Cost

Wage Expectations for 2013

Posted on by w13michael

The recovery from the 2008-2009 recession has been tepid at best, and has disappointed many.  Coming out of such deep recessions we have historically seen accelerated growth for several years, which has somewhat softened the pain of recessions and enabled businesses large and small to recover their losses.  This tepid recovery is projected to develop into slower growth long-term, as has been concluded in independent evaluations by a leading economist and a leading money manager, according to the WSJ article “U.S. Stocks: Look Out Below?”  While not the point of the WSJ article, this slower economic growth will directly and necessarily reduce the wealth creation of firms, which will directly and necessarily impact wage expectations for 2013 and beyond.

The first impact that this slower growth will have on wage expectations is through an increased gap between the income earned by the top tier wage-earner and rest of the workforce.  While not desirable for the economy, this will be the logical result of an economic environment that has less opportunity for growth.  This environment will increase the relative value of workers who are able to find opportunities for growth, especially those able to lead the implementation of expansion into new areas of business for company ownership.  The most critical of these will be the CEO’s and company leaders who are able to successfully implement these growth initiatives; the pay of these individuals will therefore increase due to this value that they are bringing to the ownership.

The rest of the workforce, meanwhile, will be pressured from two sides.  The flip side of the previous paragraph is that although the work they do is still important, it is not as critical because the Big Question will not be “How Can We Do This?” but more fundamentally “What Should We Do?”  On the other hand, the slower growth will reduce the availability of jobs and result in a higher unemployment rate.  As a simple matter of supply and demand, this slower demand will necessarily work against salary growth for the bulk of the workforce.

This raises the inevitable question of how wage negotiations must be managed especially with a unionized labor force.  Unionized labor forces in the long term have shown negative impacts to the profitability of a company, although they have been able to “negotiate” lucrative contracts in the short run.  This long-term negative impact has resulted in bankruptcies at GM and Chrysler, and most recently at Hostess.  A concept missed by the unionized labor force is the fact that if the growth in profit does not exceed the increase in value that the labor force provides such as through higher efficiency, the long-run viability of the business is at risk.  From the perspective of the labor force, the workers as a whole and every worker individually must pursue how he can add more value to his work for his employer, and this will be the only way to justify wage increases.

In a low-growth environment, what ideas are there to reduce the income gap?

U.S. Stocks: Look Out Below?
Hostess Preparing For Bankruptcy-Protection Filing
Right to Work Isn’t All It’s Cracked Up to Be

JIT – Just-in-Time or Just-in-Trouble?

Posted on by w13walney

The importance of managing risk through the supply chain has become painfully evident as a result of natural disasters which have occurred in recent months and years. Despite the obvious human cost and tragedy that ensued, catastrophes caused by the earthquakes, tsunamis, flooding, factory explosions and volcanic eruptions have all impacted enterprises who source globally, and who have embraced Lean/JIT practices at least to some degree.

The supply chain effects of these catastrophes have lead to a JIT rethink, but it is clear that many companies have failed to put in place back-up plans to cope with emergencies like the Japanese catastrophe. They were content to place all their eggs in one basket like Japan or China owing to low production costs while ignoring the obvious risks of natural disasters. But even where companies had a disaster-recovery plan in place, room for maneuver depends largely on the nature of the industry.

The production philosophy born on the factory floors of Japanese car companies is a global management practice and has saved companies billions of dollars. The idea behind JIT, or lean manufacturing, is to have the supplies a firm needs at the exact moment that they are needed. Most of the companies, with production systems based on just-in-time inventory management, understand keeping minimum inventory has its risks.

The problem for many global corporations is that they are mesmerized by cheap production costs in disaster-prone countries. They know the natural disaster risks but feel that their infrequent occurrences on a major scale justify the risks. Nature is not the only threat to the supply chain; there are also significant political risks to be considered in many politically unstable countries.

The rising production costs in China will favor a shift of production back to countries concerned to have a more secure source of supply unaffected by natural disasters. There are, however, other reasons favoring a production shift back to regions close to their markets, like flexibility to react to market changes more responsively.

