Any manufacturing packaging process where the product is being filled into individual packages has the potential of overfilling, underfilling, or having excessive uncontrolled fill variation. Companies can use Lean Six Sigma and statistical process controls to better manage package weight and volume. Proper utilization of these processes controls fill weight variation, minimizing occurrences of overfilling or underfilling, both of which can subject the manufacturer to unnecessary expenses, risk of litigation or brand damage. Companies that optimize filling can generate substantial savings without any capital investment and achieve a competitive advantage.
MANAGEMENT INVENTORY FLOWS IN THE SUPPLY CHAINAshish Hande
This chapter discusses the importance of managing inventory flows throughout the supply chain. It covers the reasons companies hold inventory, including batching economies, uncertainty/safety stocks, and seasonality. It also discusses the major costs of inventory, including carrying costs, order/setup costs, and stockout costs. The chapter introduces ABC analysis for classifying inventory items and explains how inventory visibility throughout the supply chain can benefit companies. It provides methods for evaluating inventory management effectiveness, such as calculating inventory turnover ratios.
Egan & Sons is a UK-based interior fixtures manufacturer that has had a 63-year relationship with customer Westmid Builders. However, Westmid's sales have recently resulted in a 40% loss for Egan. Using activity-based costing, Egan discovered that its most profitable 1% of customers generated all profits, while its least profitable 1%, including Westmid, caused accumulated losses equaling 40% of profits. While dropping Westmid would be an option, the document recommends that Egan first focus on cost savings and profitable products, and try to restore Westmid to a profitable relationship as dropping the long-time customer should be a last resort.
1. The document discusses supply chain management concepts, including defining a supply chain as all parties involved in fulfilling customer requests.
2. It explains the objective of a supply chain is to maximize overall value, and describes supply chain management as managing flows between stages to maximize total profitability.
3. The document contrasts vertical and horizontal organizational structures, noting that a horizontal structure organized around processes can better integrate functions and create customer value.
Inventory Management (Intro, types, spares mgmt) & Role of stores managerSrishti Bhardwaj
Introduction to Inventory management :
Definition of inventory,
scope and importance,
Classification of Materials;
Consumable,
Non consumable,
Impact on profitability of the organization and stake holder,
different types of hospital inventories,
hospital maintenance items,
spare parts stocking policies for capital items.
Functions of Store Manager.
Stores and Inventory management Unit 1 (BVUCHMSR)
Self made PPTs.. only for educational reference.
This chapter discusses how supply chain strategies can impact a company's financial statements and profitability. It shows how cost savings can be converted to equivalent sales increases using a company's profit margin. The chapter analyzes the financial impact of reducing transportation, warehousing and inventory costs for a company called CBL Distributors.com. It demonstrates that these supply chain reductions increase CBL's net income, profit margin and return on assets. The chapter also examines the financial implications of improving on-time delivery and order fill rates for CBL's supply chain.
The document discusses retail inventory management and the key challenges involved. It describes the process of replenishing inventory from the factory to the wholesaler to the distributor and finally to the retailer. Problems can occur due to production delays, shipping delays, or customers withdrawing items. The goal of inventory management is to facilitate the flow of goods while minimizing costs. It aims to stock the right products and maintain optimal inventory levels.
This document discusses supply chain coordination and the bullwhip effect. It describes how a lack of coordination can lead to distortions in information and conflicts between supply chain stages. The bullwhip effect exacerbates these issues by causing demand fluctuations to increase as orders move up the supply chain. This results in higher costs across areas like manufacturing, inventory holding, and transportation. The document outlines obstacles to coordination like misaligned incentives, information processing delays, and behavioral factors. It proposes approaches to improve coordination, such as collaborative forecasting and planning, continuous replenishment programs, and ensuring goals and incentives are aligned across the supply chain.
This white paper discusses how companies can improve their inbound supply chain through increased visibility and optimized business processes. It identifies common gaps such as a lack of optimization and carrier selection based on supplier incentives rather than service. The paper recommends taking control of inbound transportation, mapping processes, gaining shipment visibility, consolidating loads, and proactively managing suppliers to identify issues. This can help reduce costs, improve service, and provide accurate cost allocation through greater supply chain performance and control.
MANAGEMENT INVENTORY FLOWS IN THE SUPPLY CHAINAshish Hande
This chapter discusses the importance of managing inventory flows throughout the supply chain. It covers the reasons companies hold inventory, including batching economies, uncertainty/safety stocks, and seasonality. It also discusses the major costs of inventory, including carrying costs, order/setup costs, and stockout costs. The chapter introduces ABC analysis for classifying inventory items and explains how inventory visibility throughout the supply chain can benefit companies. It provides methods for evaluating inventory management effectiveness, such as calculating inventory turnover ratios.
Egan & Sons is a UK-based interior fixtures manufacturer that has had a 63-year relationship with customer Westmid Builders. However, Westmid's sales have recently resulted in a 40% loss for Egan. Using activity-based costing, Egan discovered that its most profitable 1% of customers generated all profits, while its least profitable 1%, including Westmid, caused accumulated losses equaling 40% of profits. While dropping Westmid would be an option, the document recommends that Egan first focus on cost savings and profitable products, and try to restore Westmid to a profitable relationship as dropping the long-time customer should be a last resort.
1. The document discusses supply chain management concepts, including defining a supply chain as all parties involved in fulfilling customer requests.
2. It explains the objective of a supply chain is to maximize overall value, and describes supply chain management as managing flows between stages to maximize total profitability.
3. The document contrasts vertical and horizontal organizational structures, noting that a horizontal structure organized around processes can better integrate functions and create customer value.
Inventory Management (Intro, types, spares mgmt) & Role of stores managerSrishti Bhardwaj
Introduction to Inventory management :
Definition of inventory,
scope and importance,
Classification of Materials;
Consumable,
Non consumable,
Impact on profitability of the organization and stake holder,
different types of hospital inventories,
hospital maintenance items,
spare parts stocking policies for capital items.
