BACKGROUND
As much as I enjoy writing Mapping or Operations-themed articles that could make for an interesting read, there is a considerable amount of learning that I have to do prior which makes the entire process all the more stimulating for me.
The subject matter of this post presented an opportunity for me to revisit the study material from my postgraduate education seven years ago (2014-15). I fondly recollect that one of my Operations Management professor, Prof. Arvind Subramanyam, emphasized on thorough documentation. To make the learning experience consistent for all, he used to circulate printouts of what he was going to cover in the session amongst the students. These had to be punched and find their way into a spiral-bound folder without fail. This did not go down well with my classmates who wanted to be spared from being instructed like school kids. As for myself, this folder remains an important point of reference, much more than the PowerPoint decks shared by other faculty, or my own illegible notes for that matter 😊.
This is because most of the core subjects in my specialization (Global Logistics & Supply Chain Management) were crammed in a quadrimester towards the end of the one-year program. While the professors were proficient at imparting knowledge, one did not have the time to dwell on the scope and utility of the content. Much rather, akin to a perfume, most of what I had learnt was quick to dissipate.
P.S. - I do tend to write an elaborate context; you can jump to the main section or choose to read any particular framework directly from the hyperlinked sections below-
1. AIDAS Theory of Selling, 2. Process Chart, 3. Project Charter, 4. RACI Chart, 5. SIPOC DiagramÂ
6. Postponement Possibilities Framework, 7. Product Ranking Model (ToC), 8. SCAMPER Framework 9. Seven Wastes of Lean Production, 10. VATI AnalysisÂ
11. Affinity Diagram, 12. Gantt Chart, 13. NTCP 'Diamond' Model, 14. Product Costing Model, 15. Your Custom Creation
Coming to think of it, the corporate culture here in India is very much like this (refer: flexible-time approach of Scheduling). There are scores of tasks to accomplish with unreasonable deadlines - rather than patiently addressing them one at a time, one is compelled to prioritize, multitask and deploy a '80-20' mindset - which eventually turns out to be more like 50-50. Thus, inefficient implementation adversely affects the output. However, that is not what we hear from corporate leaders - instead, what one typically encounters at any conference / in the media is-
'Our manufacturing facilities are state-of-the-art'
'We deploy cutting-edge technologies'
'We've received funding for X million dollars'
'We have a steadfast commitment to sustainability'
The reality is not that rosy though and I say this with reasonable conviction - the emphasis on rapid growth & results often comes at the expense of sound Operations. Do try evaluating the performance of an organization based on these questions-
How readily & accurately can its staff summarize a project - with dates, timeline, flow, contact points, current stage and subsequent plan of action?
How many times do you have to explain, follow-up or chase a person or a department to obtain the necessary feedback?
How complicated is it to implement new policies, methods or processes at the organization?
How often does its procurement team connect with its suppliers to clarify, revise and share additional information about their quotations?
How often do you have to deal with hierarchy and power centers to push your proposal through?
How often there is a noticeable discontinuity in effectiveness whenever a new joinee replaces the departing one despite having a large notice period with enough scope for extensive knowledge transfer and hand-holding?
How often do you have to share inconsequential information before a matter of concern to you is processed?
Only a handful of organizations would fare well on these counts. Operationally, these aren't complicated tasks to do, but the general inability or unwillingness to do it is very perturbing. Across many organizations, these aspects do not even matter as long as the customers continue to buy the products and the salary keeps flowing in at the beginning of every month.
No wonder, the corporate culture prevalent in India today reeks of self-aggrandizement. Renowned organizations do not mind paying millions to loathsome scamsters masquerading as top-tier consulting firms but hesitate to give adequate compensation to sincere staff and haggle with desirous suppliers seeking undue favors as if they are slaves. Instead of asking, 'how can you work with us to address this problem we're facing?', the question posed instead is 'how can your solution clean our mess?' ('Oh, and we are ready to buy it only if your solution comes at a lower price than the one which created the mess in the first place'). In the paraphrased words of an unabashed Operations Management professor and practitioner, Mr. Boman Moradian, 'all it takes is an agile, more operationally adept competitor to come in and knock the living daylights out of such elephants'.
