Slides 10 1 determine the purpose and motivation for contin

Determine the Purpose and Motivation
for Continuous Improvement
Intermediate Cost Analysis
and Management

©

1


Which Would You Rather Have?
• A million dollars today
-or• A penny today plus twice the previous day’s
input for a month?
(i.e. 2 cents tomorrow, 4 cents the next day, etc)

…
©


Terminal Learning Objective
• Task: Determine the Purpose and Motivation for
Continuous Improvement
• Condition: You are training to become an ACE with access
to ICAM course handouts, readings, and spreadsheet tools
and awareness of Operational Environment
(OE)/Contemporary Operational Environment (COE)
variables and actors.
• Standard: with at least 80% accuracy:
• Describe the benefit of Continuous Improvement
• Describe the process of stimulating Continuous Improvement

and creativity
©

3


The Power of Continuous Improvement
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

25
26
27
28
29
30

0.02
0.04
0.08
0.16
0.32
0.64
1.28
2.56
5.12
10.24
20.48
40.96
81.92
163.84
327.68
655.36
1310.72
2621.44
5242.88
10485.76
20971.52
41943.04
83886.08

167772.16
335544.32
671088.64
1342177.28
2684354.56
5368709.12

0.03
0.07
0.15
0.31
0.63
1.27
2.55
5.11
10.23
20.47
40.95
81.91
163.83
327.67
655.35
1310.71
2621.43
5242.87
10485.75
20971.51
41943.03
83886.07
167772.15

335544.31
671088.63
1342177.27
2684354.55
5368709.11
10737418.23

Day Two’s two cents +
Day One’s one cent =
three cents


The Power of Continuous Improvement
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

19
20
21
22
23
24
25
26
27
28
29
30

0.02
0.04
0.08
0.16
0.32
0.64
1.28
2.56
5.12
10.24
20.48
40.96
81.92
163.84
327.68
655.36
1310.72

2621.44
5242.88
10485.76
20971.52
41943.04
83886.08
167772.16
335544.32
671088.64
1342177.28
2684354.56
5368709.12

0.03
0.07
0.15
0.31
0.63
1.27
2.55
5.11
10.23
20.47
40.95
81.91
163.83
327.67
655.35
1310.71
2621.43

5242.87
10485.75
20971.51
41943.03
83886.07
167772.15
335544.31
671088.63
1342177.27
2684354.55
5368709.11
10737418.23

Day Three’s four cents +
Day Two’s two cents +
Day One’s one cent =
seven cents


The Power of Continuous Improvement

…

2
3
4
5
6
7
8

9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

0.02
0.04
0.08
0.16
0.32
0.64
1.28

2.56
5.12
10.24
20.48
40.96
81.92
163.84
327.68
655.36
1310.72
2621.44
5242.88
10485.76
20971.52
41943.04
83886.08
167772.16
335544.32
671088.64
1342177.28
2684354.56
5368709.12

0.03
0.07
0.15
0.31
0.63
1.27
2.55

5.11
10.23
20.47
40.95
81.91
163.83
327.67
655.35
1310.71
2621.43
5242.87
10485.75
20971.51
41943.03
83886.07
167772.15
335544.31
671088.63
1342177.27
2684354.55
5368709.11
10737418.23

And so on….
And so on…


The Power of Continuous Improvement
2
3

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

0.02
0.04

0.08
0.16
0.32
0.64
1.28
2.56
5.12
10.24
20.48
40.96
81.92
163.84
327.68
655.36
1310.72
2621.44
5242.88
10485.76
20971.52
41943.04
83886.08
167772.16
335544.32
671088.64
1342177.28
2684354.56
5368709.12

0.03
0.07

0.15
0.31
0.63
1.27
2.55
5.11
10.23
20.47
40.95
81.91
163.83
327.67
655.35
1310.71
2621.43
5242.87
10485.75
20971.51
41943.03
83886.07
167772.15
335544.31
671088.63
1342177.27
2684354.55
5368709.11
10737418.23

By the end of
the first week

we have $1.27


The Power of Continuous Improvement
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

28
29
30

0.02
0.04
0.08
0.16
0.32
0.64
1.28
2.56
5.12
10.24
20.48
40.96
81.92
163.84
327.68
655.36
1310.72
2621.44
5242.88
10485.76
20971.52
41943.04
83886.08
167772.16
335544.32
671088.64

1342177.28
2684354.56
5368709.12

0.03
0.07
0.15
0.31
0.63
1.27
2.55
5.11
10.23
20.47
40.95
81.91
163.83
327.67
655.35
1310.71
2621.43
5242.87
10485.75
20971.51
41943.03
83886.07
167772.15
335544.31
671088.63
1342177.27

2684354.55
5368709.11
10737418.23

By the end of
the second
week we have
$163.83


The Power of Continuous Improvement
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

21
22
23
24
25
26
27
28
29
30

0.02
0.04
0.08
0.16
0.32
0.64
1.28
2.56
5.12
10.24
20.48
40.96
81.92
163.84
327.68
655.36
1310.72
2621.44
5242.88

10485.76
20971.52
41943.04
83886.08
167772.16
335544.32
671088.64
1342177.28
2684354.56
5368709.12

0.03
0.07
0.15
0.31
0.63
1.27
2.55
5.11
10.23
20.47
40.95
81.91
163.83
327.67
655.35
1310.71
2621.43
5242.87
10485.75

20971.51
41943.03
83886.07
167772.15
335544.31
671088.63
1342177.27
2684354.55
5368709.11
10737418.23

By the end of the
month the total is
more than

$10
Million!


