Rated by:_______________ Rapid Plant Assessment

Tour Date:______________ Table 1--Rating Sheet Operation _______________

Below Above Best in
Ratings Poor Average Excellent
Average Average Class

No Measure Score 1 3 5 7 9 11 Scores

1 Customer satisfaction

Safety, environment,
2
cleanliness, & order
Visual Management
3
System

4 Scheduling system

Space use, material

5
movement, & product flow

6 Inventory & WIP levels

7 Teamwork & motivation

Condition & maintenance

8
of tools & equipment
Management of
9
complexity & variability

10 Supply Chain Integration

11 Commitment to quality

Totals
 Rapid Plant Assessment Rating--Table 1 Rating Considerations Chart 1
Measure Factors
Customer Customer ratings, quality certifications & ratings, warranty & product liability costs, employee knowledge of external and internal customer requirements, visitor
satisfaction materials & welcome, market share, rate of new product introduction & acceptance

Safety, environment, Safety & environment record, place for everything & everything in its place, cleanliness of operations--exterior & interior, floors, equipment, spills, leaks, noise, lighting,
paint, dust, air quality, employee dress, restroom conditions, desks & workbench order & cleanliness, degree of "spiffing" for visitors (negative), inventory order, material
cleanliness, & order flow order & cleanliness, color & other coding for safety & order

Operations mission & performance objectives visible; visibility of labeling & coding of product lines, inventory, equipment, & tooling; color coding & differentiation ;
Visual Management visibility of customer identification & ratings; visibility of charts tracking operation's & teams' safety, quality, & productivity, control room showing status of total operation,
System customer order & order fulfillment visibility, Kanban deployment, inventory count visible, machines & tool labeling--costs, preventive maintenance visibility, product
displays, audit results visible, production and maintenance scheduling done by visual means, vacation scheduled & absenteeism charted by visual means.

Degree of scheduling to customer order, order process efficiency, product line scheduling at single point, scheduling buckets (each order, hourly, daily, weekly, or
Scheduling system monthly), supplier scheduling & delivery, replenishment versus order fulfillment, computer scheduling versus kanban, pull versus push systems, flow time efficiencies,
backroom costs of scheduling, MRP costs, data entry costs

Space use, material Product line versus shop layout, rolling carts pulled by tractors or by hand or conveyers versus forklifts, travel distances between processes, material movement
movement, & responsibility--process owned or separate material staff, container size (forklift requirement?), containers designed for parts families, single versus multiple docks to
minimize material travel, space utilization, goals for space use reduction, line-side storage of material, MRO control,
product flow
Inventory & WIP WIP levels at each process, WIP in transit in plant, separate stores versus line side storage, number of inventory storage areas, finished product levels, total inventory
to sales ratio, process cycle time to flow time ratios, countability of inventory, WIP movemend triggered by computer, material department or next process, theoretical
levels versus actual flow times

Team problem solving capability & history, employee willingness to talk about customers, products, & company; uniformity of dress; communications & recognition
Teamwork & environment; sales per employee; team meeting areas & performance charts; training investments, educational support, benefit package & costs, unionization activity,
movitation workforce-management relationship, community support, company-supported activities (picnics, open houses, sports teams, local involvement, employee knowledge of
& support of customers & business, work instructions standards

Condition & Preventive maintenance system, setup change times, integrated go-no go quality checks, machine performance data availability, knowledge & utilization of bottleneck
maintenance of processes, process control capability, total asset utilization, operator routine maintenance, maintenance staff & teams, MRO replenishment efficiency, tool & fixture
orderliness, cleanliness, & storage location, equipment improvement policy & results, equipment technology strategy, setup times & reduction goals
tools & equipment

Use of common parts, processes, & procedures prototype process, paper transactions required on floor, keyboard entries versus bar coding, backroom paperwork &
Management of computer transactions costs, matching of data collected with data needed, simplicity & clarity of operations layout, indirect to direct labor ratio, support staff to total
complexity & workforce ratio, overhead cost ratios, commonality of tooling & fixturing, commonality of equipment & tools, commonality of support software & applications programs
across the operation & among sister plants, equipment efficiencies, ability to handle variable demand, ability to eliminate controllable variations, ability to smooth
variability demand, ability to handle supply chain, number of suppliers, not how complex but how complexity is handled.