Functions of Store Manager.
Stores and Inventory management Unit 1 (BVUCHMSR)
Self made PPTs.. only for educational reference.
This chapter discusses how supply chain strategies can impact a company's financial statements and profitability. It shows how cost savings can be converted to equivalent sales increases using a company's profit margin. The chapter analyzes the financial impact of reducing transportation, warehousing and inventory costs for a company called CBL Distributors.com. It demonstrates that these supply chain reductions increase CBL's net income, profit margin and return on assets. The chapter also examines the financial implications of improving on-time delivery and order fill rates for CBL's supply chain.
The document discusses retail inventory management and the key challenges involved. It describes the process of replenishing inventory from the factory to the wholesaler to the distributor and finally to the retailer. Problems can occur due to production delays, shipping delays, or customers withdrawing items. The goal of inventory management is to facilitate the flow of goods while minimizing costs. It aims to stock the right products and maintain optimal inventory levels.
This document discusses supply chain coordination and the bullwhip effect. It describes how a lack of coordination can lead to distortions in information and conflicts between supply chain stages. The bullwhip effect exacerbates these issues by causing demand fluctuations to increase as orders move up the supply chain. This results in higher costs across areas like manufacturing, inventory holding, and transportation. The document outlines obstacles to coordination like misaligned incentives, information processing delays, and behavioral factors. It proposes approaches to improve coordination, such as collaborative forecasting and planning, continuous replenishment programs, and ensuring goals and incentives are aligned across the supply chain.
This white paper discusses how companies can improve their inbound supply chain through increased visibility and optimized business processes. It identifies common gaps such as a lack of optimization and carrier selection based on supplier incentives rather than service. The paper recommends taking control of inbound transportation, mapping processes, gaining shipment visibility, consolidating loads, and proactively managing suppliers to identify issues. This can help reduce costs, improve service, and provide accurate cost allocation through greater supply chain performance and control.
The document discusses inventory control techniques used by oil producing firms. It begins with a brief introduction on inventory management and control. It then discusses inventory control costs, levels, and techniques such as economic order quantity. The purpose is to appraise inventory control techniques in oil producing firms and examine their relationship to firm performance and profitability. It will use Nigerian Agip Oil Company as a case study.
Unit 5 strategic issues in logistics lscm (32 pages)logistics management Suzana Vaidya
This document discusses logistics pipeline management and time-based competition. It defines logistics pipeline management as linking manufacturing and procurement lead times to meet market needs, while increasing response speed. The goals of logistics pipeline management are listed as lower costs, higher quality, more flexibility, and faster response times. Drivers requiring logistics pipeline management include time-based competition, globalization, increasing shareholder value, and customers taking more control. Specific goals of logistics pipeline management are also outlined, such as reducing costs by minimizing inventory levels, delivery times, and the overall order-to-collection cycle.
Maintaining stock records manual and electronicgenevaflanders
This document discusses maintaining stock records, both manually and electronically. It covers topics like stock requisition forms, stock record/bin cards, storage of office supplies, reporting stock levels using methods like LIFO, FIFO, and average cost. Electronic stock control methods like inventory software, barcodes, and RFID are also covered. The benefits of computerized inventory systems are outlined. Different types of computerized stock control systems and software are described. Methods of stock valuation like FIFO, LIFO, and average cost are also summarized.
Distribution & Logistics (Channel Management)Prashant Mehta
The document discusses distribution channels and logistics management in three parts. It begins by defining distribution channels, describing their characteristics and functions. It then classifies different types of channels and channel systems. Finally, it discusses channel design decisions, management, physical distribution, and provides an overview of the pharmaceutical industry distribution channel.
The document discusses the bullwhip effect in supply chains and the need for coordination. The bullwhip effect causes demand fluctuations to increase as orders move up the supply chain, distorting demand information. This lack of coordination leads to higher costs and lower profitability across the supply chain. Obstacles to coordination include information processing, operational, pricing, incentive, and behavioral issues. Potential remedies involve information sharing, collaborative forecasting, reducing lead times, and aligning incentives to build trust between supply chain members.
The chapter discusses key topics in cost accounting including how managers use cost information for decision making and performance evaluation. It describes the differences between cost and financial accounting and how cost accounting has evolved with trends like activity-based costing. The chapter also addresses ethical issues cost accountants may face and how to properly handle situations involving conflicts of interest.
This document discusses supply chain management (SCM) and supplier quality control (SQC). It provides an introduction to SCM, including its history and key elements. Logistics management is discussed as a component of SCM. The document also covers supply chain requirements and uncertainties, the bullwhip effect, and examples of strategic partnerships. SQC techniques are introduced, and SCM and SQC practices at Praxair are summarized. The document contains an agenda and is intended to provide an overview of SCM and SQC.
Customer profitability analysis gpg 37 march 02Nicholas Wu
This document provides an overview of customer profitability analysis. It discusses how companies are increasingly focusing on determining the profitability of individual customers and customer segments. Customer profitability analysis uses tools like activity-based costing to understand the costs of serving customers and the lifetime value of customers. Some key points made in the document include:
- Companies are using customer profitability analysis to provide different levels of service to profitable vs. unprofitable customers. This allows them to improve overall corporate profits.
- Understanding customer profitability requires analyzing the drivers of both customer revenues and costs of serving customers.
- Customer satisfaction alone is not enough; companies must satisfy customers profitably to improve shareholder value.
