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Cost leadership without capital investment

Improvement Projects

Our Approach

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Our Approach: Beyond Root Cause Analysis, Downtime Tracking & Production Monitoring

To get beyond the process improvement basics, such as root cause analysis, downtime tracking, and production monitoring, you must know the financial value of every opportunity. You must understand what problems have the biggest financial impact. And you also must have the capability to track improvement actions in terms of dollars.

Therefore, for truly effective manufacturing performance improvement, you need a system that provides:

The potential value, in dollars, of each improvement opportunity
The benefit, in dollars, realized from each improvement action

Without a system to provide this data, your process improvement teams are operating in the dark. Even worse, they are at the mercy of those who propose courses of action that may not have any benefit. No amount of root cause analysis, downtime tracking, or production monitoring will help you with this problem. In the absence of accurate financial data, it is impossible to prove or disprove whether benefit will accrue.

Managing by “Gut Feel”

Because of these fundamental problems, managers typically rely on gut instinct to determine improvement targets. While it’s possible to calculate the value of a single problem, it is a highly time consuming mathematical exercise and is virtually impossible to do for every problem in a plant. Managers are forced to use an ad-hoc combination of cost accounting system data and KPIs to determine which projects to work on.

You can prove this premise for yourself. Gather 15 or 20 people from different functions and levels in a plant. Ask them to list the five most important problems affecting plant performance. Few will have difficulty answering the question. But each one will have a different answer. You may find 50 to 100 problems that at least someone believes is critical. That’s why people say, “It takes forever to get things done around here.”

Everyone will agree that, without determining the real financial cost of each problem, it is impossible to prioritize them for improvement.

The Hagen Approach

In order to overcome the limitations of the cost accounting system and understand the true value of every problem, we’ve developed a patented system of software tools and services we call the Hagen Methodology. This process is not an accounting system, but a management approach that enables a business to value every improvement opportunity and then prioritize the opportunities to ensure the organization is focusing on the issues with the biggest and fastest impact on the bottom line.

The Hagen Methodology compares the profit a plant’s production lines are making with the profit they could be generating if everything ran at its true potential. It calculates the value of each profit opportunity, and then ranks them in terms of dollars. Now managers can compare improvement opportunities to focus on the areas that will drive the biggest financial gain.

Only Hagen's approach takes you beyond the limitations of root cause analysis, production monitoring, and downtime tracking.