Supply Chain Number of suppliers, supplier release system--from inventory levels or customer order, supplier certification, sourcing policies--short-term or long-term, supplier quality
ratings, delivery, & productivity objectives & history, new product development responsibility, responsibility for kitting parts, C-stock replenishment efficiency, supplier
Integration material scrap & rework, supplier cost-saving ideas implemented, supplier knowledge of lean

Commitment to Quality certification, quality process & measurement at each process & for each product, scrap & rework, problem solving process, product & customer quality data,
quality ratings, new product startup process, continuous improvement environment, degree of focus on customer satisfaction , implementation of best practices, degree
quality operational strategies are linked to corporate strategy, total quality system well-developed & deployed, single quality system.
Plant Rapid Plant Assessment Date
No Table 2--Assessment Questionnaire
1 Are visitors welcomed and given information about plant layout, workforce, customers, and products?
2 Are ratings for customer satisfaction and product quality displayed?
3 Is the facility safe, clean, orderly, and well lit? Is the air quality good and noise levels low?
4 Does a visual labeling system identify and locate inventory, tools, processes, and flow?
5 Does everything have its own place, and is everything stored in its place?
6 Are up-to-date operational goals and performance measures for those goals prominently posted?
7 Are production materials brought to and stored at line side rather than in separate inventory areas?
8 Are work instructions and product quality specifications visible at all work areas, is visual management used?
9 Are updated charts on productivity, quality, safety, and problem solving visible for all teams?
10 Can the current state of the operation be viewed in a central control room, on a status board, or on a large LCD?
11 Are production lines scheduled off a single pacing process with appropriate inventory levels at each stage?
12 Is material moved line-side in appropriate containser after receipt and not moved again?
13 Is the plant laid out in continuous product flow lines rather than in independent "shops"?
14 Are work teams trained, empowered, and involved in problem solving and ongoing improvements?
15 Do employees appear committed to continuous improvement?
16 Is a timetable posted for equipment preventive maintenance and continuous improvement of tools and processes?
17 Is there an effective project management process, with cost and timing goals, for new product start-ups?
18 Is a supplier certification process--with measures for quality, delivery, and cost performance--in place & displayed?
19 Have key product characteristics been identified and fail-safe methods used to forestall propagation of defects?
20 Would you buy the products this operation produces?
Total number of Yeses
Yes/No
Ratings process help & instructions

The ratings process should proceed as follows: Teams should tour the operation without notes or the char
Take in as much of the operation visually. Remember to compare the operation to its ideal you imagine; n
Teams should meet immediately after the tour and discuss what they have seen during the tour giving eac
the opportunity to speak and summarize the good and the bad, they observed.

The team should thoroughly discussion of all 11 ratings categories and 20 questions before assigning valu
After the general discussion and the ratings discussion, the team should go back and assign ratings and y

Remember the discussion is one of the main benefits of the tour and rating process. Do not short change

Table 1 ratings must be 1, 3, 5, 7, 9, or 11. No other numbers are allowed.

To earn a yes in Table 2, the concept underlying the question should have been largely implemented.
For example, if implementation is about 50%, that is a clear no. If implementation is at 90%, that is a clear
So, a yes indicates that the concept behind the question has been implemented in the operation.
 n without notes or the charts and
to its ideal you imagine; not to one you know.
n during the tour giving each team member

tions before assigning values or a yes or no.

k and assign ratings and yes's or no's.

cess. Do not short change the discussion.