- Models
Does your company have any unprofitable customers? How much money do you leave on the table with your customers? What profit does each of your customer add or destroy to your companies profit? How much profit do you make or lose with activities performed for your customers? We can help you to answer all of those questions
The document discusses pricing decisions and profitability analysis from an accounting perspective. It covers four situations for determining product pricing: price setting firms facing short-run or long-run decisions, and price taker firms facing short-run or long-run product-mix decisions. Short-run pricing only considers incremental costs, while long-run pricing covers all committed resources. The document also discusses pricing customized versus non-customized products, using target costing, and analyzing customer profitability.
This document contains 10 learning questions from Chapter 5 on creating customer value, satisfaction, and loyalty. It discusses key concepts like profit tiers for customers, customer perceived value, customer satisfaction, the customer development process, customer profitability, building customer loyalty, and using customer databases. The questions cover topics such as determining which customers should receive offers, building long-term customer relationships, and focusing on high-value customers.
Coordination in Supply Chain ManagementKunal Chauhan
The document discusses coordination in supply chain management. It begins by defining supply chains and coordination, then discusses how a lack of coordination can lead to issues like the bullwhip effect where demand fluctuations increase as information moves up the supply chain. It also discusses obstacles to coordination like incentives and information processing. The document proposes managerial levers to improve coordination, such as aligning goals, improving information visibility, pricing strategies, and building strategic partnerships. It concludes by discussing achieving coordination in practice.
This document discusses inventory management policies and control methods. It describes key inventory control parameters like important inventory items, order quantities, order timing, and costs. It explains perpetual and periodic inventory review systems, which differ in whether order size or frequency is held constant. Physical counting, two bin systems, FIFO, LIFO, and weighted average costing methods are also outlined. The document concludes by covering push-pull inventory methods and risk pooling concepts.
The document discusses key aspects of supply chain management including demand creation and forecasting, product development and commercialization, distribution network configuration, information sharing, and inventory management. It emphasizes the importance of integrating these different elements and having clear communication across the entire supply chain to quickly fulfill customer demand like the fast fashion retailer Zara, which can design, produce, and deliver new products to stores within 3 weeks through a highly coordinated process.
- Inventory constitutes a significant part of current assets for many companies, often around 60% of current assets. Effective inventory management is important to avoid unnecessary costs and ensure profitability.
- There are different types of inventory including raw materials, work in progress, and finished goods. The objectives of inventory management are to maintain optimal inventory levels for smooth operations while minimizing costs.
- An optimum inventory level balances ordering costs, carrying costs, and stock-out costs. Both over-investment and under-investment in inventory can be dangerous for a company. Effective inventory management tracks inventory levels and determines when and how much to order.
Activity Based Profitability ManagementMiguel Garcia
Activity Based Profitability Management (ABPM) and Activity Based Budgeting (ABB) offers organizations a complete tool to gain a competitive advantage and provides crucial information to support the process of making strategic and operational decisions in the current business environment. It might seem that having this type of information for the management of profits, costs and budgets is not necessary to implement Digital Transformation solutions because the implementation of new technologies does not require an evaluation of this type, and it is assumed that it must be implemented independently of what it implies and at any cost, but this is an error because it will always require business processes, products or services, customers or users, service channels, etc. that must be evaluated from the financial and business process point of view, implemented, measured and improved within a competitive and market environment. In this sense, the profitablitiy, cost and budget information provided by the approach of ABPM and ABB will lead to better business decisions that significantly increase the performance and profits of the companies.
Logistics management aims to coordinate activities from procurement to delivery to satisfy customers at lowest cost. It links suppliers, production, distribution and customers through materials and information flows. The ultimate goal is customer satisfaction by establishing organizational linkages to the marketplace. Effective logistics can provide competitive advantage through cost leadership or value differentiation and enhanced customer service.
This document provides an overview of supply chain management concepts. It discusses inventory management, including types of inventory, functions of inventory, tracking inventory using SKU and UPC codes, inventory costs, and selective inventory controls like ABC analysis. It also covers lean manufacturing, planning methods like replenishment order point and economic order quantity, forecasting techniques, and procurement. The document is divided into 7 chapters that briefly explain these various supply chain management topics.
Complexity in business arises from the diversity of markets, customers, products, processes, components (parts or materials) and suppliers that a company chooses to deal with. Most managers recognise that complexity
comes at a cost - both in activities and overhead. But to be competitive, it is important to understand where and how the market rewards differentiation, and to root out all complexity that cannot be justified.
Complexity can hinder the performance of supply chains and the proliferation of products can lead to excessive set-ups and costs during manufacture.
Errors in forecasting can be magnified which may increase the chance of stock-outs and drive up the costs of distribution. But the answer is not to simply cull products indiscriminately from the range. Companies need to
balance the costs of complexity with how the market values variety.
Many low-volume products lose money after the associated costs of complexity are accounted for. And some products thought to be adding complexity are
quite profitable, because they generate high margins. It may appear tempting just to eliminate ‘the tail’ of the portfolio of products. But the answer lies in understanding the inter-dependencies within the portfolio and pinpointing the trade-offs between the requirements of the market, revenues, costs, and stakeholders' ambitions for growth. People from Marketing, Sales, Development, Supply Chain and Manufacturing have different perspectives on
what needs to be done. Only by collaborating can complexity be reduced and contained.
August White Paper 1/2015: Getting a Better Grip on External SpendingAugust Associates
Traditional savings reporting and accounting keep business owners and finance in the dark about external expenditure development. It doesn’t have to be that way.
The document discusses inventory control techniques used by oil producing firms. It begins with a brief introduction on inventory management and control. It then discusses inventory control costs, levels, and techniques such as economic order quantity. The purpose is to appraise inventory control techniques in oil producing firms and examine their relationship to firm performance and profitability. It will use Nigerian Agip Oil Company as a case study.
