Category: Supply Chain Management

How To Improve Productivity

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Seven Skills of a Highly Productive Workforce By Doug Howardell Customers in the global economy are more demanding than ever before. They can be; there is more competition than ever before. Customers take it for granted that you will deliver a low cost and high quality product or service. Now on top of that, they demand it faster and customized to their individual needs. To be a survivor in the marketplace today you must produce world class quality products and services, designed to meet the specific customer’s needs, deliver them quickly anywhere in the world and at a competitive price.…
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How To Improve Customer Service

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Stop me if you’ve heard this before. Your CEO or some other top management type addresses the troops in an attempt to rally them to do better. “Our customers are revolting! They are demanding more for less. They want world class products and services. They want it all and they want it now. If we can’t provide what they want, they will find some one who can. Customer loyalty is a myth formed in the mist of our distant past. We must be closer to our customers then ever. We must provide great customer service.” I’d bet some version of…
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Crisis Brings About Real Change – A Case for In-Sourcing

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For the past decade companies have spent considerable time and resources on strategically outsourcing their products and services. But maybe now, while our economy is in a real crunch, is the time to reconsider this strategy and put people back to work in this country. According to the APICS Dictionary, 12th edition, in-sourcing is “using a firm’s internal resources to provide goods and services”. The opposite is out-sourcing; “the process of having suppliers provide goods and services that were previously provided internally”. In the old days we called this a “make or buy” decision and out-sourcing was called sub-contracting. The…
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Activity Based Costing in the Information Age

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I. Traditional costing today Despite the fact that it is over 75 years old, most companies still use standard cost systems both to value inventory for financial statement purposes and for many other management purposes as well. While it has some advantages for financial statement purposes (simplicity, consistency, well understood by auditors), it is, at best, meaningless and, at worst, misleading as a tool to assist in making effective management decisions. Why is this true? It’s because the business case for which it is being used today is not the business case for which it was designed. Standard cost accounting…
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Don’t Reduce Excess Inventory, Avoid Creating It

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Many articles have been written over the years on how to reduce excess inventory. I want to tell you how to avoid creating excess inventory in the first place. Excess inventory is to be avoided for several reasons. First, it takes cash to buy or build inventory. Many companies borrow to support their short-term cash needs. When you borrow, you pay interest. Every dollar paid in interest comes right off the bottom line. Second, excess inventory takes up space. You may have to rent space to store the excess materials you are carrying. Third, you typically have to count your…
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Keep Your Customers with Good Service

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Two years ago, I pulled the plug on one of my telecom providers. Having no other options, I did business with them for 5 years, and hated every minute of every one of our interactions. Two years ago, a tree trimming company did a poor job pruning my ornamental pear tree, and now it is diseased and suffering. Needless to say, I did not call them back this year, when my tree needed additional care. Last year, I needed a new server and an upgraded network. The IT company I’d used for 2 years failed to serve me. They told…
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Maintaining and Verifying Database Integrity in a Manufacturing Environment

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Introduction In this age of rapidly changing products and processes it is important that all elements of the manufacturing database are verifiably accurate if an MRP system or any other type manufacturing control system is to be used effectively. The objectives of this paper are 1) to review cycle counting principles as applied to inventory quantities, 2) to establish a problem solving approach that will correct the source of errors, not merely correct the errors and 3) to identify other elements of the manufacturing database that should be audited. Too few companies have an effective inventory cycle counting system in…
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Maximizing the Most Important Resource Your Company Has: Cash

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Of all the resources you should maximize, cash is the most important. More businesses fail for want of cash than for want of profit. Cash flows in a cycle into, around, and out of a business. Cash goes out for facilities, equipment, labor and materials before cash comes in as sales. That upfront expenditure of cash is usually called working capital. You have a limited amount of working capital. Spend your cash on buildings and maintenance, and there is less to spend on labor. Spend it on material, and you have less to spend on equipment. In good times, you…
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Maximizing Cycle Counting Results

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Cycle counting is an audit technique where inventory is counted on a cyclic schedule and a process of not just fixing the inventory error but understanding and eliminating the root cause for the inventory inaccuracy. It is also a method of measurement so that you have a benchmark for continuous improvement. If not done correctly, this process can be a waste of resources. This article will explore several different types of cycle count methods that can be used. Control Group Method Companies that are new to cycle counting tend to start with this method. It is a fast way to…
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Keys to Plant Management Success

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To succeed in today’s environment, it is no longer desirable to have a world class operation focused on providing a “value add” while maximizing resources; it is a requirement. Today’s global business climate is becoming more competitive. It is tough to stand out in the crowd, and it is increasingly difficult to squeeze out an operating profit. Clearly, the trend has been to move operations to lower cost countries such as Mexico and China where there are lower wage rates, less intensive laws and regulations, etc. There are no quick fixes. Success almost always boils down to a day-to-day persistence…
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