Energy

Finance is a Liar Sometimes

Posted on by rebekah30123f14

There are numerous ways to measure success for a specific company. Whether it is pure revenue based, maximizing capacity, or providing the best quality, each company has its own specific way of measuring its success. The article from industry week discussed the dangers a company has when they use financial-based planning. One example the article gave when discussing a poor financial measurement was inventory. In the world of accounting inventory is considered a current asset. A current asset relies on liquidity and more specifically so being able to convert into cash within a year. The problem with that definition is that it relies on the fact the inventory will eventually be sold. The article stated that, “High inventories therefore mean longer cycle times, longer lead times and less responsiveness to customer needs.” That quote essentially means that the more inventories a company has the ability to change becomes weaker. 

Cheap offshore labor as a method as cost savings was also mentioned as being expensive. In the books, cheap labor looks attractive as costs are being minimized and more products are being able to be made. However, with off shoring come defective goods. In my own experience, anytime I order something through Amazon which I know is coming from China I am taking a risk. 50% of the time my order will be completely defective. If not defective, the quality will be sub-par. That level of quality cannot be measured by a financial metric and as a result is not taken into account with valuating success on a revenue based level.

 henry ford image

The measures to which a company should measure their success as the article states (and I agree as well) are the three KPIs: Time, Material, and Energy. Henry Ford was a strong component of these measurements as he believed, “time, material, and energy are worth more than money because they cannot be purchased by money.” Taking into account that belief, there then becomes four major points consulted when making decisions and improvements.
1. Waste of the time of people
2. Waste of the time of things
3. Waste of materials
4. Waste of energy
All four of those points touch on the certifications we have been talking about in class. While the six sigma is not discussed in the article, concepts of lean manufacturing are present throughout. In addition, ISO 14001 certification is mentioned. An example is given that it is not only wasting raw materials it is also wasting the scrap materials. Ford specifically showed this method that even though back in his time he could have thrown scraps in the river he instead decided to use it to make something else. This allowed him to maximize raw and scrap materials which led to cost savings. In accounting, and financial reporting that is never take into account. Through this article I really understood that while financials are important that should not be the only measurement used to determine a company’s success.

 

1.) What do you think is the best way for a company to measure success?

2.) Are resources such as time, energy, and materials equally important? Or does one stand out from the rest?

3.) What are some of your own personal experiences when  ordering goods from overseas?

 

http://www.industryweek.com/leadership/when-finance-runs-factory?page=3

Green Innovations – Affecting How and Where We Travel?

Posted on by spr1311kbeery

“When you travel these days, you’re doing so in a more environmentally friendly fashion than you did a decade ago- and you probably can’t even tell.”

Today, many business industries are changing the way they operate their business by placing more emphasis on environmental sustainability. For example, hotels are using motion sensors, key cards that control lights, fluorescent bulbs and ceiling fans aimed at saving energy. They are installing low-flow shower heads and toilets, while also recycling more and replacing individual shampoo bottles with large dispensers. Although these things may seem small and almost unnoticeable, they truly make a huge difference. “Green buildings use, on average, 26% less energy, emit 33% less carbon dioxide, use 30% less water, and produce 50% to 75% less solid waste, according to the building council.”

Element Hotels- use eco-friendly materials as often as possible and are applying for LEED certification.

When looking at other industries such as the airline and rental car businesses, they too are making a larger effort to surpass the minimum legal requirements and become more sustainable. Since 2000, Airlines have saved more than $33 Billion on fuel and prevented the release of 670 Billion pounds of greenhouse gases.  The Airline industry has adopted new technology and practices to reduce their carbon footprints. For instance, US Airways are replacing gas-powered ground vehicles that transport bags with electronic ones at its Philadelphia hub and adding a new building to house the vehicles at Philadelphia Airport that is made of 20% recycled materials.

Moving on, another industry, the car rental industry is also taking many new steps in order to be more “green.” Today the enterprise has more than 5,000 hybrids and electric vehicles for rent in 70 different locations. Lisa Marini, a spokeswoman says that “we will continue to add hybrids and EV’s to our fleet based on consumer demand and availability from manufacturers.” Furthermore, David Eastes, a director at VroomVroomVroom.com who tracks the industry, says he has seen an increase in the number of companies dedicated solely to renting out hybrid and electronic vehicles and “that’s never been seen before.”

Moreover, business in these three industries are making the change to be more green not only because they have been forced on the industry by the threat of government action, sheer economics or consumer demands, but some companies say its just good business. Paul Snyder, Vice President of corporate responsibility for IGH proclaims that, “we actually have customers who are asking, ‘What’s the carbon footprint of our meeting.” With so many people today becoming more and more knowledgeable and concerned about sustainability, making every effort to go more green, no matter how small, and even if it goes unnoticed, is extremely important.

In sum, How do you judge companies based on their sustainability efforts? And how do these efforts change your opinion of the company’s reputation? What sustainability efforts have you experienced from hotel, airline, and rental car businesses?

Reference: http://www.hotelmanagement.net/green/green-innovations-are-changing-the-face-of-travel-20076