Unit 5 strategic issues in logistics lscm (32 pages)logistics management Suzana Vaidya
This document discusses logistics pipeline management and time-based competition. It defines logistics pipeline management as linking manufacturing and procurement lead times to meet market needs, while increasing response speed. The goals of logistics pipeline management are listed as lower costs, higher quality, more flexibility, and faster response times. Drivers requiring logistics pipeline management include time-based competition, globalization, increasing shareholder value, and customers taking more control. Specific goals of logistics pipeline management are also outlined, such as reducing costs by minimizing inventory levels, delivery times, and the overall order-to-collection cycle.
Maintaining stock records manual and electronicgenevaflanders
This document discusses maintaining stock records, both manually and electronically. It covers topics like stock requisition forms, stock record/bin cards, storage of office supplies, reporting stock levels using methods like LIFO, FIFO, and average cost. Electronic stock control methods like inventory software, barcodes, and RFID are also covered. The benefits of computerized inventory systems are outlined. Different types of computerized stock control systems and software are described. Methods of stock valuation like FIFO, LIFO, and average cost are also summarized.
Distribution & Logistics (Channel Management)Prashant Mehta
The document discusses distribution channels and logistics management in three parts. It begins by defining distribution channels, describing their characteristics and functions. It then classifies different types of channels and channel systems. Finally, it discusses channel design decisions, management, physical distribution, and provides an overview of the pharmaceutical industry distribution channel.
The document discusses the bullwhip effect in supply chains and the need for coordination. The bullwhip effect causes demand fluctuations to increase as orders move up the supply chain, distorting demand information. This lack of coordination leads to higher costs and lower profitability across the supply chain. Obstacles to coordination include information processing, operational, pricing, incentive, and behavioral issues. Potential remedies involve information sharing, collaborative forecasting, reducing lead times, and aligning incentives to build trust between supply chain members.
The chapter discusses key topics in cost accounting including how managers use cost information for decision making and performance evaluation. It describes the differences between cost and financial accounting and how cost accounting has evolved with trends like activity-based costing. The chapter also addresses ethical issues cost accountants may face and how to properly handle situations involving conflicts of interest.
This document discusses supply chain management (SCM) and supplier quality control (SQC). It provides an introduction to SCM, including its history and key elements. Logistics management is discussed as a component of SCM. The document also covers supply chain requirements and uncertainties, the bullwhip effect, and examples of strategic partnerships. SQC techniques are introduced, and SCM and SQC practices at Praxair are summarized. The document contains an agenda and is intended to provide an overview of SCM and SQC.
Customer profitability analysis gpg 37 march 02Nicholas Wu
This document provides an overview of customer profitability analysis. It discusses how companies are increasingly focusing on determining the profitability of individual customers and customer segments. Customer profitability analysis uses tools like activity-based costing to understand the costs of serving customers and the lifetime value of customers. Some key points made in the document include:
- Companies are using customer profitability analysis to provide different levels of service to profitable vs. unprofitable customers. This allows them to improve overall corporate profits.
- Understanding customer profitability requires analyzing the drivers of both customer revenues and costs of serving customers.
- Customer satisfaction alone is not enough; companies must satisfy customers profitably to improve shareholder value.
- Models
Does your company have any unprofitable customers? How much money do you leave on the table with your customers? What profit does each of your customer add or destroy to your companies profit? How much profit do you make or lose with activities performed for your customers? We can help you to answer all of those questions
The document discusses pricing decisions and profitability analysis from an accounting perspective. It covers four situations for determining product pricing: price setting firms facing short-run or long-run decisions, and price taker firms facing short-run or long-run product-mix decisions. Short-run pricing only considers incremental costs, while long-run pricing covers all committed resources. The document also discusses pricing customized versus non-customized products, using target costing, and analyzing customer profitability.
This document contains 10 learning questions from Chapter 5 on creating customer value, satisfaction, and loyalty. It discusses key concepts like profit tiers for customers, customer perceived value, customer satisfaction, the customer development process, customer profitability, building customer loyalty, and using customer databases. The questions cover topics such as determining which customers should receive offers, building long-term customer relationships, and focusing on high-value customers.
Coordination in Supply Chain ManagementKunal Chauhan
The document discusses coordination in supply chain management. It begins by defining supply chains and coordination, then discusses how a lack of coordination can lead to issues like the bullwhip effect where demand fluctuations increase as information moves up the supply chain. It also discusses obstacles to coordination like incentives and information processing. The document proposes managerial levers to improve coordination, such as aligning goals, improving information visibility, pricing strategies, and building strategic partnerships. It concludes by discussing achieving coordination in practice.
This document discusses inventory management policies and control methods. It describes key inventory control parameters like important inventory items, order quantities, order timing, and costs. It explains perpetual and periodic inventory review systems, which differ in whether order size or frequency is held constant. Physical counting, two bin systems, FIFO, LIFO, and weighted average costing methods are also outlined. The document concludes by covering push-pull inventory methods and risk pooling concepts.
The document discusses key aspects of supply chain management including demand creation and forecasting, product development and commercialization, distribution network configuration, information sharing, and inventory management. It emphasizes the importance of integrating these different elements and having clear communication across the entire supply chain to quickly fulfill customer demand like the fast fashion retailer Zara, which can design, produce, and deliver new products to stores within 3 weeks through a highly coordinated process.
- Inventory constitutes a significant part of current assets for many companies, often around 60% of current assets. Effective inventory management is important to avoid unnecessary costs and ensure profitability.
- There are different types of inventory including raw materials, work in progress, and finished goods. The objectives of inventory management are to maintain optimal inventory levels for smooth operations while minimizing costs.
- An optimum inventory level balances ordering costs, carrying costs, and stock-out costs. Both over-investment and under-investment in inventory can be dangerous for a company. Effective inventory management tracks inventory levels and determines when and how much to order.