largely implemented.
on is at 90%, that is a clear yes.
d in the operation.
Rated by:______________ Rapid Plant Assessment Tour Date:______
Plant:__________________ Table 3--Tour Data
Measure Metric Data
Sales Volume Yearly customer sales dollars
Unit Production Number of yearly production units
Production Employees Number of hourly employees
Average Wage Rate $ per hour
Fringe Benefits % of wage rate
Salaried Employees Number of employees
Average Salary Yearly base pay plus fringes
Total Employees Total production & salary people
Employee Turnover % employees that leave each year
Direct/Indirect Ratio Ratio of DL to Indirect Labor
Overhead Rate Direct Labor Rate Multiplier
Workforce Grievances Number outstanding for union workforce
Average Overtime % overtime by employees over year
Direct Material Cost Actual $ or COS%
Average Working Capital Inventory + Acc Rec - Acc Payable
Order Fulfillment % of orders delivered on time
PP&E $ Book value of property, plant & equipment
Equipment State Old technology or up-to-date
Equipment Condition Preventive maintenance effectiveness
Plant Size Square Footage
Product Complexity Number of different product families
Process Complexity Number of different process types
Operations Type Job shop, line flow, batch, assembly
Operations Mix What mix of operations types?
Daily Demand Variability Short Term Variability--peak to average
Yearly Demand Variability Seasonal Variability--peak to average
Equipment Utilization Average Equipment utilization
Finished Goods Inventory $ or units of finished goods
WIP Inventory Raw material & WIP Inventory Levels
Bottleneck process? What is the operations bottleneck?
Theoretical Flow Time Theoretical time to produce products
Actual Flow Time Actual time to produce products
Environmental Issues Noise, Air, Effluents, etc.
Safety Record Incidents per employee per year
 Chart 2 Typical Operations Measures
NO Variable Low side High Side Nominal
1 Yearly sales per employee--manufacturing $ 100,000 $ 500,000 $ 300,000
2 Yearly sales per employee--Assembly $ 250,000 $ 1,500,000 $ 500,000
3 Production hourly wage rate--manufacturing $ 10 $ 30 $ 18
4 Production hourly wage rate--Assembly $ 9 $ 19 $ 13
5 Hourly wage rate--Retail & Services $ 7.5 $ 15 $ 9.5
6 Production hours per year (less vacation & holidays; see Note 2) 1,625 1,920 1,800
7 Fringe--FICA & Medicare Taxes (employee portion only--1/2 of total) 9.4%
8 Fringe--Medical for family per year $ 4,400 $ 15,000 $ 9,000
9 Fringe--Workmen's Comp per year--production employee $ 350 $ 2,500 $ 1,000
10 Fringe--Insurance, AD&D, other per year % of hourly wage rate 3.0% 12.0% 7.5%
11 Fringe--Vacation, holiday, sick leave/production employee--days/year 15 30 22
12 Fringe--for hourly employees--% of yearly base pay 25% 95% 50%
13 Annual average salary for plant employees $ 32,000 $ 80,000 $ 45,000
14 Fringe--for salaried employees--% of yearly base pay 20% 50% 35%
15 Plant fixed costs per sq ft per year 15 65 35
16 Plant variable costs per sq ft per year 18 55 30
17 Yearly equipment fixed costs--% of COS--heavy manufacturing 6% 12% 9%
18 Yearly equipment fixed costs--% of COS--assembly 3% 7% 4%
19 Yearly equipment variable costs--% of COS 4% 15% 9%
20 Sales per sq ft per year--manufacturing $ 150 $ 500 $ 200
21 Sales per sq ft per year--assembly $ 400 $ 1,500 $ 750
22 Gross Margin--manufacturing 10% 40% 20%
23 Gross Margin--Assembly 7% 30% 12%
24 Material % of COS--Manufacturing 25% 65% 50%
25 Material % of COS--Assembly 55% 80% 70%
26 Manufacturing overhead rates--% of Direct Labor hourly cost 200% 500% 300%
27 Salaried overhead rates--% of direct yearly salary 30% 100% 60%
28 Corporate allocations--percent of sales 1% 5% 2.5%
29 "Other" plant costs % of COS--manufacturing (See Note 3) 5% 20% 10%
30 "Other" plant costs % of COS--assembly 6% 15% 7%
31 Working capital to sales -5% 35% 16%
32 Inventory to sales 5% 30% 12%
33 Accounts Receivable--days outstanding 15 120 45
34 Account Payable--days outstanding 20 90 45
35 Inventory Turns per year--assembly 6 125 20
36 Inventory Turns per year--heavy manufacturing 3 25 10
38 Hours to assembly a typical seat set for an automobile 0.5 2.5 0.8
39 Hours to assembly a PC 0.05 0.3 0.1
41 Typical Manufacturing Overhead Variances 3% 20% 7%
42 Property, plant, & equipment investment to yearly sales 15% 100% 25%
43 Equipment depreciation--years 3 15 7
44 Indirect to direct labor ratio 10% 100% 33%
45 Salary to production worker ratio 10% 50% 18%
Notes: 1. Data from instructor's experience, 2. 2080 hrs/yr., 3. "other" costs refer to RPA cut
Rated by:______________
Rapid Plant Assessment Tour Date:____________

Plant:_________________________
Table 4--Holistic Cost of Sales (RPA Cut)
Measure % of
Measure--Annual $'s Measure--% of COS Data
Sales
Sales

Cost of Sales (COS)

Direct Material Cost

Total People Cost

Property, Plant, & Equipment Cost

"Other" Costs

Gross Margin

PP&E Investment Average yearly $'s

Facility yearly cost Average yearly $'s

Working Capital Investment Average yearly $'s

Net Assets Employed Average yearly $'s

Shop Rate $/hour

 RPA Cost of Sales Example
Plant Data Value Plant Data Value
Yearly Sales $ 100,000,000 Direct Material in Sales: % of COS 56%
Gross Margin 15.0% Freight in: % of Material 4.0%
Total production workers 350 Scrap & rework in Material 3.0%
Indirect workers (in above) 110 Plant Size Sq Ft 150,000
Salaried staff 55 Plant fixed cost $/Sq ft $ 5.00
Standard Hours/yr 1,800 Plant variable cost $/Sq ft $ 4.50
Average Direct Labor rate $ 15 Equipment fixed cost $ 4,000,000
Average Indirect Labor rate $ 17 Equipment variable cost $ 750,000
Average hourly overtime 10.0% PP&E $ 6,175,000
Fringe % 42.0% Manufacturing O/H rate 300%
Average salary $ 50,000 Salaried O/H rate 60%
Salaried Fringes 30.0% Corporate allocation %/sales 2.00%
Salaried overtime 10.0% Tour evaluation 55 (Table 1) rating; 5 yes's for Table 2

