7/31/2019 Bpr Session 05

1/10

Time Compressed Delivery Process of a Heavy-duty, Highway Truck

Customer Dealer InquiryOrder Entry Schedule

Assembly

Assembly Shipment

Pricing CreditCheck

Pre-approvalComponent

Supply

JITAccessory

Fabrication

Pre-

EngineeredOption

CustomEngineering

7/31/2019 Bpr Session 05

2/10

Maturity of Strategic Concepts

Embryonic Growth Mature Aging

Value for theCustomer

ShareholderValue

CompetitiveAdvantage

.. .

7/31/2019 Bpr Session 05

3/10

Core Processes for CreatingCustomer Value

Customer Customer Customer

Product Creation Order Delivery Service Assurance

Products Fit for Useby Time of Launch

Orders HandledCorrectly and Quickly

Transparent Servicefor Maximum

Product Enjoyment

Planand

Specify

DesignandTest

LaunchTake-in

Order

Sourceand

Manu-facture

DistributeandInstall

Maintainand

Repair

Upgrade Dispose

7/31/2019 Bpr Session 05

4/10

Quality, Delivery and Cost in Order Delivery

Quality

Delivery

Cost

Take-inOrder

Sourceand

Manufacture

Distributeand

Install

UnambiguousUnderstanding of Customer Request

On-the-spotProcessing Of

Customer Requestfor ImmediateQuotation

Low Change-cost if First Quotation is

Unsatisfactory

Easy Inquiry intoStatus of Product-in-process

Fault-freeDispatching of Sub-assembly Kitsto Site

Ability to SpecifyDesired ProductFinishing Close toDelivery Time

Predictable andReliable Delivery

Time

Generation of ProductDocumentationAccording to CustomerStandards

Low Cost of ImmobilizationDuringInstallation

7/31/2019 Bpr Session 05

5/10

Capacity Loss Associated withWorking on Several Projects

E f f e c

t i v e

C a p a c i

t y100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

Number of Simultaneous Projects

n=2 n=3 n=4 n=5

L=Mental Switch Time (Hours)

L=0.5

L=1.0

L=1.5

n=1

0%

7/31/2019 Bpr Session 05

6/10

Waste of Resources Due to Rework

100

75

50

25

0

R & D S t a f f

B u i

l d - u

p

( % )

30%

Hardware

TotalSoftware/Firmware Total

Net Productive

Fixing

Potentially750 EngineersFreeable to WorkOn New Products

70% 40%

7/31/2019 Bpr Session 05

7/10

Opportunities for Lead Time Reduction

0 10 20 30 40 50 60 70

% of Respondents Quoting Opportunity asMost Important to Reduce Development Lead Time

Use of Information Systems

Use of CAD/CAM

Parallelism in Design Process

Opportunities to Communicate Well

Pragmatism Instead of Over-Engineering

Intensive Planning

Early Involvement of Functions

Opportunity

68 68

53

46

39

28

26

23

13

Project Management

7/31/2019 Bpr Session 05

8/10

Impact of Unanticipated CompetitorProduct Introduction

(A) = Actual(E) = Expected

S a l e s

V o l u m e s

( U n i t s

)

Year-1

Year0

Year1

Year

2

Year

3

Market (A)

Market (E)

Company (A)

Company (E)

Competitor (A)

Competitor (E)

7/31/2019 Bpr Session 05

9/10

Impact on Sales Volume and Profit

Volume Gross Profit Net Profit

2nd to Market

72% of Expected

SalesVolume

IncreasedTrade

Discounts

49% of Expected

Gross Profit

IncreasedAdvertisingAndPromotion

20% of ExpectedNet Profit

I n d e x

f o r

3 Y e a r s C u m u

l a t i v e

( E x p e c

t e d =

1 0 0 )

0

50

100

7/31/2019 Bpr Session 05

10/10

Creating the Right Products

Technological ObsolescenceCommercial Obsolescence

CannibalizationScope for Carry-OverScope for CommonalityProduct IntegrityLearning and Experience