Activity Based Profitability ManagementMiguel Garcia
Activity Based Profitability Management (ABPM) and Activity Based Budgeting (ABB) offers organizations a complete tool to gain a competitive advantage and provides crucial information to support the process of making strategic and operational decisions in the current business environment. It might seem that having this type of information for the management of profits, costs and budgets is not necessary to implement Digital Transformation solutions because the implementation of new technologies does not require an evaluation of this type, and it is assumed that it must be implemented independently of what it implies and at any cost, but this is an error because it will always require business processes, products or services, customers or users, service channels, etc. that must be evaluated from the financial and business process point of view, implemented, measured and improved within a competitive and market environment. In this sense, the profitablitiy, cost and budget information provided by the approach of ABPM and ABB will lead to better business decisions that significantly increase the performance and profits of the companies.
Logistics management aims to coordinate activities from procurement to delivery to satisfy customers at lowest cost. It links suppliers, production, distribution and customers through materials and information flows. The ultimate goal is customer satisfaction by establishing organizational linkages to the marketplace. Effective logistics can provide competitive advantage through cost leadership or value differentiation and enhanced customer service.
This document provides an overview of supply chain management concepts. It discusses inventory management, including types of inventory, functions of inventory, tracking inventory using SKU and UPC codes, inventory costs, and selective inventory controls like ABC analysis. It also covers lean manufacturing, planning methods like replenishment order point and economic order quantity, forecasting techniques, and procurement. The document is divided into 7 chapters that briefly explain these various supply chain management topics.
Complexity in business arises from the diversity of markets, customers, products, processes, components (parts or materials) and suppliers that a company chooses to deal with. Most managers recognise that complexity
comes at a cost - both in activities and overhead. But to be competitive, it is important to understand where and how the market rewards differentiation, and to root out all complexity that cannot be justified.
Complexity can hinder the performance of supply chains and the proliferation of products can lead to excessive set-ups and costs during manufacture.
Errors in forecasting can be magnified which may increase the chance of stock-outs and drive up the costs of distribution. But the answer is not to simply cull products indiscriminately from the range. Companies need to
balance the costs of complexity with how the market values variety.
Many low-volume products lose money after the associated costs of complexity are accounted for. And some products thought to be adding complexity are
quite profitable, because they generate high margins. It may appear tempting just to eliminate ‘the tail’ of the portfolio of products. But the answer lies in understanding the inter-dependencies within the portfolio and pinpointing the trade-offs between the requirements of the market, revenues, costs, and stakeholders' ambitions for growth. People from Marketing, Sales, Development, Supply Chain and Manufacturing have different perspectives on
what needs to be done. Only by collaborating can complexity be reduced and contained.
August White Paper 1/2015: Getting a Better Grip on External SpendingAugust Associates
Traditional savings reporting and accounting keep business owners and finance in the dark about external expenditure development. It doesn’t have to be that way.
Companies often struggle to fully realize the benefits of reducing complexity in their operations. This document discusses how companies can plan from the start to capture these benefits. It recommends explicitly considering benefit capture as part of complexity reduction efforts. Companies should identify which benefits, such as reducing costs or improving customer service, will provide the greatest value. They should also understand what changes are needed internally to achieve these benefits. With a clear plan to convert reduced complexity into financial gains, companies can better ensure the benefits of their efforts materialize.
Dangerous Goods Report, Volume 10—The Total Value of ComplianceLabelmaster
Volume 10 of the Dangerous Goods Report introduces a new framework that helps businesses realize positive return on investment from their hazmat compliance programs— Total Value of Compliance. It also examines how advanced packaging technology simplifies the transport of damaged, defective or recalled lithium batteries and battery devices, and looks at the safety considerations driving our new partnership with CHEMTREC®.
The Total Value of Compliance.
Compliance is not just “a cost of doing business”—it should deliver a positive ROI.
Obexion Max revolutionizes recalls.
Remember when battery device recalls were expensive, complicated and time-consuming?
CHEMTREC and Labelmaster team up for safety.
Giving responders complete, current information is the heart of our combined mission.
Cost accounting provides essential information for businesses and the economy by measuring efficiency, identifying unprofitable activities, and aiding in fixing prices. It helps control costs, evaluate reasons for losses, and aids future planning. Some key advantages include eliminating waste, reducing costs, identifying reasons for profit/loss, advising on make-or-buy decisions, and fixing prices. Cost accounting data assists the government, trade unions, and preparation of financial accounts.
This document discusses the evolution and importance of cost accounting. It outlines the historical development of cost accounting from its origins in bookkeeping through modern developments. Key points include Charles Babbage emphasizing the need for cost accounting in 1830, the establishment of modern factory cost accounting before WWI, and the extension of cost accounting techniques to distribution in the 1930s. The document also covers different costing methods like job costing, process costing, and departmental costing. It discusses how cost accounting helps management with pricing decisions, estimates, cost control, productivity analysis, and inventory management. Overall, the document provides an overview of the history and applications of cost accounting.
This document is a case study analyzing portfolio management and complexity reduction at Whirlpool Latin America. It aims to propose tools and processes to eliminate unnecessary complexity and keep complexity under control.
The study finds that Whirlpool Latin America has a significant number of stock keeping units (SKUs) across its product portfolio, not all of which are profitable. Complexity is even higher in the export portfolio, which has many more SKUs but much lower volumes and profitability.
The document proposes implementing a permanent portfolio management methodology to continuously monitor the financial health and objectives of the portfolio. It also recommends combining efforts on standardization, modularity and portfolio management to reduce complexity while maintaining profitability. New tools are proposed to assess
The Balance Scorecard: Presentation to the Institute of Electrical EngineersKinetik Solutions Ltd
The balanced scorecard is a crucial methodology for manufacturing managers to identify bottlenecks and exceptions in processes. It measures performance in financial, process, customer, and people areas to create a balanced and sustainable approach, rather than just focusing on targets. The scorecard is created by cross-functional teams and measures underlying drivers of performance like process velocity. It is reviewed regularly to focus on problem areas and drive process improvement through teams addressing the root causes of issues. Using a balanced scorecard approach frees up management time and empowers employees to make improvements.
