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).
Table of Contents
Part 1: An Introduction on the MCPD System
Chapter 1: Starting From the Need for Continuous Cost Reduction
Chapter 2: A MCPD System Overview Part II: The MCPD Transformation
Chapter 3: Establishment of MCPD System: Steps to Begin
Chapter 4: The MCPD Implementation: Designing, Building and Full Development
Chapter 5: The MCPD Constant and Consistent Application Part III: The MCPD Practical Implementations and Case Studies
Chapter 6: Application of the MCPD: Manufacturing and Assembly Industry
Chapter 7: Application of the MCPD: Process IndustryConclusion
Appendix 1: Checklist for MCPD System Transformation
Appendix 2: Glossary of MCPD Terms
List of Figures
List of Tables
About the Author
Alin Posteuca, Ph.D, is a management consultant in cost improvement, productivity and quality and managing partner of Exegens Management Consultants (Romania). Prior to this position, he held top management positions in manufacturing and service companies.His major research areas include manufacturing policy deployment, manufacturing cost improvement, and operational management of production. His recent research includes the manufacturing cost deployment policy to translate the strategic objective to reduce the long-term production costs to the annual activities and actions of manufacturing cost improvement, by setting targets and means for the process cost improvement. He has been actively involved in various industrial consulting and training projects for more than 18 years in Romania. He has published in various research journals and presented papers at numerous conferences, regarding productivity, manufacturing cost improvement and industrial engineering. He is certified public accountant. He has an MBA degree (University of Iasi, Romania). He received his Ph.D. in managerial accounting from the Bucharest University of Economic Studies (Romania). Also, he received his Ph.D. in industrial engineering from the Polytechnic University of Bucharest (Romania).
"Reveal your hidden Productivity!
Sometimes you need to do the hard work of understanding the data - data can uncover the secrets of your operations: the good, the bad … and the ugly. And sometimes, you need to work at the detailed level to fully understand what is going on … and uncover why.
The MPCD approach does this - works at the detailed, data level to uncover those secrets. But more than this - it drives forward progress. It uses targets to motivate, to challenge and to provide evidence - of the possible, the realistic, the ‘truth’. Managers can then work at a daily level to identify why these targets are not being met - and to improve operations so that the targets are met, regularly and consistently. MPCD deployment puts those managers firmly in control. Perhaps most importantly, MPCD provides the links between the "productivity vision" and longer-term aims -- and the goals and action plans that drive shorter-term improvement. Adopting and using the MPCD system releases hidden reserves of productivity and profitability.
Alin has done a remarkable job of condensing a lot of detailed information into a readable, interesting and challenging book. If you are the type of manager who values evidence-based policy determination and decision-making, then MPCD is the approach for you. If you are not yet convinced, read the results of case examples - this approach works!"
President of the World Confederation of Productivity Science
"This book takes a comprehensive approach to inform the reader about how to achieve manufacturing profitability. While the lessons within are discussed in many publications and professional forums, few of them seem to approach the problems with as much common sense. Similarly, it seems that there are many publications that demonstrate expertise in planning and policy development, but few of them tell us how to better execute those plans. This book does both. The book starts by demonstrating the need for MCPD and the importance of having management commitment. It then delves into the very practical steps required for both implementation and subsequent continued use. Finally, it provides working examples to demonstrate the efficacy of the approaches. The result is a highly practical guide that should enable the careful reader to implement MCPD for the benefit of his or her organization."
G. Don Taylor, Ph.D., P.E.
Charles O. Gordon Professor – Virginia Tech
Vice Provost for Learning Systems Innovation and Effectiveness
"This book is a new, original, scientific, methodical and a practical approach toward reducing the production costs in a manufacturing environment. Through his professional education, practical involvement and exposure to the everyday production problems, Mr. Posteuca, PhD, is presenting, both, to the academia and to the production floor people, a new type of scientific analysis and activities optimizations.
The book starts with an excellent description of the manufacturing environment problems and needs and then the new approaching method is introduced and explained in terms that can be easily understood not only by college educated professionals, but also by a large amount of people who are working every day in manufacturing plants and have to resolve so many issues.
At the end, the book is analyzing manufacturing samples from everyday life and is proposing practical solutions the optimize the good ones or remove the bad ones.
After spending a pleasant time reading and professionally enlightening myself, I highly recommend this book to anyone interested in improving the efficiency of his manufacturing process he is in charge!"
Lean-Six Sigma Master Black Belt, Philadelphia, USA.
