High Cost Of Not – Doing

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High Cost Of Not – Doing

9/11, 2001 has hit a whole lot of business. But the most badly hit was air industry. US airlines were virtually on the ground for most of time rather than in the sky. As old adage says. Planes are safer at the ground. But they are built to fly and that where they should be all the time. Almost whole aircraft industry was badly hit by being grounded. Million of jobs evaporated and billion of dollar went under drain. All these were due to not doing anything.
Peter Drucker, in his book ‘Managing for result’ defines the cost point in the whole supply chain.
1. Productivity cost
2. Support cost
3. Policing
4. Waste or Idle time.
Drucker accept that to some point all three cost centre productivity cost, support cost, policing cost are imperative to any business. It takes massive investment to produce something and market it successfully. A corner cutting here and there can be welcomed but you can’t remove any of these three cost centre at all.
But waste rarely needs to be analyzed. It is usually quite clear that this or that cost cannot produce results; whether we can do anything about it is another thing.
But waste is very hard to find.
These fact are hidden the accounts book only. The normal available account will not show this. You need to dig hard to find these unacceptable costs to your product and services,
In it services industry or any knowledge intensive industry, major concern of any top management people in 2001 was the bench period. As industry defines it as a time when your know ledge worker are sitting idle in the absence of project. This cost awesome money to any organization and pull it into big trouble. Lucent technology faces the similar effect in 2001-02.
Although to avoid these waste effort and tools are totally outside of conventional approach to cost control and cost cutting. They required major, prolonged efforts, but the fact is most cost cutting, let alone the across-the-board cut, does not even touch waste. Yet, in business waste is real cost centre. It required a lot of systematic planning and organized effort to recognize a waste in the supply chain and get rid of it.
Any Manager Job is to keep the ship running tight to produce the greatest value for the constituents.

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