The document discusses seven factors for success in the packaging industry:
1) Managing raw material costs and passing costs through to customers.
2) Reducing waste and raw material content through process improvements and investments.
3) Determining optimal capital expenditure levels to maintain competitiveness without overspending.
4) Accurately measuring key performance indicators like overall equipment effectiveness to drive continuous improvement.
5) Identifying underperforming products, customers, and markets and being willing to exit unprofitable relationships.
6) Investing in innovation to differentiate from competitors.
7) Effectively managing global supply chains and offshoring.
Revolutionizing The Downstream Supply ChainDavid Evans
This document discusses revolutionizing the downstream supply chain in the oil and gas industry through the use of technology and innovative business models. It proposes a system with four components: 1) outsourcing distribution operations to eliminate large in-house logistics teams, 2) implementing a shared fleet model to improve vehicle utilization, 3) introducing dynamic scheduling and routing powered by advanced analytics to optimize operations, and 4) enabling dynamic slot booking and pricing to maximize profits. Adopting this holistic approach through an integrated technology solution can streamline operations, lower costs, and create value for oil companies and their partners.
Few people would start a journey with a map that shows neither where they are nor where they are going. Yet many companies seek to compete without knowing the true cost, and profit, of their products or services, and customers.
Directors often base corporate strategy on misleading information that supports bad decisions. This only helps competitors. Traditional financial information systems measure a company’s performance only in the aggregate.
They may not help to find opportunities to increase competitiveness in the market place.
To create more value and enhance their profitability, organisations in manufacturing and service require accurate information on costs. Activity Based Costing (ABC) can provide it. But organising an effective ABC initiative is not as simple as opening a book and beginning at Chapter One.
A Study on Formulation of Costing SystemProjects Kart
A Study on Formulation of Costing System. Modern business needs frequent cost information about business activities to plan accurately for the future, to control business results and to make a proper appraisal of the performance of persons working in the organization. The fulfillment of these goals requires details about the costs incurred and benefits (revenues) obtained which are provided by “cost accounting”.
Financial accounting is developed over the time to record, summarize and present the financial transactions or events, which can be expressed in terms of money. This function was primarily concerned with record-keeping leading to preparation of Profit and Loss Account and Balance Sheet. The information obtained through financial accounts is useful to the shareholders, creditors, financial analysts, labour union, government authorities etc. However, the information generated by financial accountancy for several purposes is not sufficient for decision making in many areas.
The document discusses using gross margin analysis to understand the key drivers affecting a company's margins. It outlines how margins can be impacted by factors like price, volume, product mix, channel mix, and sales region mix. Performing a gross margin analysis that separates out the impacts of these different factors can provide valuable insights into what is specifically driving changes in a company's margins and help identify areas to improve profitability. The analysis approach presented allows executives to better understand issues impacting margins and develop targeted action plans to address problem areas.
Unit 3 logistics costs lscm (18 pages)logistics management Suzana Vaidya
- The document discusses logistics costs and the principles of logistics costing. It notes that traditional accounting systems do not fully capture customer costs or the impacts of logistics decisions across functions.
- It advocates for total cost analysis and identifying the incremental costs of logistics activities and missions to understand true costs. This involves analyzing costs across the order to collection cycle and identifying which costs are avoidable for specific customers or segments.
- Mission costing is presented as a useful concept, with missions cutting across functions to achieve customer service goals. This allows determining the total system cost of meeting mission objectives.
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Manufacturing Packaging: Controlling Fill Variation Increases Yield, Reduces Costs
1. A White Paper from
Myrtle Consulting
Delivering Operational Improvement
Substantial
savings with no capital
investment required
Manufacturing Packaging:
Controlling Fill Variation
Increases Yield, Reduces Costs
By Bruce Everett
Curtis Gavin
Lily Ho
Abstract
Any manufacturing packaging process where the product is being filled into individual
packages has the potential of overfilling, underfilling, or having excessive uncontrolled
fill variation. Companies can use Lean Six Sigma and statistical process controls to
better manage package weight and volume. Proper utilization of these processes
controls fill weight variation, minimizing occurrences of overfilling or underfilling, both
of which can subject the manufacturer to unnecessary expenses, risk of litigation or
brand damage. Companies that optimize filling can generate substantial savings
without any capital investment and achieve a competitive advantage.
2. A White Paper from
Myrtle Consulting
Delivering Operational Improvement
Introduction
Today’s highly competitive market has forced companies to look at all alternatives to reduce waste and control fill variation.
Whereas overfill gives away product, costing many companies tens of thousands of dollars annually, underfill can subject
companies to litigation, fines or damage to the brand. For these reasons, it is critical that companies optimize their filling
operation to ensure that the proper amount of product is in each and every package.
Understanding Fill Variation
In any packaging process where product is being filled into individual packages that use a target or nominal weight label, there is
a risk of improper filling. This problem impacts a variety of manufacturing facilities. For this reason, it is crucial that manufacturers
direct their attention and efforts to controlling fill variation.
Underfilled packages
Underfilled packages pose significant risk to manufacturers, as the Federal Trade Commission (FTC) oversees and enforces the
Fair Packaging and Labeling Act. Under this Act, manufacturers are required to disclose net contents of the package. The FTC
may conduct random sampling to ensure that companies are properly filling their packaging, weighing packaging contents during
announced or unannounced site audits. The enforcement of this Act is designed to investigate and stop consumer deception such
as slack fill. Underfill can result in temporary discontinuation of a production line or facility, causing loss of productivity, rework or
yield loss. Underfilling can also result in consumer complaints that can destroy brand equity or diminish customer loyalty.
