’ statement on the number of products to be sold and the profit for 5-10 years for each PFC.

Daily Cost Management (DCM) is the seventh step of the MCPD system (daily MCI Management). It refers to day-to-day control of processes and equipment, or shop floor management for MCI, to verify productivity at all KPIs, and for verifying the fulfillment degree of MCI policy deployment for all PFCs from the KPIs related to losses and waste.

Daily Manufacturing Cost Improvement Process (DMCIP) is the basic tool of the seventh step of the MCPD system (daily MCI management). It is a set of principles, processes and tools that enable to monitor and achieve annual MCI targets and means at all levels of the organization and clearly establish decision-making levels by designating owners for all KPIs related to MCI (…) ensuring fast horizontal and vertical communication to continually have a quick reaction and an adequate response to any problem with the annual MCI means targets.

Daily Management Indicators (DMIs) are the extension of the kaizen and kaikaku indicators (KKIs) for MCI and are an element of the fifth step of the productivity business model (PBM) – the MCPD system framework. They identify, report and address deviations from standard as quickly as possible for company generic KPIs (production, quality, cost, delivery, safety, morale – PQCDSM), for KPIs related to losses and waste, CLW and CCLW and for KKIs through day-to-day problem-solving activities, through the participation of team leaders and operators.

External Manufacturing Target Profit is the multiannual and annual manufacturing target profit obtained from manufacturing and selling products to customers. Calculation: multiannual and annual manufacturing target profit – multiannual and annual external manufacturing profit = multiannual and annual internal manufacturing target profit.

Internal Manufacturing Target Profit is the multiannual and annual manufacturing target profit obtained from MCI. Calculation: multiannual and annual manufacturing target profit – multiannual and annual external manufacturing profit = multiannual and annual internal manufacturing target profit.

Kaizen and Kaikaku Indicators (KKIs) are the key performance indicators (KPIs) extension and are an element of the fifth step of the productivity business model (PBM) – the MCPD system framework. They are continually assessing the success of the KPIs related to losses and waste, CLW and CCLW at the level of each PFC process.

Losses and Waste Stratification Flow Analysis (LWSFA) is the measurement of the impact of losses or waste (cause) on all losses and waste affected from upstream processes (effects), from downstream processes (effects) and from the process in which losses or waste occurred (effects). The MCPD team seeks to identify as many possible effects as possible of a cause to determine CCLW (see matrix 4).

Management Branding (MB) ”is a managerial system that, by an integrated approach, creates and synchronizes, for the application, contextual managerial behavioural identities in order to increase organizational productivity and/or economic growth” (Posteucă, 2011).

Multiannual Basic Productivity Strategies (MBPS) is a tool to achieve multiannual manufacturing profits for: (1) ensuring an acceptable level of effectiveness in achieving the annual and multiannual target number of units to be produced and sold (by maximize outputs; reduce not effectively used input – losses improvement); (2) to ensure an acceptable level of efficiency to meet annual and multiannual manufacturing target cost (by minimize inputs; reduce excess amount of input – waste improvement).

Managament by Manufacturing Cost Improvement Policy (MMCIP) is the management of the fulfillment of annual and multiannual manufacturing costs and targets.

Manufacturing Cost Improvement (MCI) it is the process of searching, identifying and removing CLW and CCLW from the processes of each PFC by setting targets and means to continually target ideal costs (zero CLW).

Manufacturing Cost Improvement Catchball Process (MCICP) it is the process of participatory decision-making on annual MCI targets and means through which information and ideas are thrown and caught back and forth, up and down throughout the manufacturing company for each PFC.

Manufacturing Cost Policy analysis (MCPa) is the first phase of the MCPD system – the first two steps of the MCPD system. It represents the process to translate the need to reduce the manufacturing unit costs into concrete actions and activities at the level of the main processes of each PFC, and to increase real managerial commitment and reduce resistance to change among all people in the company and beyond.

Manufacturing Cost Policy development (MCPd) is the second phase of the MCPD system – third and fourth steps of the MCPD system. It is the process of coordinating the MCI means to achieve MCI targets in order to consistently support MCPD in the medium and long term and to ensure horizontal and vertical communication through the total involvement of all departments in order to achieve the continuous transformation of the company by reducing reactive managerial behavior to operational challenges. 

Manufacturing Cost Policy management (MCPm) is the third phase of the MCPD system – fifth, sixth and seventh steps of the MCPD system (last steps). It represents the process of total involvement of all the people in the company and beyond to fulfill the MCI means, monitoring, assessing, and adjusting the effectiveness of the MCPD system.

Matrix 1 of MCPD: Continuous Measurement of Losses and Waste is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is the qualitative analysis of identifying the opportunities for consistent MCI approach to losses and waste for each major process of each PFC and manufacturing system with KPIs for losses and waste (the level of non-productivity is measured continuously and consistently in the last 6-12 months).

Matrix 2 of MCPD:  Analyze and Identify Sources that Generate Losses and Waste is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is the analysis of causes of losses and waste at their root where they are formed, and then prevent them from appearing and effects at the level of each PFC and entire manufacturing system (ragged effects most often in inventory and stocks).