"The approach from this book is great. Through this book, Alin Posteucă is helping organizations to uncover the hidden potential of profitability through understanding of manufacturing costs behind losses and waste in product families costs flow and alignment of improvement actions and initiatives to achieve Manufacturing Cost Improvement (MCI) goal. The MCPD system is addressing the top management that needs to meet profitability targets by strategic and operational improvement of manufacturing efficiency, but very important, this transformation is based on all workforce engagement on this path.
In his book, Alin is describing the needs for this strategy (the why?) and the steps for this transformation system implementation for tangible and consistent fulfillment of MCI (the how?). And the case study presented in the 3rd section of the book is an eye-wide opener for the organizations on the road for this strategy deployment implementation, with all the links between product families manufacturing flow, cost of losses and waste understanding, actions or improvement initiatives throughout the manufacturing flow, levels in the organization and the annual MCI goal."
Lead Black Belt, Cameron, a Schlumberger company
"It is a clear, coherent and very well-structured book up to the smallest details that channel your attention and look at the manufacturing companies' operations as a true "exploded view" to identify real opportunities for consistent and continuous manufacturing cost improvement (MCI) through the MCPD system.
Most of the times, we design, build and use the equipment without the natural ambition to closely and continually monitor their consumption (time spent in detail, spare parts, utilities, etc.). This "exploded view" of the manufacturing process is a way of reverting / resetting every time the logic that we often think is perfect to release hidden reserves of productivity and profitability.
The real practical applications presented in the book are very useful. For example, replacing bottleneck operations is an example of how to use this "exploded view" of data and information to trigger tangible action to increase productivity to deliver the ROI target in line with the company's expectations - we have simulated this case study and can confirm its practical applicability.
Really remarkable the effort to simultaneously capture the details and the overall picture of the processes!"
Plant Maintenance Manager, ZF Group-TRW Airbag Systems
"Once I got the chance to review Manufacturing Cost Deployment (MCPD) Transformation: Uncovering Hidden Reserves of Profitability, I was prepared for documented, precise, deeply connected to operational realities work. I was not disappointed: well structured, proving deep knowledge of Lean and financial aspects, this book is not a "quick fix" tool, but a real asset if you are looking for multiannual approach, team involvement and company culture turnaround. More: it openly speaks, straight from beginning, about main barriers to consistent/sustainable transformation of manufacturing companies- among which, lack of real managerial commitment is pointed as decisive one.
I would also particularly highlight the three case studies at the end of the book: accurate on defining the issue, providing clear "pattern" and road-map on MPCD implementation, result analyze and conclusion. A lecture to consider for each manager passionate on improving his results!"
Plant Manager at Litens Automotive Eastern Europe (Litens Automotive Group)
"Reading this book it becomes obvious that a newer methodology of implementing the costs and efficiencies required in the 21st century across the world has been just published.
From my personal perspective, this the manual that many educators and trainers are missing from their tool boxes because it makes the connection between the different methodologies used by the organizations plus it brings the Cost Transformation and Profitability back into the discussion of why we need projects and educators to be involved in organizational transformations.
Throughout the book, I read the new methodology with steps that will be implemented rigorously as Need for Continuous Cost Reduction, to Transformation, Implementation and Consistency to achieve Manufacturing Cost Improvement. The two cases are well detailed such that many organizations can follow the plan, while training and education can be consistently developed by those who consider Kaizen and Kaikaku as being at the heart of any process."
Professor eLearning, BITSPEC Lean Six Sigma certification
"My favorite animal is cheetah. Not only for speed but for adapting to environment. In the same way Manufacturing Cost Policy Deployment (MCPD) Transformation: Uncovering Hidden Reserves of Profitability book by Alin Posteucă show us not only to be the best but also how to adapt to new kind of economy. Alin by his book show as a new view of the new world. By simple case studies in his book, Alin show us how to adapt to new economy. I strongly recommend MCPD system and his book to all want to make manufacturing cost improvement by apply the advice from his book."
Lean Manager at Filtration Group
"In manufacturing, our job is to continuously find the balance between cost, effectiveness and innovation to stay competitive in an increasingly selective market. The theme tackled by Alin fully reflects the struggle for discovering this balance, even if it means discovering less pleasant things, which can be hidden in unsuspected areas. The MPCD system also finds it useful to carry out radiography of the company, if the reader goes through the steps indicated. The book is useful for decision-makers who make data-based decisions, but also for those who want to learn this new approach. With MPCD system, you will be able to find those unknown reserves of profitability and productivity in your company."