Speaking of Operations, while some of its topics do appear overwhelming, the concepts are rooted in practicality and implementation of frameworks - which sits well with me. And it is these frameworks that I had documented in that folder which has remained embedded with me - I have utilized some of them at consulting projects previously and even do so today while operating my firm. Unsurprisingly, they even constitute a significant portion of this post.
Structured and Persistent are two words which embody the essence of sound Operations to me. Structured because much of what Operations entails is based on an organized method of performing processes, whereas Persistent because usually one has to pursue the method in a dogged & a disciplined manner to benefit from its utility extract the desired outcome.
Let me share with you fifteen handy frameworks - categorized under three phases of a project: Implementation, Monitoring, and Planning - which you can use to understand and/or improve the operations at your organization to good effect. You will be able to download the diagrams and templates from the link mentioned towards the end of each sub-section.
2. TECHNIQUES FOR IMPLEMENTATION PHASE
1. AIDAS Theory of Selling - Funnelling approach to map Sales Operations
AIDAS, acronym for Attention, Interest, Desire, Action & Satisfaction, entails keeping a tab of the buying journey of customers.Â
Doing so helps to determine where to focus on, what the customer's priorities are, and to set actionables for the next phase. Widely popular among marketing professionals, the AIDAS framework is a simple and highly effective tool to enhance Sales Operations as well.
The framework is shaped as a 'funnel' because the number of prospects/customers reduce at each juncture in the selling cycle. For example, Tom emails a marketing brochure to 100 prospects to draw their Attention / generate Awareness (A) about his products. Only 20 respond expressing their Interest (I) to for a presentation / demo. After fulfilling the prospect's ask, only 10 express a Desire (D) to buy the product and float a request for quotation. Out of the 10 quotations shared, only 6 are Accepted / Acted upon (A). Two of these customers end up receiving defective products and opt to return it, so only 4 customers are Satisfied (S) with their purchase.
There are several variants of the Funnel model such AIDA, AIDCA and AIDCAS. But that is beside the point - if you observe the buying journey of customers, you will be able to categorize it into 3 to 7 distinct buckets which you can then structure into your own custom funnel framework.
The key to highly effective Sales Operations, in my opinion, is to inculcate the disciple to document the stages in sufficient detail, monitor it at regular intervals, and to formulate / revise the course of action when the need arises.
2. Process Chart - to delineate and measure time spent towards productive activities
Not to be confused with Process Flow Chart which is an expanded diagrammatic view, a Process Chart captures the time taken for completing a process. Each process is labelled as per its core characteristic which can be either of Operation, Transportation, Inspection, Delay or Storage.
Those processes which directly help in the conversion of input to output are classified as Operation. Other processes are assigned as applicable, however, essentially they aren't directly productive.
Process Cycle Efficiency (Total Process Time spent on Operations ÷ Total Process Time) is a useful metric to understand what portion of the process time is being spent on productive activities. The objective for an organization is to continually improve / increase the cycle efficiency. This can be achieved by finding ways to reduce the time spent on unproductive activities such as as merging existing processes - more ways can be found the SCAMPER subsection.
Do note that cost implications are not considered in the Process Chart, only time is measured. As cost tends to be directly proportional to the time spent on performing an activity, lowering the denominator (Total Process Time) is likely to reduce the overall cost of production.
3. Project Charter - to prepare a broad, yet exhaustive, summary of the project
Project Charter is a neatly structured document which represents an authoritative summary of the Project scope, its objectives, risks, the people involved, and other relevant details. Once signed & stamped by both the parties, it can also be considered as a legal agreement.
While the technical definition of a Project Charter can be accessed here, the method of developing it and content to be included within can vary - here's a useful guideline document which you can refer. The template in Figure 4 was shared by my professor - Mr. Arvind Subramanyam, and I use it to this day, not only to summarize consulting projects but also as a means to formally respond to RFQ's (Request for Quotations).
Read more on Project Charter here. Access the framework template here. If you choose to use it, do print it on A3 paper (default setting) as it is much more impressive in a large frame.
