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Тренинги, Курсы, Обучение — Agile, Scrum, OKR
Тренинги, Курсы, Обучение — Agile, Scrum, OKR
Тренинги, Курсы, Обучение — Agile, Scrum, OKR
17 October, 2022 г.
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What is the Cost of Delay framework?

The Cost of Delay framework is a simple framework that helps companies identify the cost of delay associated with their supply chains. The framework looks at…

What is the Cost of Delay framework?

The Cost of Delay framework is a simple framework that helps companies identify the cost of delay associated with their supply chains. The framework looks at all the different factors that can cause delays in a particular product, and then it assigns them a value based on their impact on overall costs.

The framework takes into account many factors that affect the time it takes for your products to move from raw materials to consumer hands, including transportation costs, storage fees and losses due to spoilage or damage.

The Cost of Delay framework, also known as the cost of delay index (CODI), is a tool for measuring the cost of delay. It is used by utilities, manufacturing companies, and government agencies to estimate the total costs incurred when a business needs to wait for an item or product from another business.

The computing process is as follows:

  1. The CODI is calculated by multiplying by 0.05 the average lost revenue per year due to delays at each stage in the supply chain. This means that if you have a shipment coming from China that has to wait two weeks before being delivered, your CODI will be 0.05 x $100,000 = $5,000 per year in lost revenue.

  2. A 95% confidence interval around this number is then calculated using sample data collected from independent sources such as suppliers or warehouses that are not directly involved with your company's supply chain. This allows you to see how widely your data set might vary from this number.

The Cost of Delay framework is a framework for analyzing how delays in the supply chain impact a company's operations. The framework is based on a model of a firm, which includes inputs such as raw materials, labor, and other resources. The model also includes outputs such as products sold and profits earned.

The supply chain delay model has five steps: input activity, processing activity, product activity, production activity, and final service activity. The first step is to identify the activities that occur during each stage of the supply chain. These will vary from company to company depending on what products they sell and what processes they use internally for production. The second step is to determine how long it takes for each stage of the supply chain to complete its work before moving on to the next step. Finally, we add all of these delays together so we can get an estimate of how long it will take for us to receive our products when compared with another company that uses different resources or processes internally rather than outsourcing them externally like we do with some suppliers (e.g., Amazon).

The Cost of Delay framework is an approach to managing project management. By breaking down a project into three distinct phases, this approach allows for better financial management and optimization of resources.

The Cost of Delay framework was developed by Microsoft, who has used it extensively in their own software development processes. It divides a project into three phases: Early Planning, Execution and Post-Execution. Each phase has its own set of goals and metrics that are used to measure progress and success towards the overall goal of completing the project on time and within budget.

Each phase has its own set of challenges which must be managed effectively in order to meet deadlines and deliverables on time and under budget.

How do you calculate the cost of delay?

The cost of delay can be difficult to calculate, but it is essential for companies to understand. Some ways to calculate the cost of delay include:

  1. Calculating the cost of a delay in terms of lost revenue, or loss of sales or market share

  2. Multiplying the cost per unit by the number of units delayed, which can be used to determine how much the company loses when inventory is delayed

  3. Calculating the cost per hour of personnel who are working on a given project, and then multiplying that figure by the number of hours that they are not able to work while they wait for an item

Also there are two ways to calculate the cost of delay:

  1. You can use a direct method, which is also known as the critical path method (CPM). This method requires you to define the project's overall duration and then identify the activities that make up each phase. Once you've done that, you can calculate how much time each activity will take, and then you can determine the total project duration. To get the cost of delay for each activity, multiply its resource units by its duration.

  2. You can also use an indirect method, which is also known as a slack-based technique or network diagramming method (NDM). This method uses a network diagram to represent your project's schedule in order to determine how much it will cost when delayed by an amount of time equal to one unit of work. To do this, follow these steps:

  3. Identify all activities and identify their durations

  4. Calculate slack times for each activity

  5. Determine total delay costs

Direct costs are expenses that you have to pay out of pocket to delay the project. These include:

  • The salaries of people who would have been working on this project if it hadn't been delayed
  • Materials and supplies that are needed for the project but can't be used because of the delay

Indirect costs are expenses that aren't paid out of pocket but still affect your business. These include:

  • The opportunity cost of not having that money invested elsewhere (for example, if you invest $100,000 in this project, you won't be able to invest it elsewhere)
  • The cost of paying for a new person who will work on this project once it resumes
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