Manufacturing Engineering Manager, ZF Group-TRW Airbag Systems
"In the beginning, the book presented a general look for an entire organization and explains very well how the entire levels must understand that the continuous improvement of manufacturing costs it is not a goal only for production department but requires mobilization of all people in the company. That means that they have to improve continuos the activities (Kaizen) and actions (Kaikaku) of the processes of each product family cost. The book has concret examples very useful in the daily practice. I recommend sincerily this book to all managers that want to improve their work and want to have better results."
Technical-Production Director at Farmec
"The concept of Manufacturing Cost Policy and its deployment is addressing by the means of this book both senior corporations high-level management as well as junior managers of small enterprises. The book is giving a thorough description of the approach applicable to any stage of business development lifecycle, highlighting the path to be followed in an integrated management approach. At the same type the book is addressed to day by day solutions to be implemented in a two ways channel application (Top-Down and Bottom-Up). The book is giving a through view on all the concurrent factors that might be overlook when aiming to withstand the competitors’ environment and is growing learning on rapid adapting under controlled indicators to changes driven risks management. Implementation of a rational and risk-controlled manufacturing policy integrated from early design of the product until the mass production is greatly based on the product’s cost controllers where manufacturing cost is placed at its core. This makes obvious that the proposed continuous and consistent application of the Manufacturing Cost Policy Deployment must be considered as redlined item of the management dashboard. Regardless of position and experience Alin’s book will bring to you new and interesting ideas, information that will make you reconsider the managerial approach and model you were used to, improving for sure your personal approach to business management.
Timisoara Medical Subsidiary, Design Quality Manager at Flex
"Everyone wants to improve costs, everyone wants long lasting results, but most of the low hanging fruits are already consumed by now. So, what happens in manufacturing when you just apply what everyone else is using? Well, you most likely have similar results as everyone else and then just some subjective or accidental factor will make the difference. There is obviously something more that you or anyone else who wants to have a fair edge has to do. There is no quick fix or miracle solution. So, what can you do then?
You need to understand your data and what to do with it. Manufacturing Cost Policy Deployment is a detailed and very well-structured guideline that provides you with the right advice and examples on how to do this. It’s giving you the answers to questions that perhaps you always had in your head, but they were never really addressed.
Getting back to the beginning: by now most of the manufacturing organizations have at least a basic lean understanding, but it is not working if the costs are not under control, profits are low or even missing and people do not feel engaged and motivated. Why are the targets and the way they are addressed so important? How can we make sure we are fully aware of our existing waste and how to transform all the available information in better planning and suitable targets? How do we engage everyone, what is the link between motivation, targets and profit? What do we learn from our customers, from the market – and why? And there are so many more questions and the best part of the MCPD is that it’s addressing all these questions with clear data and examples and helps you getting your answers.
I know Alin for many years and this work is a true highlight of his long-time research. It is one of those books that you wished you had it early in your career when you were responsible for critical projects or businesses and you knew that things can be done better. Thankfully, it is never too late to learn!"
Global Sourcing Leader – Progress Rail, a Caterpillar company
"Manufacturing Cost Policy Deployment Transformation is a new approach. MCPD aims is to reduce costs of losses and waste (CLW) by addressing areas that offer the most opportunities for improvement. The book presents a structured approach to analyze cost and implement a long term strategy for profitability improvement.
Alin presents a new method to identify priorities for improvement activities, by looking at the CLW (compared to just looking at KPI's like: "down time", "scrap/rework rate", etc). Quantifying losses and waste through a money value gives Continuous Improvement Engineers and/or Middle Management the right arguments for convincing the Top Management to approve improvement projects resources. On the other hand, the Top Management can link better the improvement activities to the Annual Targets for Cost Reduction. The case studies shown help clarifying questions which might arise when trying to put this new theory into practice.
This book is useful to companies starting an improvement journey or to companies which tried already to improve their operations, but didn't manage to achieve a significant impact. MCPD system ensures a step-by-step guidance to achieve the manufacturing cost improvement."
Supplier Engineer at Lam Research AG
"Once you start reading this book you realize the business complexity top managers has to deal with on daily basis. Digging more in lecture the complexity breaks out in simple steps through MCPD structured approach. You start to understand better the connections between business functions, keeping in mind that profit is the reason why organizations exists.
MCPD transformation concept developed by Alin Posteuca and detailed in this book, together with Management Branding concept by same author are powerful tools to be used by managers at all levels. Upper management have to embrace the concept and lower levels of management have to practically implement on shopfloor the steps described.
Case studies at the end of the book are proving that concept works fine with structured approach, hard work and team work when no barriers are present between business functions."
Production Supervisor- Manufacturing