Matrix 3 of MCPD: Continually Converting Losses and Waste into Manufacturing Costs is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is a quantitative analysis to identify the CLW in a proportion of 30-40% of current manufacturing costs for each PFC in order to: (1) determinate the total MCI multi-annual reserve, (2) establish the basis for annual CCLW and implicitly for annual MCI targets and means; (3) establish the annual and multiannual cost reduction plan for the CLW for each cost object (such as: CLW for each product; CLW for all PFC products and CLW for a process/ equipment/ cost center);

Matrix 4 of MCPD: Analyze and Establish Critical Costs of Losses and Waste is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is the process of determining the acceptable future status of the total CLW of each PFC and total company for the next 5 years and aims at identifying CCLW that is at least 80% of the CLW identified by matrix 3;

Matrix 5 of MCPD: Current Assumptions for Critical Costs of Losses and Waste Improvement is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is the process of determining the annual level of CLW that can be addressed by reducing the annual CCLW level for each PFC. It seeks to identify and consistently address the main phenomena, principles and symptoms of CLW by developing current assumptions for CCLW, especially credible assumptions, after the TOCR has been set for the next 5 years to reduce CLW.

Matrix 6 of MCPD: Setting Annual MCI Targets to Achieve Annual MCI Goal is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is the process of setting the annual MCI targets that converge to meet the annual MCI goal. Matrix 6 develops together with matrix 5 with matrix 7 with CAMPT and annual budgets for MCI, after the current assumptions for CCLW improvement for the next year have been established.

Matrix 7 of MCPD: Setting Annual MCI Means to Achieve Annual MCI Targets is a part of the second step of the MCPD system. It is a part of the ongoing and consistent reconciliation process between the top-down and bottom-up approach for establishing the annual MCI target for each PFC. It is the process of establishing the link between annual MCI means and annual MCI goals through the fulfillment of annual basic MCI strategies.

Manufacturing Cost Policy Deployment is ”(…) the process of translating the strategic objective of reducing manufacturing costs in the long run towards the improvement of annual systematic activities and towards annual systemic improvement actions by setting targets and means to improve process costs of families of products (…)” (Posteucă, 2015, p. 65; Posteucă and Sakamoto, 2017, p. 81-82; Posteucă, 2018, p. 10-11).

Multiannual Manufacturing Improvement Budgets (MMIB) is the AMIB extension for current and future future products of all PFCs of the company with the aim of planning and controlling the level of multiannual manufacturing profit targets (internal and external).

Productivity Business Model (PBM) is a process to support the full implementation of a robust multi-annual productivity program at all levels of a company to support long-term profitability and competitiveness. It is the implementation framework of the MCPD system and consists of 7 main phases: (I) Company’s productivity vision (CPV), (II) Company’s productivity mission (CPM), (III) Productivity core business goal strategies, (V) Productivity policy deployment (OMIs, KPIs, KKIs, DMIs), (VI) Productivity Continuous Feedback to CPV.

Productivity Core Business Goals (PCBG) is the company productivity missions (CPM) extension and is an element of the fifth step of the productivity business model (PBM) – the MCPD system framework. PCBG represents the major directions within the company, which needs to be continuously improved to meet the “productivity vision” based on the “productivity mission”. PCBG highlights the key areas for which resources will be allocated in the future such as: to reduce the manufacturing delivery time, to reduce the manufacturing costs, to increase the manufacturing profit, to develop new products, to provide respect for people.   

Productivity Master Plan (PMP) is the process of establishing an annual and especially multiannual (5 years) strategic productivity plan for each PFC.

Product Family Cost (PFC) is a product group that shares the same types of costs, equipment, and processing parameters. The definition of PFCs is made taking into account the following elements: (1) production numbers, (2) contribution to multiannual and annual target profits for the annual MCI target, (3) percentage of similar processes over the entire production stream, (4) products that have similar potential to reduce CLW and achieve the annual MCI targets; and (6) the product life cycle is increasing and/ or falls within the initial volume and target profit (ultimately).

Physical Losses (PL) are the structures of losses and waste associated with material inputs from processes. The manufacturing cost is related to PL (or impact on manufacturing system inputs).

Strategic Direction of Improvement (SDI) represents the MCI policy deployment extensions for each PFC for strategically targeting productivity improvement needs. There are three types: SDI (1): Manufacturing Capacity (Maximizing Outputs – E); SDI (2): Manufacturing Control (Minimizing Inputs – I) and SDI (3) Manufacturing Delivery (Minimizing Inputs – I).

Strategic Key Points on Manufacturing Process (SKPMP) is the PCBG extension. It is the analysis for each PFC based on which the productivity strategies, annual productivity objectives, KPIs of CLW, kaizen and kaikaku activities and daily MCI management are developed at all hierarchical levels of the manufacturing company.

Time-Related Losses (TRL) are the structures of losses in process/ equipment times. The transformation cost is related to TRL (or impact on manufacturing system outputs).

Total Offer for Cost Reduction (TOCR) is the acceptable future status of CLW for the next 5 years (targeting ideal costs zero CLW).

Zero Costs of Losses and Waste (ZCLW) is the ideal state or final destination of the successive transformation of the manufacturing flow through the continuous process of the seven steps of the MCPD (planning and execution of the future CLW/ CCLW, usually annual) to reach ideal costs (zero CLW/ CCLW) for each PFC to reduce/ eliminate 30-40% of CLW in the total manufacturing costs of a PFC.