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Material Handling Information - 10 Steps to Get There - Executive Summary and Cost Justification
   
10 Steps to Get There
Executive Summary and Cost Justification

Northwest Airlines has reduced picking time for aircraft maintenance parts by 60% with a mini load buffer. Faster delivery to maintenance workers reduces flight delays and cancellations, justifying Northwest's investment.
  • Quantify cost savings, primary business advantages, and benefits.
  • Project Return on Investment (ROI).
  • Generate payback analysis, simple payback, net present value, and initial rate of return using a ROI calculation worksheet.
  • Traditional justification factors include:
    • Labor savings.
    • Space savings.
    • Safety.
  • New justification factors include:
    • Speed/Cycle Time.
    • Accuracy.
    • Quality.
    • Make to Order.
    • Mass Customization.
    • Pull Systems.
    • Responsiveness.
  • Identify impact and cost of doing nothing.
  • Compare current system against alternative solutions.
  • Prepare a hard-hitting executive summary that makes your case quickly, concisely, and logically:
    • How current system works.
    • Why it must be changed.
    • Alternatives considered.
    • How new system will work.
    • How much new system will cost.
    • Justification.
    • Design-Build process and timetable.
    • Next steps.
  • Give the pitch to senior management.
Continue to Step 6.

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