4. RACI Chart - Matrix to assign responsibility and authority at work
RACI Chart, technically known as Cross-Functional Roles & Responsibility Matrix is a useful way to map who's in charge of what, be it tasks or processes. At large organizations or even those that are scaling up, one can often witness a lack of accountability at one extreme and clashing responsibilities at the other. This matrix helps clarify individual roles and alleviate these issues.
The Chart itself is not complicated to prepare although it should developed with stakeholder consensus. At first, all unique activities must be identified. Thereafter, each person / team is assigned a category based on his/her role in fulfilling that activity. The categories include-
Responsible: One who has the duty to complete the activity. Generally, this the Process Owner(s)
Accountable: One who is responsible for the outcome of the activity
Consulted: One who has the relevant expertise / information & whose advice can be taken during the course of the activity
Informed: One who may not directly contribute towards the activity, but should be kept informed of related decisions and progress
Typically, all process blocks are listed vertically & all personnel/designations are listed horizontally. Once the chart is prepared, the output tends to be compelling-
I had modified the RACI Chart in one of my projects to include Organisation Chart, Process Owner, Process Time Taken and Process Dependencies in order to make the document more wholesome-
5. SIPOC Diagram - to map processes and its key elements
SIPOC is a framework commonly used in Project Management & Six Sigma workflows and is an acronym for Suppliers, Inputs, Project Steps, Outputs & Customer. With a SIPOC Diagram, one gets an overview of the processes and its context in terms of the people involved and the material and data that exchanges hands. Creating a SIPOC Diagram entails-
naming a process
defining its starting and ending point
listing the key outputs of the process
defining the customers i.e. those who receive the outputs
arriving at distinct project steps - decisions and/or feedback should not form a part of it
listing key inputs to the process
defining the suppliers i.e. who sends these inputs
While Customer Acceptance Criteria (refer Figure 7) is generally not documented in a SIPOC Diagram, it helps to visualize the organization's understanding of the project as well as the expectation of the customer at each stage. Thinks of it as a summary of those aspects where failure to comply would result in rework and additional costs.
The SIPOC Diagram also helps in knowledge transfer in that it can be used to train new joinees or transferred employees. Being a high level document, SIPOC lays the base for more detailed workflows such as the Work Breakdown Structure and Process Flow Chart.
TECHNIQUES FOR MONITORING PHASE
6. Postponement Possibilities Framework - to align Production strategy with buying behaviour
Postponement happens to be a favorite topic of mine in all of Supply Chain Management - I find the concept to be profound and evaluate organizations from the prism of if/how they utilize it in functions such as manufacturing and distribution. Essentially, Postponement entails delaying further production or processing (and the investment that goes with it) as much as possible until the customer confirms the order. This is akin to how MS Dhoni bides his time and hangs in there in a limited-overs cricket match, keeping the required rate within reach before unleashing his shots at the very end to put pressure on the bowler and win the game.
Operations-savvy organizations strive to
a) monitor and predict customer demand, particularly at point-of-sale (PoS), and/or
b) move from a Push-based to a Pull-based system of manufacturing
This is because volatility in customer demand reverberates across the Supply Chain and magnifies upstream in the network. By adopting Postponement i.e. moving to a Pull-based system, an organization can not only improve its Working capital and better serve changing customer expectations but also mitigate the Seven Wastes of Lean Production such as Overproduction, Overprocessing and Waiting from its operations.
The framework below highlights the 'possibilities' for adopting Postponement - a manufacturer can visualize where the current production strategy lies and the options available to move from to a more Pull-based system. For example, Make to Forecast is a pure-Push production strategy at one end of the spectrum where the manufacturer does everything from Design to Distribution prior to customer order confirmation whereas Engineering to Order is a pure-Pull production strategy which lies at the other end of the spectrum where the manufacturer delays everything from Design to Distribution till the customer confirms his order. The production strategies in-between are a hybrid of Push and Pull - for example, Assembling to Order means that a manufacturer does all activities till Fabrication prior to receiving customer order confirmation while the work on the others commences only after.
It is neither necessary nor advisable for all organizations to move to a pure-Pull system of operating. Rather, they must strive to find a right fit based on a) the nature of their industry, b) the characteristics of their supply chain, and c) the needs of their customers. The framework does a good job in suggesting the possibilities to re-align the production strategy based on evolving buying behaviour as well as based on the prevalent business and competitor strategy.