There are number of avenues open to risk mitigation strategies to deal with large scale disruptions of supply chains, including:

–        Challenge suppliers to develop disaster plans so that they can make provisions to move to alternate sites for production, in the event that they are unable to produce product at their main plant.

–        Eliminate sole-source suppliers, and developing the capabilities of additional companies. Having one supplier is probably too few, but having five suppliers is too many in terms of achieving economies of scale.

–        Analyze where suppliers are located, and limiting the number of critical component suppliers that are geographically situated in a risky area.

–        Review insurance policies and consider taking-out contingent business interruption insurance that protects against losses relating to the inability of suppliers to deliver.

Experts have been recommending for years that manufacturers diversify their supply base. After all, recent history is full of examples of widespread supply chain disruptions and their consequences for manufacturers reliant on too few sources, such examples are: attacks to WTC and Hurricane Katrina in USA, flooding in Thailand, factory explosions in Germany, volcanic ash from Iceland and earthquake and tsunami in Japan.

References:

Japanese Earthquake-Tsunami Show Flaws In Just-In-Time

http://nhne-pulse.org/flaws-in-just-in-time-production/

Reducing Risk in The Automotive Supply Chain

http://businesstheory.com/reducing-risk-automotive-supply-chain-2/

Japan’s earthquake must force JIT supply changes

http://logisticswithballs.blogspot.com/2011/04/japans-earthquake-must-force-jit-supply.html

Auto companies relook at just-in-time mantra

http://articles.timesofindia.indiatimes.com/2011-05-18/india-business/29555380_1_shekar-viswanathan-toyota-production-system-tsunami

 Japan One Year Later: What Did Supply Chain Practitioners Learn from the Tsunami?

http://supplychainalmanac.com/2610/japan-one-year-later-what-did-supply-chain-practitioners-learn-from-the-tsunami/

Walgreens Inventory Management System

Posted on by f1234crobinson

 

As early as 1994, Walgreens has been ahead of its competitors regarding inventory systems. Taking on new technology, which is defined as SIMS technology (strategic inventory management systems), which previously had not been applied to the pharmaceutical sales industry. This early technological approach to dealing with issues of inventory, such as over and under stocking, greatly benefitted Walgreens in the long run. This benefit was able to be transmitted to consumers as well as net profits for Walgreens due to their ability to track their inventory in all facets of its movement. The systems implemented by Walgreens allowed it to eliminate a great deal of its excess as well as virtually eradicate under stocking. However ultimately, what was most significant is what this process allowed Walgreens relative to its consumers. Walgreens, as a result, managed to cut its customer wait-time in half.

Walgreens has been able to use this basis of efficient to expand to over 4000 locations in ten years. Moving from a locally recognized Chicago pharmaceutical retail company to a major corporation, which many argue in large part is associated with its focus on inventory management. Because Walgreens monitors its inventory through every step of its process it is more difficult for anything to be lost in addition this data collecting process, which is becoming more and more utilized allows Walgreens to stay ahead of the curve.

Walgreens has been able to become the company it is today as a result of its constant revising and tireless focus on technological internal opportunities in the inventory and customer care sectors. It is this technological focus that has lead Walgreens to become a major market share holder per the NAICS able to hold it’s own against CVS and RiteAid while acquiring smaller scale pharmaceutical retailers.

 

http://www.fundinguniverse.com/company-histories/walgreen-co-history/

http://www.hollandcs.com/retail2.html

 

A Storm’s A Brewin

Posted on by f1231ivboneva

storm

With hurricane Sandy quickly approaching the East coast, it is hard not to wonder why these storms are coming in stronger and later than ever. The Chicago Tribune published an article today examining the factors contributing to these “super storms” and all facts point to global warming.

