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The horizontal dimension of the Resource Planning and Waste Reduction matrix is based on the star technology Just-in-Time/Total Quality Control (JIT/TQC), which seeks to change the current process to drive out the waste embedded in it. JIT/TQC suggests the creation of cells to reduce production and administrative lead time and to reduce work-in-process inventory and the space needed to store it. It also encourages flawless execution, to avoid the time and expense consumed for rework. By driving out these wastes from the process, JIT/TQC helps a company move closer to its "ideal," waste-free process.
In MRP/JIT/TQC, the crossing-point of the two dimensions is the activity of production of an individual item. The vertical (planning and control) dimension, classical MRP-II, shows when the item must be produced. The horizontal (change) dimension, Just-in-Time/Total Quality, tries to reduce the resources need to produce the item. Just using MRP will result in better control, but not in resource reduction. Using only JIT/TQC will reduce resources but will not bring any stability to the process and to the people running it.
In Cost Calculation and Cost Reduction, which has Activity-Based Cost ing (ABC) as its star technology, the vertical dimension calculates true costs of products and of customers so that costs can be better planned and controlled.
ABC's horizontal (change) dimension tries to reduce and/or eliminate the factors which create cost. Thus it seeks to change the existing process and to make it more like the ideal process with the lowest possible costs and the least possible consumption of resources. The initial idea for Three-Plus Integration came in fact from Peter B.B. Turney's matrix representing ABC.
In ABC, the crossing-point of the two dimensions is also an activity. The control view of ABC permits calculating the correct product cost based on the activity's consumption of resources and the product's consumption of the activity. The change view of ABC identifies the inputs and cost drivers of the activity and gives its performance measurements. Just using the control view will produce better product costs for say manual soldering but will not focus on why the activity costs so much. Perhaps poor product definition requires too much manual soldering as opposed to automatic flow soldering. The change view is required for identifying cost drivers and seeking ways to eliminate them, which means changing the process to make it less resource-consuming.
Although each management-technology family can be represented by a separate plus sign, in reality the horizontal bars of the three pluses are all linked, because they represent the company's customer-driven industrial process, initialized the Voice of the Customer (see Figure 3). So the change-directing dimension of the different technologies can be used to reduce the length of the linked horizontal bars, symbolizing reducing the length of the process.
To be Continued
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