7. Product Ranking Model - to know 'What to sell?' using the Theory of Constraints
I think you might agree if I were to say that a) the primary goal of any organization which is not into social service is to maximize its profits & b) everything else - the number of customers, employees, factories, products etc. holds little relevance if the business isn't profitable.
Q: So then, operationally speaking, what should be the goal of any organization which wants to maximize its Profits (minimize its Losses)? A: As per the Theory of Constraints, it should maximize its Throughput where Throughput is the rate at which the produced products are sold to the customer i.e. are generating sales.
Let me explain the concept of Throughput with an elaborate example-
Imagine you are heading an organization which sells 10 types of chairs and are reviewing its performance at the end of the financial year.
You obtain the Price list (Figure 9) and rank the chairs based on its selling price. Would this help you to identify-
the products to sell on priority?
the products to continue selling?
the products to discontinue selling?
Not really, as you do not know the cost of making each type of chair and thus, the profit to be gained from selling it.
You retrieve one more datapoint - the Variable Expense associated with selling a unit of chair and compute the Contribution Margin (Selling Price − Variable Expense) and proceed to rank the products based on it-
Once again, is this data sufficient for you to arrive at which products to sell and which to keep?
I believe the reader responses would be one of these-
'yes, the products that rank high on Contribution Margin (CM) should be given priority'
'because the CM is positive for all products, none of them should be abandoned'
'hold on, let's include the Fixed Cost besides the Variable Expense'
These are reasonable but not the right answers. As per the Theory of Constraints - one can maximize the profits (minimize the losses), only if you are maximizing the Throughput. The data in Figure 10 is insufficient to arrive at a meaningful conclusion.
Hence you proceed to add a few more data points. Refer Figure 11-
Now you retrieve the Rate of Production per day for each chair and compute the Throughput/Day and proceed to rank it-
You've added-
the Production Rate/Day (Assume the rate of Production is equal to the rate of Sales i.e. all that is produced on a given day is sold on that day itself with no ending Inventory or Product returns)
The Fixed Cost in the form of Fixed Plant Operating Expenses for a year
The desired Profit from running the business in a year (this is very consequential)
Thereafter, you proceed to compute Throughput/day and proceed to rank it
Throughput/day = Production Rate/Day (Sales Rate/Day) * Contribution Margin.
Essentially, instead of focusing on Sales, you are factoring in the organization's ability to produce a type of chair as well. While the Throughput Rank gives valuable insights, it is not enough to answer the questions. And so, you proceed to include additional data points - the Fixed Cost and desired Profit. This will help you to arrive at the Product Ranking based on Theory of Constraints.
The labels to ToC Rank (refer Figure 11) are assigned using this logic-
- If Throughput / Day exceeds Fixed Costs + Desired Profits, then the product is a Winner
- If Throughput / Day exceeds just Fixed Costs, then the product is So-So
- If Throughput / Day is unable to breach even the Fixed Costs, then the product is Resign
You have your answers!
If the organization wants to maximize its Profits (minimize the Losses), it should prioritize the production and sales of Winners because these carry highest potential profitability-wise
The So-So category of products are those which can be continued being sold because it still helps the organization to recover its Fixed Costs which is critical in terms of business continuity
The Throughput derived from selling the Resign products is not even sufficient to recover the Fixed Costs. Freeing up resources here and deploying it to Winners would be beneficial
If you were to reflect on these suggestions, I'm sure you'll find the Theory of Constraints concept to be as illuminating as I did when I first encountered it.
Some of you may counter with 'as per our business strategy, producing and selling Chairs E & H (Resign) helps us offer an additional choice to the customers, enter export markets, boost innovation in manufacturing (among a myriad of other genuine reasons), and therefore these should not be done away with'. Fair enough, but from an Operations lens, continuing to sell these products at their current Production rates would imply that you are negating your organization's chances to achieve the desired Profits as well as not pursuing the organization's primary objective which is to maximize its profitability. Resources are not infinite, rather they have to be allocated prudently - instead of selling chairs E & H, your organization and its shareholders are better served if you focus on making and selling more of chairs B & D (Winners). And if you really want to utilize unique strategies, deploy it on the So-So category of chairs as they need to be developed into Winners.