Overfilled packages
Overfilling results in unnecessary product “giveaway,” which reduces revenue and margin. For example, consider a product with
a one-pound nominally labeled weight per package, which holds a product worth $1.00 per pound, and is processed at a rate
of 50,000 packages per week, 50 weeks per year. The savings generated by a 1% reduction in overfill could save 25,000 pounds
annually, or $25,000 per year.
By minimizing underfill/overfill and controlling fill weight variation, companies can create a competitive advantage, not only by
reducing the amount of product that is given away but also by reducing material costs in packaging, storage and transportation.
Additionally, companies can package product that was previously wasted in overfill as additional output.
Methodology for Minimizing Fill Variation
In any packaging process where product is being filled into individual packages that use a target or nominal weight label, there is
a risk of improper filling. This problem impacts a variety of manufacturing facilities. For this reason, it is crucial that manufacturers
direct their attention and efforts to controlling fill variation.
Myrtle Consulting has developed a methodology using Lean Six Sigma and statistical process capability analysis, available in most
statistical software packages, to drastically reduce weight/volume fill variation. Myrtle Consulting’s process of controlling package
weight/volume can be broken down into six steps:
3. A White Paper from
Myrtle Consulting
Delivering Operational Improvement
Step 1: Analyze current data – Analyzing current data from the manufacturing filling line is the first step to
determining the amount of underfill or overfill that is taking place. Continuous data is required for a fill analysis using
statistical process control and process capability methods. This type of data is information that can be measured on
a continuum or scale. The data is normally captured in the operating system that governs the fill process. Typically,
within that fill process there is a target or nominal weight. There are also tolerance limits: UCL, which represents
the upper control limit, and LCL, which represents the lower control limit. This information is generally displayed
graphically on a control chart.
A control chart (see Figure 1) is a line graph that displays a continuous picture of what is happening in the production
process over time. It is an important tool for statistical process control. The UCL and LCL on a control chart indicate
whether the observed variation in the process is within tolerance and therefore acceptable, or whether the variation is
caused by an abnormal event that must be investigated.
Control Chart Example
Below is just one example of a control chart that contains continuous process data over time. This particular chart
measures the size of marbles being manufactured on a line. To be within specification, the marble has a nominal size of
26mm but must be at least 25mm (LCL), but no bigger than 27mm (UCL). If the size of each marble in the manufacturing
line is measured and recorded (i.e. 25.2mm, 26.1mm, 27.5mm, etc.) over a significant period of time, then it is easier to
see variation or one-time events impacting the marble manufacturing process.
Marble Sizes
Size
27.0
26.5
26.0
25.0
25.5
0 5 10 15 20
LCL = 25 mm
NOM = 26 mm
UCL = 27 mm
4. A White Paper from
Myrtle Consulting
Delivering Operational Improvement
Step 2: Understand legalities and company policies – Understanding legalities and company policies for the
filling operation is crucial when tackling underfilling and overfilling. Most company policies are centered around the FTC
requirements for filling and labeling a particular product. Most packaged goods are pre-labeled with a nominal weight at the
processor, and the regulatory requirements in most states come from the National Institute of Standards and Technology
Handbook 133 (NIST HB133). Two aspects of FTC packaging requirements are relevant to overfill: the Maximum Allowable
Variation (MAV) and the Average Error (AE).
The weight/volume of each individual package in an inspection lot cannot be below an absolute lower limit known as
the Maximum Allowable Variation (MAV). NIST HB133 defines MAV as: “…a deficiency in the weight, or measure, of an
individual package beyond which the deficiency is considered to be an unreasonable error.” This requirement is designed to
keep manufacturers from intentionally shorting customers’ product in order to cut costs or increase profits.
Average Error has to do with the overall distribution of weights/volumes in an entire sample lot or run. The AE requirement
stipulates that the average of all sampled units cannot be lower than a predetermined amount below the nominal labeled
weight. In other words, if an auditor pulled a random sample of a particular product off the shelf, then the average weight of
all of those packages should not fall below the nominal weight on the label.
By understanding these legalities, companies can focus their efforts on measuring MAV and AE to ensure that they
consistently comply with company policies and FTC regulations..
Step 3: Determine fill weight targets – In order to maximize profitability while complying with government regulations,
manufacturers must achieve a precise balance when setting the optimal fill rate. Consistent overfilling to minimize risk is
inefficient and sacrifices profitability, while underfilling results in significant risks of non-compliance with regulations and
related punitive actions. Effective root cause analysis, statistical process control and process capability methods can be used to
determine optimal targets for product fill for a given process. Focused efforts to minimize fill variation will allow the target to be
further optimized, resulting in less waste without increasing risk of non-compliance.
A commonly used statistical method for minimizing risk is to calculate the Z-score. The Z-score takes the current state data and
estimates targets to reduce giveaway of product, and is known as the shifted target. This estimation process is completed with
extensive customer input and collaboration to provide a realistic check on the statistical data. Even though the shifted target is
based on actual data, it does require monitoring to ensure the desired results are achieved.
Step 4: Implement control and tracking charts – It is important to post control charts in filling operations and have
the operations group chart the process status as a short interval control on an hourly basis. Once the shifted targets have
been determined by the customer, implementation of these targets is communicated and tracked on the production floor by
means of a tracking chart. As demonstrated with the marble example, a control chart is a visual management tool designed
to chronologically track the overfill status for each filling machine. This helps to monitor machine performance with respect
to hourly fill weights.
The tracking chart is constructed by identifying the y-axis as overfill amount and the x-axis as time (see Figure 2). The tracking
chart is divided into three zones depicted by the colors green, yellow and red, from bottom to top respectively. The green
zone ranges from zero overfill (LCL) to the green zone upper control limit. The green zone upper control limit is the desired
overfill shifted target, as determined earlier, to allow a percentage of samples below label claim.
