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Weekly Versus Monthly Pubs --Dickeson

November 2002











































Job#SalesDirect Matls.Thruput HoursValue AddedVal. Add /Hr. Val.Add /SalesSales/ Matls.
427$9,856$4,269152.1$5,587$3756.7%2.3
527$4,872$1,98568.0$2,887$4259.3%2.5
459$7,895$3,87497.8$4,021$4150.9%2.0
387$8,796$4,25890.1$4,538$5051.6%2.1
555$3,785$1,35832.5$2,427$7564.1%2.8
715$11,789$5,025156.3$6,764$4357.4%2.3
638$8,652$3,580114.6$5,072$4458.6%2.4
952$3,879$1,48551.3$2,394$4761.7%2.6
247$2,869$1,25844.7$1,611$3656.2%2.3
248$4,056$1,98279.6$2,074$2651.1%2.0
249$13,580$5,987165.9$7,593$4655.9%2.3
250$6,875$4,25889.8$2,617$2938.1%1.6
251$7,056$3,28490.2$3,772$4253.5%2.1
252$6,859$2,40666.6$4,453$6764.9%2.9
253$6,025$2,78971.4$3,236$4553.7%2.2
254$10,589$4,358103.8$6,231$6058.8%2.4
255$12,879$5,705120.3$7,174$6055.7%2.3
256$4,705$1,85662.6$2,849$4560.6%2.5
Tot.$135,017$59,7171,657.7$75,300$4555.8%2.3
Avg.$7,501$3,31892.1$4,183$4555.8%2.3


What's so different about the table included above? There's a "Throughput Hours" column. For each of the 18 jobs listed, we see how long it took the Direct Materials of each job to get through the conversion process of the plant. Here's what this 18-job sample tells us:

* It takes 92 hours to get a job through the process.

* On average, each job yields $4,183 Value Added (VA).

* We're producing at $45 VA per process hour.

* Pricing is roughly 2.3 times materials.

* An average job sells for $7,500 and uses $3,300 direct materials.

The focus of this analysis is twofold: 1.) Rate of satisfying customer demand and 2.) Rate of converting materials to claims for cash. This points our concentration to results desired by both customer and printer. There's a third aspect of the table: marketing analysis. Perhaps there's a fourth aspect as well: capacity utilization. We're really appraising enterprise productivity with this table—satisfaction of both customer and supplier needs from the printing conversion process.

This 18-job sample suggests that Work In Process (WIP) inventories took 3.84 days to complete. (92.1/24) That's a process churn rate of 95 times a year. (365/3.84) Try this analysis on your own data. Then noodle it a bit. At your current price yields, how many times must you increase that WIP turnover to produce satisfactory earnings? As you increased turnover couldn't you drop prices and optimize enterprise earnings? Heresy! Shades of Sam Walton.

Other Industries Get It

What are we saying? Are we suddenly realizing that rate of Throughput—WIP turnover—is far more significant to earnings than Budgeted Hour Rate hocus-pocus? That's what Laidlaw, Deming, Ohno and Goldratt have been shouting these past 15 to 20 years. We just didn't get it. Other businesses in other industries got it, but in printing we've had tunnel vision. We've been staring at the wrong numbers! We must look at Throughput of Value Added per process hour—by job, by product, by materials and whatever.

The true secret of efficiency, productivity and profitability for manufacturing—for printing—is to be found in the speed and continuity of process throughput.

—Roger V. Dickeson

About the Author

Roger V. Dickeson is a printing productivity consultant based in Tucson, AZ. He can be reached via e-mail at rogervd@bigfoot.com.
 

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