8. SCAMPER Framework - to redesign business processes
While SCAMPER is a useful technique to brainstorm new ideas to solve problems, its importance in process redesign is just as immense. Figure 12 contains the constituents of SCAMPER, definitions & similar trigger words.
Practitioners prefer to extend the Process Chart with SCAMPER columns. In this way, besides visualizing the as-is i.e. the processes and its timings, one can also plan for the to-be state by brainstorming using the SCAMPER options to see how the processes can be redesigned in order to increase the Process Cycle Efficiency thereby improving overall Operations.
9. Seven Wastes of Lean Production - to identify excesses in the Value Stream
TIMWOOD is a mnemonic which captures the Seven forms of Waste - a concept widely used in Lean Manufacturing which entails making the product 'with the shortest Production Lead Time, of the highest Quality, at the lowest Cost, and with the most dependable Delivery'.
The framework was developed by Taiichi Ohno (father of the famed Toyota Production System) and helps give perspective about what types of Waste could exist in the value stream and the need to spot and eliminate them. 'Overproduction' is deemed to be the most serious waste of them all as it not only tends to be the root cause for the other types of waste, but also it and leads to bottlenecking across the value stream. Figure 13 lists down TIMWOOD's constituents, a short description for each, and some ways in which each of them exist in the system.
10. VATI Analysis - to understand the pattern of material flow in production and its implications
The VATI Analysis framework helps one to understand the operational characteristics of the plant based on how material flows through it. The exact shape of flow can vary, but broadly it would resemble either of the letters - V, A, T or I. Based on the shape i.e. the flow configuration, one can identify the areas that may need regular attention and where the bottlenecks can occur. Essentially, what a manufacturer has to target is to keep the material movement fluid across production which enhances efficiency. Certain indicators of fluidity are quick processing, limited WIP inventory, shorter manufacturing equipment setup times, and limited waste-generation. These aspects are not to be improved in isolation, rather, a systems-view needs to be taken to see how the moving parts interact and impact the value stream.
The underlying fundamental of VATI is the Theory of Constraints (ToC) which indicates that to attain the objective of maximizing profitability, which is to maximize the rate of production (in conjunction with sales), one has to ease out the most limiting factor i.e. the bottleneck in the value stream.
The four figures below represent the V, A, T & I configurations, its characteristics, where product differentiation tends to occur and where the issue areas could lie, along with an example of industry.
To perform VATI Analysis, you'd have to map the material flow at your Plant with an emphasis on areas of convergence and divergence i.e. where there is considerable change occurring in the processing steps - either a coming together or a drifting apart. The shape that manifests will broadly resemble a V, A, T or I configuration and based on that you can utilize the body of knowledge to schedule and control the material flow to boost fluidity.
For example, in a V-shaped facility (eg. 'one-to-many' divergent plant such as Oil Refineries) where the same input (crude oil) is continuously utilized at multiple branches which eventually produces multiple types of finished goods, it is common to have issues pertaining to high amounts of WIP inventory (work-in-process) and Finished goods inventory in comparison to that of the Raw Material which can be utilized at any of the branches. Also, at the point of divergence, one branch may experience a shortage of input material if other branches rob it for themselves.
Contrastingly, for A-shaped plants ('many-to-one' convergent plants such as Automotive parts), key Raw Material shortages may lead to the assembly line halting which would result in a pileup of other Raw Material inventory & WIP inventory. Here, the problem of synchronization arises - getting all the separate branches to release output at the same time for the converging branch to process.
In a T-shaped ('many-to-many') plant, Furniture manufacturing for example, multiple types of Raw Material (Wood) are processed in batches separately while the point of differentiation (divergence in this case) tends to happen much later in the production process - where the final furniture is assembled using multiple processed wood inputs issues. Here, inventory issues would be more prevalent at the WIP and Finished Goods stage. Both, Robbing and Synchronization issues may occur at the diverging stage.