Amanda Staudt, a climate scientist for the National Wildlife Federation, explains that climate change is not the sole cause of catastrophic weather events, but instead intensifies their damage and severity. She believes that since the Earth has become increasingly warmer, the length of hurricane season has increased, and the numbers support her conclusions. As industrial societies began burning fossil fuels “in great quantities in the late 19th century… the average global temperature has risen between 1.5 and 2 degrees Fahrenheit.” In addition, the water temperate in the Mid-Atlantic is 5 degrees higher than the average. Because of these warmer climates, out atmosphere retains 4% more moisture than it once did 40 years ago. Scientist predicts that by the end of the 21st century “hurricanes could dump 20% more rain than it does now.”

This article relates directly to the ethical and social responsibilities companies have in an effort to preserve the environment. Along with providing ethical working conditions and accurate financial statements, companies should use environmentally friendly resources and dispose of their products in a safe way. It is the manager’s duty to ensure their business is not harming people or the environment in any way.

Alternatively, city officials of New York, New Jersey, and other large cities on the East coast are taking every precautionary measure to ensure people stay safe during hurricane Sandy. Officials have closed down the entire subway system in New York, hired additional electricians from all around the US, and canceled hundreds of flights and trains to and from LaGuardia.

I find this forecasting to be a great sign of successful management by the city officials, but what do you think? Do you feel that they are over-hyping this storm, like many believe happened last year with hurricane Irene? Will the increase of this ‘Super Storms’ encourage companies to become greener?

http://www.chicagotribune.com/news/nationworld/la-na-nn-hurricane-sandy-heads-to-northeast-20121027,0,177959.story

Cash Strap? Need a Job this Holiday Season?

Posted on by f1224hpham

With the holiday season approaching fast, many major retailers are opening up more jobs in preparation for the high demand of the holidays. Experts estimated about 700,000 new, temporary jobs for this year, which is a slight increase from last year. As the economy is slowly moving out of the recession, many American families are paying back their debts, which give them the extra cash to spend this year. Hence, there is a great outlook for this holiday season for those of you who are looking for a little more income or just taking advantage of the employee discount that most of these retailers offer for their employees.

Looking at previous years numbers, most of these retailers are retaining their seasonal workers well over the holiday season. These temporary, seasonal jobs are turned into full-time positions, which for most workers are a good thing if they are looking for a permanent job. I have started seeing a lot of companies doing this nowadays. Rather than hiring full-time workers right from the start, companies would look into their pool of temporary workers first before hiring outside workers for any new positions. I’ve had a taste of this through the internships I have had done in the past. Most of the firms that I want to work for usually hire from their pools of interns and offer little to no position to those who have not worked an internship at their firm.

We’ve talked about forecasting in class, and this article ties in with this topic. With the increase in demand for goods and services this holiday season, major retailers are hiring more workers to meet this demand. Some even go as far as to open temporary stores, i.e. Toys “R” Us, in anticipation for the busy holiday rush. I think that this is a good boost for the economy as it may opens more, new jobs in the future for some people. Also, for companies, this is a smart move because they do not have to deal with making enough revenue to cover for the fix costs that come with permanent stores throughout the year. They can just rent a store for three to four months just in time for the holiday demand.

Questions to consider: Are you looking for a job? Would you be interested in becoming a seasonal worker? How are these companies handling their forecasts? What are the pro and cons of the increase in jobs during the holiday season?

 

http://www.forbes.com/sites/meghancasserly/2012/10/02/700000-new-retail-jobs-for-holiday-2012-heres-whos-hiring/

iPad’s Little Brother

Posted on by f1223hlodhia

Apple Inc., one of the world’s largest innovators, has, once again, announced the launch of a new product: a smaller version of their best-selling iPad Tablet. Once again, early adopters and loyal customers flock to see the newest hype that the company has to offer.

After being under the scope of the public for their iPad, Apple Inc. has decided to take on the challenge of creating a product that can compete with Amazon’s Kindle Fire HD, Google’s Nexus 7, and others. Previously, many customers had complained that the iPad itself was very large and heavy compared to its competitors., as well as being very costly. Although Apple has not commented about any specific features about the product itself, many excited and loyal Apple customers have come up with their own list of potential features and rumors of production that Apple may consider when creating the mini iPad since the company is known to put customer satisfaction at the top of their priorities.

