Sunday, July 22, 2012

Total Cost of Ownership Over Time of our Business Processes

...... Total Cost of Ownership as related to processes with waste.

At first thought, one might say that the cost of "waste" is only associated with wasted time, loss of products, etc. However, I propose that there are several types of "waste" and what we all should be concerned with is "The Total Cost of Ownership" of our processes over time.

Yes, the base cost of waste is the various tasks times the number of hours times the rate per hour. But, more importantly to our business are the additional costs associated with: + Rework - due to poor training and bad procedures for our workers + Wasted effort - due to poor planning of our tasks and projects + Changes in Mind - due to poor communication with workers, suppliers and customers Imagine a cleaning crew that showed up to wax the floor at customer XYZ office. After stripping off all the old wax, they found that the cleaning company's purchasing agent had not ordered the new wax; the workload scheduler had not told the supervisor that they were to wax a different site instead and -- by the way the stripping removal of the old wax turned out poor quality because they were recently hired workers from a different company and these workers had not been properly trained for using the specific type of equipment. Refer to overhead slide at: 

 There have been some studies that suggest that all these additional costs may be as much as 25% of total costs of doing business.

Total Cost of Ownership over time - please give this concept some thought.

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