The yellow zone ranges from the green zone upper control limit to the yellow zone upper limit (UCL). The yellow zone is
the amount of overfill allowed above the overfill target and should result in actions by the operator to bring fill rates back
into the green zone.
The red zone ranges from the yellow control upper limit to the red zone upper limit. The red zone is the amount of
overfill not allowed and must trigger immediate action by the operator to bring back into the green or yellow zone.
Additionally, there is a red zone that is below the label claim and requires machine adjustment to increase the fill
weight into the green zone.
5. A White Paper from
Myrtle Consulting
Delivering Operational Improvement
The tracking chart helps the operations team identify, in real-time, the adjustments required to optimize fill rates.
Manufacturers should carefully consider how changes in formulation may impact their operations prior to pursuing this strategy.
Step 5: Install shiftly and monthly meetings – Data without action is not sufficient to change behaviors. It is
important that companies establish meetings to evaluate report data and identify action items as a team. By establishing
regular meetings by shift and again on a monthly basis, it is possible to review control and tracking charts, understand
variances and set goals. Shiftly reviews are used to determine common and special causes of any outliers in the process.
Based on this information, the team can determine what actions need to take place to minimize variation in the process. All
organizations’ management operating systems contain feedback and control loops to promote continuous improvement of
processes as illustrated by the prior tracking chart. The current shift tracking results are aggregated and discussed in the pre-
shift meetings, highlighting assignable causes for data points in the red zones if known. If each shift is managed properly with
respect to overfills, then the sum of the shifts will result in favorable weekly, monthly and yearly performance. The valued
outcome from this frequent meeting is to identify causes and assign actions to prevent recurrence of the red zone data
points. Succinct identification of the causes within the organization’s problem-solving framework will aid ultimate overfill
control. Monthly meetings are held to track overfill results to ensure progress is occurring over time.
1ǥǦ ShiŌ 2ⁿǖ ShiŌ 3Ǥǖ ShiŌ
1ǥǦ
Hour
2ⁿǖ
Hour
3Ǥǖ
Hour
4Ǧǚ
Hour
5Ǧǚ
Hour
6Ǧǚ
Hour
7Ǧǚ
Hour
8Ǧǚ
Hour
Date
Grams
Batch Number(s)
+6.0
+5.5
+5.0
+4.5
+4.0 UCL
+3.5
+3.0
+2.5
+2.0
+1.5
+1.0
+0.5
-0.5
-1.0
-1.5
-2.0
Label Claim LCL
AVG.FillWt.(+/-)LabelClaim(Grams)
Line 4: Fill Weight Tracking
6. A White Paper from
Myrtle Consulting
Delivering Operational Improvement
Step 6: Review results and current targets – The final step of the process involves conducting a regular review of the fill
weight targets every six months to determine if set targets are still valid and if any further adjustments are required. A periodic
management review meeting is held to illustrate overfill trend, projected annual savings and determine future overfill targets
based on the data from the period. This is normally completed semi-annually but is customer-defined and can be quarterly.
Highlights of this meeting are the actions to prevent recurrence and their results on overfill actuals. This places the importance
on identification of improvement directives and not solely on the projected annual savings. Perpetuation of the assignable cause
activity, identification of deviations, and a process to find causes and actions to prevent recurrence are crucial to the continuous
improvement process and require significant visibility.
Conclusion
Controlling packaging weight/volume allows companies to reduce and control variation of products, thereby decreasing costs
and increasing overall profits. By incorporating processes such as tracking charts on the manufacturing plant floor, all levels of
the organization have the ability to see the process capability of the filling operation. Continually resolving issues with the
outliers in the process ultimately results in a significant productivity improvement for most companies. Companies are able to
use previously wasted materials to package more product, giving them a competitive advantage in their respective markets.
Using the Myrtle Consulting methodology to reduce fill variation, one healthcare company was able to save over $250K in baby
formula production per year. In a little under four weeks, savings of over $24K were realized instantly to the bottom line. This
demonstrates that a tiny shift in fill weights can equate to substantial savings – without any capital investment. Proper analysis of
the data, identifying the causes of variation in the process, and developing the right actions to minimize this variation will result in
reducing overfill and thereby improve productivity.
About Bruce Everett - Bruce Everett is a consultant with Myrtle Consulting Group. He has worked in a range of industries
including automotive, appliances and metals. He has a degree in Industrial Engineering and several years of engineering
experience. Bruce has delivered operational improvements to clients in a variety of industries through the use of Toyota Production
System and Lean Manufacturing techniques.
About Curtis Gavin - Curtis Gavin is a consultant with Myrtle Consulting Group. He is a process improvement and operational
effectiveness professional with the ability to assess process flow, identify bottlenecks, create metrics for improvement, and train
supervisors and staff to execute recommendations. He has more than a decade of operational and change management experience
and four years of experience in quality/process improvement. He consistently achieves project savings and deliverables, saving time
for clients and adding revenue to their bottom line. His communication skills are complemented by analytical ability, knowledge of
industrial products, manufacturing, distribution and retail industries.
About Lily Ho - Lily Ho is a seasoned Manager with Myrtle Consulting Group helping clients to reduce costs, improve
processes and manage project execution. She began her career as a Six Sigma Black Belt in the heavy machinery industry working at
Caterpillar. During her nine years of consulting experience, she has undertaken a wide range of local and international assignments
across multiple industries and functional areas. Lily has experience in Lean Six Sigma, Lean implementation, cost reduction, process
redesign, organization design, project management, change management, project prioritization and selection, operations strategy,
asset optimization, supply chain management, analysis, and cross team collaboration. Her industry experience includes consumer
packaged goods, chemicals & energy, mining, oil & gas, heavy equipment, utilities, electronics, and technology solutions.