First, a “major Apple investor” has publicly claimed that the iPad mini will be unveiled on October 17th, 2012 and that the official launch date of product will be November 2nd, 2012, which gives customers plenty of time to obtain the new creation for the upcoming holiday season.

Second, rumor has it that the iPad mini will have a 7.85 inch liquid crystal display (LCD) with a 2,048-by-1,536 pixel resolution, although the screen will not have the same retina display of the original sized iPad. This may be to simply keep the cost of the product lower and more affordable to the public.

Since the cost in the market is a major driving factor behind this new product, there has been some speculation that the cost and price was also very important to Apple. There were many concerns that the iPad was priced too high for many people, which is why Apple decided to come out with a newer, more cost effective alternative for those people who do not want to spend $399-$499 on the iPad. Instead, it is expected that the iPad mini will retail for about $249, which is slightly higher than the prices of its major competitors.

Along with the rumors of its features and displays, there have been some claims that people have obtained leaked photos of the final product. Some of the physical attributes that can be seen in the final product are:

  • Wi-Fi adaption
  • nano SIM tray for cellular connectivity (thought to be for a pricier model)
  • An 8-pin “Lightning” connector found
  • A microphone jack in the same upperleft corner as current iPads
  • Aluminum backing
  • volume buttons on the right side of the tablet with a switch
  • rear-facing camera
  • two speaker grilles at the bottom

The last major rumor about the iPad mini is the location of production. Although nothing has been confirmed by Apple, production has been thought to be in China and Brazil.

 

Potential leaked photo of the new iPad mini

More information about can be found at http://shopping.yahoo.com/blogs/digital-crave/ipad-mini-almost-know-162420535.html

Jobs Running Away

Posted on by f1222sghatila

Jobs Running Away

Outsourcing is something that we are use in the United States because our labor is too expensive. In business, we find the most effective, efficient, and the cheapest way to go with our operating cost. Outsourcing is one way to cut labor cost in production and services and provide the same results.  There are many advantages of outsourcing not just cutting cost but also maintaining a competitive advantage than competitors with the same product. A company like Nike who outsources to China, Indonesia, and Vietnam are gaining an advantage for the price but many disadvantages as well. Outsourcing is an advantage for immediate but in the long run this decreases jobs domestically and creates many risks. Ricks contain ‘inappropriate planning and analysis’ because of corrupt or local government rules, managers that might not be capable, and employees only working because that’s the only earning they will receive. Outsourcing not only impacts domestic jobs but overseas because if the company were to decide to leave that would demolish their economy in some counties.

Indiana is planning to outsource their State Lottery operations, it is currently postponed but like many other operations, they want to pass it to larger vendors. They want to determine if this will be beneficial to them to gain more money or suppress their gain. They want to use outsourcing for their advantage in improving operating and service, and for outside technology and expertise which they believe will bring more people to play the lottery and help the state. Even though many other states have outsourced their lottery services with Indiana will become 95%.

Operations has much to do with maintaining and process where for the overall product or services can provide a better, shorter, and cheaper outcome for the business to grow. Outsourcing is one big operation in which product are shipped overseas for their cheap labor or technology and brought back to be sold domestically. Strategically they have to plan if this will help with the future growth because it is a large investment or they will have to spend even more backsourcing.

I believe a lot of strategic planning that goes into deciding whether a company should outsource. Even though I believe keeping is domestic, will have the local jobs and grow our economy. Even though many companies find it as an advantage to ship the labor I think ethically, paying the workers domestically will help with the current or future recession and avoid the risks and disadvantages that goes into outsourcing. Do you think ethically outsourcing is a good plan for any product or services?

http://www.businessweek.com/ap/2012-09-26/panel-delays-vote-on-outsourcing-ind-dot-lottery

Software to Simplify Project Management

Posted on by jamesonh301s12

Learning about the aspects of project management was interesting to me because a business can be successful unless it manages it projects successfully.  I worked at a painting company one summer and our project management was directly linked to how successfully we completed a job.  The owners of the company had to assess how much time would need to be dedicated to a project and how much it would cost to complete.  They would also choose which employees they wanted to do which job.  The employees who performed the best were put on the most important projects.  Project management was successful at our company because we had clearly defined goals, each job was unique, the jobs required our specialized skills, and all of the projects were temporary but each was essential to the success of the company. 

