Demand Driven Performance

ISBN-10: 0071796096

ISBN-13: 9780071796095

Edition: 2014

Authors: Debra Smith, Chad Smith

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Learn how to implement demand driven metrics for vast improvement in measuring performance.Demand Driven Performancedetails why the outdated forms of measurement are inappropriate for current circumstances and reveals an elegant set of global and local metrics to fit today’s demand driven world. The book shows how to minimize the organizational and supply chain conflicts that impede flow, and eventually, corporate success.Metrics are used to create a benchmark for measuring improvement and to identify and focus on those improvements that are most needed, and that have the highest ROI. However, the world has fundamentally changed in terms of delivering value and driving strong financial performance and growth. The continued use of outdated metrics is driving companies in the wrong direction giving them false signals, putting their personnel into conflict at all levels of the organization, and also wreaking havoc in the supply chain. This book offers solutions to remedy these issues.Defines a new demand driven approach for measuring total organizational performance and the corresponding local metrics that integrate with those measuresAdvocates a systems approach to measuring improvement, and shows how conventional metrics are no longer appropriateFocuses on reliability, stability, speed/velocity, strategic contribution, local operating expense, and local improvement wasteA case study demonstrates the processes in the book and provides you with the technology and tools needed to achieve a demand driven system
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Book details

List price: $70.00
Copyright year: 2014
Publisher: McGraw-Hill Professional Publishing
Publication date: 11/5/2013
Binding: Hardcover
Pages: 336
Size: 6.00" wide x 9.00" long x 1.00" tall
Weight: 1.386
Language: English

Carol Ptakis at Pacific Lutheran University as Visiting Professor and Executive in Residence after years of executive management experience at PeopleSoft and IBM Corporation. Most recently, she served as the vice president and global industry executive for manufacturing and distribution industries at PeopleSoft where she developed the concept of Demand Driven Manufacturing (DDM), credited with significantly improving the company's position in the manufacturing industry software market.Chad Smithis the co-founder and Managing Partner of Constraints Management Group (CMG:, a services and technology company specializing in pull-based manufacturing, materials, and project management systems for mid-range and large manufacturers. Clients include LeTourneau Technologies, Boeing, Intel, Erickson Air-Crane, Siemens, IBM, The Charles Machine Works (Ditch Witch), and Oregon Freeze Dry. Chad is an expert in ASR and the Theory of Constraints (TOC).