Consider a 3%
Annual Improvement
• For a $250 billion organization over ten years:
$M

1

2

3

4

5

6

7

8

9

10

budget 250000 242500 235075 227724 220447 213243 206110 199049 192059 185138
savings

7500

7425

7351

7277

7204

7132

7061

6990

6921

• The Army you save may be your own!!!!
©

total
74%

6851 71713


Consider a 3%
Annual Improvement
• For a $250 billion organization over ten years:
$M

1

2

3

4

5

6

7

8

9

10

budget 250000 242500 235075 227724 220447 213243 206110 199049 192059 185138
savings

7500

7425

7351

7277

7204

7132

7061

6990

6921

• The Army you save may be your own!!!!
©

total
74%

6851 71713


Consider a 3%
Annual Improvement
• For a $250 billion organization over ten years:
$M

1

2

3

4

5

6

7

8

9

10

budget 250000 242500 235075 227724 220447 213243 206110 199049 192059 185138
savings

7500

7425

7351

7277

7204

7132

7061

6990

6921

• The Army you save may be your own!!!!
©

total
74%

6851 71713


Consider a 3%
Annual Improvement
• For a $250 billion organization over ten years:
$M

1

2

3

4

5

6

7

8

9

10

budget 250000 242500 235075 227724 220447 213243 206110 199049 192059 185138

savings

7500

7425

7351

7277

7204

7132

7061

6990

6921

• The Army you save may be your own!!!!
©

total
74%

6851 71713


Continuous Improvements:

Lots of Small Victories
• Continuous improvement’s success based
on:
• Many, many small initiatives
• Widespread employee involvement
• The long term power of accumulation

• The AAR is the forum to monitor progress
in generating initiatives
©


Learning Check
• How would you describe the power of
Continuous Improvement?
• Where is Continuous Improvement
monitored?

©

15


How Do You Get Continuous Improvements?
• You ask for them
• (Why did the chicken cross the road?)

• You reward them
• You expect them
• You build a team that knows continuous

improvement is expected

©


You Will Be Amazed
• “What you have done is unleash the
creativity of your people”
• HQDA staff officer after CSA review

• Who knows best how to fix a problem?
•
•
•
•

Congress?
Auditors?
HQ staff?
The person who lives with the problem?

©


Opportunities for Creativity
•
•
•
•
•

•

Shedding activities no longer needed
Resizing service levels to current needs
Eliminating redundancies
Redefining service levels provided
Challenging inefficient guidance
Removing deadwood

©


Learning Check
• What are two ways of achieving Continuous
Improvement initiatives?
• What are three opportunities for Continuous
Improvement?

©

19


Shedding Activities No Longer Needed
• Organizational inertia tends to
institutionalize services once started
• No clear mechanism exists to reassess the
requirement for service
• Results in continuance of non essential tasks
while sometimes cutting essential

• Example from Fort Huachuca

©


U.S.

C Paul A. Rossi

Cost Reduction Initiative
$000

Title:
Contractor property accountability
Status: (Achieved or in-progress)
IN-PROGRESS
Responsible Manager:
Forecasted annual cost reduction: $ 23K
Number of positions (FTE):

1

Target date for cost reduction:

February


Share the Wealth
• Garrison Commander:

• “You know those computers you’ve wanted for
the warehouse that we couldn’t afford? Well,
thanks to your action we can now afford them.
Take $6K of the savings and get them. I’ll take the
other $17K for unfunded requirements that I have
at the Garrison Level. Great job!”

©


Resizing Service Level to Current Needs
• Many missions have downsized
• Many support functions have not

• Examples:
• Hours of airfield operation at Fort Huachuca
• Staffing for ammunition issue point at Fort
Huachuca

©


Eliminating Redundancies
• Organizations often generate a “stove pipe”
approach
• Consolidating across institutionalized
boundaries can improve efficiency
• Beware the danger of creating non-responsive
monopolies

• Examples: Fort Detrick and Fort Huachuca

©


Fort Detrick
• Initiator: Maintenance Supervisor
• Description: Cross train monitoring,
preventive maintenance, and emergency
response personnel
• Result: Save $600K per year while
increasing uptime

©