I-shaped plants (one-to-many or many-to-one-to-many or many-to-few-to-many) such as Confectionery manufacturing typically face issues at the intermediate stages of processing where Raw Material, Manufacturing equipment & Resource-sharing issues could arise due to convergence, especially if you consider the high demand-variability that occurs from the customer standpoint in this industry.
TECHNIQUES FOR PLANNING PHASE
11. Affinity Diagram - to organize ideas into systematic buckets
The Affinity Diagram way of documenting the output from brainstorming is straightforward - its utility lies in its simplicity of use. Essentially, each idea for improving Operations generated from Brainstorming sessions have to be categorized under an overarching theme. There is no analysis or critiquing to be done - full freedom is given to the participants to convey as many ideas, be it good, bad, costly or naive to achieve the objectives of the organization. Thereafter, each idea is grouped under a theme and subsequently each theme and the ideas within are studied, dissected and discussed. The shortlisted ideas can be implemented subsequently.
I can tell from personal experience that, as simple as this method sounds, it is routinely deployed at top management consulting firms at the planning stage of their large projects - the themes are considered as independent work-streams and have specific consulting resources assigned to it. Those who are familiar with the process (junior and middle executives) share several improvement ideas in a breakout session moderated by the consultant resources assigned to a particular workstream. These ideas are subsequently discussed with the senior members from the client team present in order to sign off the viable ideas. Once a pool of ideas is ready, these are used as a basis to define the objectives of that work-stream - for example, to generate one million dollar-worth of total savings by sourcing a new supplier (idea A - half million savings) and buying in bulk (idea B - half million savings). A task-force comprising senior members from the client team is subsequently created who are supposed to oversee the project through its tenure. The task-force nominates the process owners (relatively junior to them) who are supposed to drive the project on the ground and together with the consulting team, a consensus is generated to bring the idea to fruition.
Traditionally, this brainstorming activity is done at a physical meeting with paper, sticky notes, marker pens etc., but nowadays it is convenient to hold virtual sessions with staff from multiple teams and geographies being able to participate at a short notice. 'Breakout rooms' feature on video-conferencing applications offer segmented (theme-wise) discussion facility within the confines of a single meeting window so that the senior members can juggle around to observe, intervene and finalize the discussion points.
12. Gantt Chart - to schedule project workflows effectively
The Gantt Chart is one of the oldest project scheduling tools available to us and its utility is still appreciated. I presume a majority of readers would have used it in some form already. While there are several modified Gantt Chart formats going around - which include more data points and eye-catching design, I prefer to create and use a simple version on Microsoft Excel as I find it easier to manage and can modify it at will.
In professional use, Gantt Chart preparation can also be clubbed with other Operations frameworks such as Work Breakdown Structure & Network Diagram. For those unfamiliar, a Gantt Chart is basically a calendar-based system of tracking Timeline and Progress of activities to be performed towards a project. It involves listing down the tasks / processes / plan of action on the Y-axis and having the timeline is denoted on the X-axis. Thereafter one inputs & color-codes (in blue in the visual below) the timeline of a particular process based on its expected start and end date.
As the project is set into motion, the activities which are completed on time can be color-coded in a different way (in green below) whereas those which are moderately or extremely delayed can be color-coded in a different way (in yellow and red respectively, below). Comments pertaining to the portion that is completed, revised schedule and reason for delay can be made within the colored-cells. These can be reviewed and revised as per the monitoring cadence. All in all, Gantt chart proves to be a very effective calendar-based Scheduling System indeed!
13. NTCP Diamond Model - to assess a project across four important dimensions
The NTCP Model entails mapping a new project's characteristics using these dimensions-
1. Novelty - How unique the product is for the market (derivative, platform or breakthrough)
2. Technology - The uncertainties involving the technology to be used (from low to super high-tech)
3. Complexity - How complicated is the project scope for the organization (assembly, system or array)
4. Pace - At what speed / criticality does the project need to be completed (from regular to blitz)
Any project can be plotted across all the four dimensions to create a 'diamond' shape. For industries where there product innovations are rapid and new launches happen frequently (Smartphones for example), the diamond will intersect the Fast level in the Pace category. The explanations for each level can be accessed here.