 It was also essential for our company to use the process of planning, scheduling, and controlling.  The planning stage included figuring out what products or tools would be needed to complete a job, figuring out who would be put on the job, figuring out transportation, and other things of that nature.  The scheduling stage would include decisions like the jobs start date and the estimated end date.  They would also need to schedule when they wanted the job to be completed during the day.  Some jobs could only be worked on at night because the business could not be disturbed during the day. The controlling aspect would be making sure that everything is going according to schedule and that the quality of the work met company standards. If a job was substandard then adjustments had to be made to scheduling to fix the problem. 

The owners of the company also had to decide which projects took precedence over others.  Sometimes we would be told to put a current project on hold because more important project required more attention.  Deciding which projects take precedence is essential to the company’s success because you need to be able to understand which accounts are most important to your business so you can keep them happy. 

Keeping track of all of this would be very stressful.  However technology is being designed to make managing projects a little bit easier.  The company semYOU has come out with new project management software called sem.ProjectPoint(http://www.prnewswire.com/news-releases/cloud-project-management-semyou-releases-new-version-of-semprojectpoint-159862105.html).  This is cloud based software so it allows you to store and easily share information throughout a company.  It also allows you to view information about your company in useful ways such as in pie charts or other forms.  This allows you to quickly find overviews of what’s going on in your organization and will help to identify a company’s needs.  Would integrating this new technology into a company’s project management process be beneficial to an organization, or would it interfere with their existing methods?

on Time with errors

Posted on by Bashayer

We discussed different aspects of project management during our last class, which are highly important and rewarding if applied properly in real life. However, some projects, if not most, can go towards unwanted directions or results.

In the company I work with, we had a project of launching a new system at a specific budget and within a very short time (6 months). Both cost and time were out of negotiation, so we couldn’t increase the allocated budget nor increase or extend the project period. This was a real challenge and a very stressful situation. So what did we do? We worked together, the project
manager and the functional lead, and put all our effort in planning the project from the different perspectives of a project, such as:

  • Project integration management.
  • Project scope management.
  • Project time management.
  • Project cost management.
  • Project quality management.
  • Project human resource management.
  • Project communications management.
  • Project risk management.
  • Project procurement management.

It might sound a bit complicated, but with the help of PMBOK guide, which is a frame work for project management, we were able to plan and execute the project efficiently.

For more information on PMBOK guide, please click the below link:

http://en.wikipedia.org/wiki/A_Guide_to_the_Project_Management_Body_of_Knowledge

Our project was delivered on time and within budget but of course the output quality of the project was not superb. Because the emphasis from the higher management was on time and cost, we had to deliver a lower quality system that suffered from minor issues which were considered as none show stoppers.

Another issue that has contributed to the output quality was the changing requirements of system users. As the project progressed, the end users of the system had a clearer picture of their requirements and how the system should behave in
different cases. Such requests for changing the requirements or adding additional requirements are handled by monitoring and controlling process. Most of the requested changes were considered as chargeable change request, which means that we have to pay additional cost to the system vendor, and this of course was unfeasible, hence, the change requests were declined and the system did not deliver the modified or additional requirements.

From management point of view, they were happy that the project was delivered on time without exceeding project budget, however, from end users’ view; they considered that the project did not fully satisfy their requirements.

I personally think that we could have achieved a better quality results if the project was scheduled for a longer period (more than 6 months) because for any system, it has to meet end users’ requirements, and because it’s the end users who are going to use the system, not the management.

Do you think we should deliver a project on the specified time and cost even if the project’s output suffers from errors?

How would you act if you are in a situation where the higher management is only concerned about time and cost but not performance?