COS RPA "Cut" RPA COS % COS Traditional COS Computation Value % COS
Yearly Sales $ 100,000,000 Sales $100,000,000
Direct Materials + freight in $ 48,156,077 56.7% Material % of COS $ 49,645,440 58.4%
Production people costs $ 15,379,452 18.1% Direct Labor $ 7,128,000 8.4%
Salaried people costs $ 3,932,500 4.6% Manufacturing Overhead 21,384,000 25.2%
Total peopla costs $ 19,311,952 22.7% Salaried Overhead $ 4,840,000 5.7%
PP&E $ 6,175,000 7.3% Corporate allocation $ 2,000,000 2.4%
Other $ 9,356,971 11.0% Cost of Sales $ 85,000,000 100.0%
Corporate Allocation $ 2,000,000 Numbers
2.4% in green are computed from the plant data or Table 3
Numbers in red are estimates using Table
COS $ 85,000,000 100.0% 3
Gross Profit $ 15,000,000 Numbers in blue are gleaned from the tour
Gross Margin 15% Note: direct labor is 8.4% of COS, while total people costs are 19.2%
Sales per Employee $ 246,914 Relationships are in the cells if this MS Excel sheet is opened.
Rapid Plant Assessment Template for Estimating Lean Transformation Benefit
RPA CUT Vary Year 1 Year 2
with Year 0 Sales Change Year 1 Sales Change Year 2 Sales
Variable Sales? Value % Value % Value %
Sales
Materials + freight in Yes

Total People Costs No

PP&E Costs No

Other No

Corporate Allocation ?
COS

Gross Profit (GP)

Contribution Profit No

GP without lean Yes

Table 1 Rating

Table 2 Rating
RPA Example 1 Estimating Lean Transformation Benefit with increasing sales
RPA CUT Vary Year 1 Year 2
with Year 0 Sales Change Year 1 Sales Change Year 2 Sales
Variable Sales? Value % Value % Value %
Sales $ 100 100% 10% $ 110 100% 12.0% $ 123 100%

Materials + freight in Yes $ 49 49.0% -0.5% $ 54 48.8% -1.5% $ 59 48.0%

Total People Costs No $ 22 22.0% 0.0% $ 22 20.0% -5.0% $ 21 17.0%

PP&E Costs No $ 6 6.0% 5.0% $ 6 5.7% 12.0% $ 7 5.7%

Other No $ 13 13.0% -20.0% $ 10 9.5% -40.0% $ 6 5.1%

Corporate Allocation Yes $ 2 2.0% -10.0% $ 2 1.5% 0.0% $ 2 1.3%

COS $ 92 92.0% $ 94 85.4% $ 95 77.1%

Gross Profit (GP) $ 8 8.0% $ 16 14.6% $ 28 22.9%

Contribution Profit No $ 44 43.7% $ 48 43.8% $ 56 45.2%

GP without lean Yes $ 8 8.0% $ 12 11.3% $ 18 14.9%

Table 1 Rating 45 15 60 15 75
Table 2 Rating 3 5 8 6 14
RPA Example 2 Lean Transformation Benefit with no sales increase
RPA CUT Vary Year 1 Year 2
with Year 0 Sales Change Year 1 Sales Change Year 2 Sales
Variable Sales? Value % Value % Value %
Sales $ 100 100% 0.0% $ 100 100% 0.0% $ 100 100%
Materials + freight in Yes $ 49 49% -0.5% $ 49 48.8% -1.5% $ 48 48.0%

Total People Costs No $ 22 22% -10.0% $ 20 19.8% -5.0% $ 19 18.8%

PP&E Costs No $ 6 6% 10.0% $ 7 6.6% 10.0% $ 7 7.3%

Other No $ 12 12% -10.0% $ 11 10.8% -30.0% $ 8 7.6%

Corporate Allocation Yes $ 2 2% -10.0% $ 2 1.6% 0.0% $ 2 1.6%

COS $ 91 91% $ 88 87.6% $ 83 83.3%

Gross Profit (GP) $ 9 9% $ 12 12.4% $ 17 16.7%

Contribution Profit No $ 44 43.7% $ 44 44.1% $ 45 44.6%

GP without lean Yes $ 9 9.0% $ 9 9.0% $ 9 9.0%

Table 1 Rating 45 12 57 12 69
Table 2 Rating 3 4 7 5 12