Introduction: Deep Truth
The Need to Get Smarter
Are We Even Playing by the Right Rules?
Area 1: Planning and Materials Management
Area 2: Costing Systems
Area 1 + Area 2 = Big Problems
The Rise of the New Normal
The Push-and-Promote Problem
The Need for Flow
Variability-Enemy Number One of Flow
The Types of Variability
Demand Variability
Supply Variability
Operational Variability or "Murphy"
Management Variability
Getting Smarter-A Basic Blueprint for Change
Install the Right Thoughtware in the Organization
Become Demand Driven
Deploy Smart Metrics-Rules for the Smarter Way
Install Thoughtware in the Organization
Can Our Organizations Think Systemically?
Modern Organizations-Conflict Factories
Conflicts and Oscillation
A Short Story about Oscillation
The Real Definition of Waste
Becoming Demand Driven
Push and Promote to Position and Pull
Accepting the Changes Inherent in the New Normal
Embracing Flow and Its Implications
Designing the Demand Driven Operating Model
Placing Decoupling Points
Placing Control Points
A Decoupling and Control Point Example
Protecting Decoupling and Control Points
Demand Driven Stock Buffers
Demand Driven Time Buffers
Demand Driven Capacity Buffers
Bringing the Demand Driven Model to the Organization
Operating and Sustaining the Demand Driven Model
Introducing Smarter Metrics
The Search for a Deeper Truth
Quantifying the Performance Gap
Smarter Metrics
Oregon Freeze Dry
Jamestown Container Company
The Results
LeTourneau Technologies, Inc.
M.C. Gill Corporation
Lessons from the Four Companies
How Do We Know What's True?
The Scientific Method
Monthly Meeting of "Company Normal"
Using Consistent Terminology
What Is a Scientific Fact?
What Is a Theory?
What Is Proof?
What Is Scientific Proof?
Back to the Scientific Method
Unit Cost-Centric Efficiency-A Deep and Universal Truth
Efficiency, Flow, and the Right Measures
The "Right" Measures
Defining Cost
Our Current Accounting Measuring Mess
The Proliferation of ERP/MRPII
The Growing Distance between the Front Office and Operations
The Fading Away of Management Accounting
An Increase in Complexity
The Shift from Linear to Nonlinear Systems
Silo Thinking
Challenging a Deep Truth by Definition Shakes Up the Status Quo
The Evolution of Flow and ROI as Strategy
The Birth of Product Costing
The Birth of Decentralized Management
An Accelerant-Andrew Carnegie
The Rise of Wholesale Distribution and Large-Scale Retail
The Birth of Conglomerates and Management Accounting
Automation and the Death of the Craftsman
Ford versus General Motors-A Lesson of Relevancy
How Did GM Beat Ford?
The Birth of Push and Promote
Systemizing the Management of ROI
The Emphasis on GAAP and the Rise of Unfocused Improvement and Outsourcing
A Case Study-The Boeing Dreamliner
The Boeing Dreamliner
Complexity Science and Supply Chains
The Newtonian Way
The Push beyond Newton
Chaos and Complexity Theory Maturation
Supply Chains as Complex Adaptive Systems
The Simplicity in Complexity
Understanding Complex Systems
What Makes a System Complex?
Complex Systems Are Nonlinear
The Move beyond Complexity Theory-Complex Adaptive Systems (CAS)
The Edge of Chaos
Self-Organization and Emergence
Emergence and Innovation
Self-Balancing Feedback Loops Maintain Stability
Resilience and Rigidity
A Complex Adaptive System Example-Company Normal
A Reference Example for Complex Adaptive Systems
Connections and Interactions in Nonlinear Systems
CAS and the Demand Driven Operating Model
Data Collection and Feedback Loops
Demand Driven and Resiliency versus Rigidity
Smart Metrics
Managing in a Pareto World Calls for New Thinking
The Power of Pareto and Strategic Buffers
Stock Buffers, Pareto Analysis, and Smart Metric Objectives
The Purpose and Size of Each Strategic Stock Buffer Zone
Strategic Stock Focused Improvements
Flow Indexes
Capacity Buffers, Pareto Analysis, and Smart Metric Objectives
A Paretian View of Resource Capacities
The System and Paretian View of Resource Capacity
The Implications of the Sales and Operating Plan for Strategic Capacity Investment
Cost, Volume, Profit Relevant Range Is Defined by the Scarce Capacity Resource
Allocating Scarce Capacity to the Market Based on Strategic Contribution
Prioritizing the Product Mix by Throughput Dollar Rate Changes the CVP Graph
Calculating the Value of Finding More Lathe Capacity
Relevant Information for Strategic Outsourcing
The Case for Acquiring Internal Lathe Capacity
A Summary of the Financial and Nonfinancial Factors of Outsourcing or Capital Investment
The Third Alternative-Using Smart Metrics to Find Capacity
Summary on Strategic Investments in Capacity and Stock
The Scheduling Implications of Stock Buffers
Stock Buffers' Role in Execution
Control Points and Resource Scheduling
Time Buffers and Reliable Schedule Execution
Time Buffers as the Execution Feedback Loop for Manufacturing
Time Buffers Require Ten Zones
Time Buffers During Work Order Execution
Minimizing Control Point Disruption
Schedule Execution Coherence and Priority Alignment
Assigning Roles and Responsibilities
Larger, More Complex, Multisite System Control Requirements
The Cheat Sheet for a Demand Driven Performance System
Ask and answer five key questions hourly, daily, weekly, and monthly
Ensure the five critical data capture points to provide the smart metric answers are timely
Plan an executable schedule focused on system flow and the market lead-time strategy
Expect reliability, stability, and speed
Remove cost-centric competing measures
Performance Measurement Built on a New Deep Truth
The Need for Steady Feedback
Focus on Improvement
A Final Thought on Information Technology
More on the Strategic Replenishment Buffers of Demand Driven MRP (DDMRP)
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