Mapping project characteristics across the four dimensions helps decision makers to know whether the project is right to pursue given the company's strategy and its existing capabilities, what are the risks involved, the resources that would be required, the processes that would need to be utilized and the management style to be deployed. Not only this, while the project is being executed or during post-project monitoring, the model helps to demonstrate gaps between how the project 'should have been managed' and 'was being managed'. The shape of the diamond tells a story by itself - for example, larger the diamond, the greater the potential of the project albeit with bigger risks involved.
While I haven't had the chance to utilize the NTCP model professionally thus far, but I really appreciate the 'Diamond' framework as such. Just as a 2 × 2 matrix is useful to categorize so many commonly-used business models, a Diamond-shaped framework can be used when one needs to compare and contrast scenarios which have four broad parameters. I had created a semi-automated Decision Diamond Framework to compare how a company's Job Description fared in comparison to my ideal and minimum preferences for a similar role. You can download it here (do not use the online version - click File and download as Excel workbook) and modify it to suit your own projects.
14. Product Costing Model - to structurally arrive at an estimate of product cost
While planning for a new project, it is important to arrive at reasonably accurate product costing. This is both for the internal function (cost to manufacture the components) as well as for external function (cost to procure the components). The entire structure of Operations is dependent and influenced by this and hence, arriving at product costing is a vital step which this simple model helps us to do.
The Product Costing model, captured in the figure below, comprises four broad cost categories-
Direct Costs,
Indirect Costs,
External Procurement Costs, and
Selling General & Administrative Overheads
Direct & Indirect costs are further divided into these buckets - Material, Labour, Equipment & Others. Together, the cost of all these components, when combined, would help you determine an estimate of the Product Cost. Overall, it is a fairly straightforward and effective framework.
15. Your Custom Creation - Develop a new framework compatible with your organization
Finally, we have reached the end of this long post and no, I do not intend to be cheeky here. I genuinely believe, espouse and practice 'create your own framework' mindset for Operations Improvement based on what I intend to document, measure or monitor keeping the stakeholder, organization and overall industry dynamics in mind.
Sometimes I adapt existing models, which you'd have already observed a few times across this post, while on other occasions I create a new framework altogether taking the client objectives and expectations into consideration. Of course, there is a level of intellect involved here, so you must read up on advantages and disadvantages of existing frameworks before designing a new one as poorly designed frameworks will not only complicate the project but also waste valuable time and lower the morale of the client / workforce.
To unearth points of references for creating a new framework, I can suggest you to document and measure as many operational processes in a structured manner and inculcate this discipline among the workforce across departments. Thereafter, analyze the documented steps and measurements closely overlaying it with sector-specific insights and customer preferences and I'm certain this would trigger compelling avenues to develop and utilize a framework to treat key focus and bottleneck areas.
Once a framework is developed and put to use, ensure that it is monitored at regular intervals and preventive and corrective measures to improve the process are identified and above all, implemented. Finally, ensure that the output of these operations improvement exercises are recorded, reported and shared with the right stakeholders in your organization in the form of a Management Information System (MIS).
Hope you enjoyed reading this article and found it to be informative. Do access the complete list of templates for the methods discussed above, here. In case you have any queries and/or suggestions, please feel free to connect.
ABOUT US
Intelloc Mapping Services | Mapmyops.com is based in Kolkata, India and engages in providing Mapping solutions that can be integrated with Operations Planning, Design and Audit workflows. These include but are not limited to - Drone Services, Subsurface Mapping Services, Location Analytics & App Development, Supply Chain Services & Remote Sensing Services. The services can be rendered pan-India, some even globally, and will aid an organization to meet its stated objectives especially pertaining to Operational Excellence, Cost Reduction, Sustainability and Growth.
Broadly, our area of expertise can be split into two categories - Geographic Mapping and Operations Mapping. The Infographic below highlights our capabilities.
Our 'Mapping for Operations'-themed workflow demonstrations can be accessed from the firm's Website / YouTube Channel and an overview can be obtained from this flyer. Happy to address queries and respond to documented requirements. Custom Demonstration, Training & Trials are facilitated only on a paid-basis. Looking forward to being of service.
Regards,