1. The document discusses whether machines are more like Pandora's box or Prometheus' gift to humanity.
2. It analyzes the financial justification of automation by comparing costs of labor versus machinery over 8 years under various assumptions. Machinery is shown to be significantly less costly.
3. However, the traditional analysis is flawed because it does not consider how machinery can improve quality, flexibility and responsiveness to increase sales and profits over the long run.
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Nobody has time for fake trends, especially recruiters.
Jonathan Kestenbuam, Managing Director of Talent Tech Labs, is here to separate myth from reality.
This one sentence document does not provide enough context or information to create an accurate 3 sentence summary. The document contains only one word - "Lorem" - which is not meaningful on its own.
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Few people know that they have the power to attract good things. Click this site http://www.ilanelanzen.com/ for more information on How To Have Good Luck. The only condition is to be positive. Believe in yourself and nothing can stay in your way. Your personal and professional life can transform if you change your way of thinking. Henceforth, it is advisable that you learn How To Have Good Luck.
Follow Us : https://mymomisspecialbecause.wordpress.com
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O documento lista vários eventos culturais e shows musicais nos quais Andrei Alves participou entre 2013 e 2005, incluindo aparições em programas de TV e rádio, lançamento de CD, e shows patrocinados por leis de incentivo à cultura.
O Hospital Municipal de Araucária não está fechado, mas atendendo parcialmente até normalizar a situação. A Prefeitura cancelou o contrato com a Pró-Saúde devido a problemas de gestão como falta de insumos e atrasos nos pagamentos. Um novo contrato emergencial foi assinado com o Instituto Bio Saúde para assumir a gestão enquanto a transição ocorre.
The Truth About Cats & Dogs: What You MUST Know About Talent Acquisition TodayRecruitingDaily.com LLC
Nobody has time for fake trends, especially recruiters.
Jonathan Kestenbuam, Managing Director of Talent Tech Labs, is here to separate myth from reality.
This one sentence document does not provide enough context or information to create an accurate 3 sentence summary. The document contains only one word - "Lorem" - which is not meaningful on its own.
Este documento presenta un resumen de un poster presentado en el V Congreso de la Asociación Uruguaya de Producción Animal en diciembre de 2014. El poster describió el desarrollo de un inmunoensayo rápido para la detección de mastitis subclínica en ganado lechero. El trabajo fue realizado por investigadores de la Universidad de la República y el INIA en Uruguay.
Few people know that they have the power to attract good things. Click this site http://www.ilanelanzen.com/ for more information on How To Have Good Luck. The only condition is to be positive. Believe in yourself and nothing can stay in your way. Your personal and professional life can transform if you change your way of thinking. Henceforth, it is advisable that you learn How To Have Good Luck.
Follow Us : https://mymomisspecialbecause.wordpress.com
Este documento presenta el marco conceptual para el desarrollo de un Mapa de Progreso de las Tecnologías de la Información y la Comunicación (TICs) para el sistema escolar chileno. Describe cuatro dimensiones clave (Tecnología, Información, Comunicación y Ética) y siete niveles de logro esperados de los estudiantes. Además, provee indicadores genéricos para monitorear el progreso de los estudiantes en cada dimensión y nivel.
O documento lista vários eventos culturais e shows musicais nos quais Andrei Alves participou entre 2013 e 2005, incluindo aparições em programas de TV e rádio, lançamento de CD, e shows patrocinados por leis de incentivo à cultura.
O Hospital Municipal de Araucária não está fechado, mas atendendo parcialmente até normalizar a situação. A Prefeitura cancelou o contrato com a Pró-Saúde devido a problemas de gestão como falta de insumos e atrasos nos pagamentos. Um novo contrato emergencial foi assinado com o Instituto Bio Saúde para assumir a gestão enquanto a transição ocorre.
The document discusses how robots and artificial intelligence are changing the skill sets needed for finance transformation projects. It notes that routine tasks are being automated, increasing the need for skills like data analysis, project management, and strong interpersonal skills. To succeed, organizations must have the right mix of seniority, experience, and skills mapped to their specific project needs. Maintaining the right grade mix over time, as tasks change, is important for delivering projects and long-term services effectively.
AOGR_Jan2010-Enterprise Level Approach To Informationsmrobb
Oil and gas companies face challenges from industry volatility and financial pressures that force tough choices about strategies. "Drilling" into core enterprise processes and systems offers the greatest opportunity to maximize the value of existing assets by achieving greater operational efficiency, reduced IT costs, and improved supply chain performance. Companies can take three key steps: learn from proven operational models in other industries, adopt a collaborative team approach across departments, and change technology from SCADA to an enterprise operations platform that enables information access and sharing to optimize operations.
Field force automation involves using technology and software to automate the management and dispatch of mobile field workers. This document provides an 8-step guide to successfully implementing field force automation and realizing benefits such as improved productivity, customer service, and invoicing. It discusses selecting the right software and suppliers, piloting the system, and continuing to focus on benefits after full implementation. Case studies are provided of companies like BT, Romtelecom, Northumbrian Water, and Kirklees Community Healthcare that improved efficiency, reduced costs, and better served customers through field force automation.
This whitepaper discusses the use of analytics to help companies retain customers during and after mergers and acquisitions (M&As). It describes the challenges of customer retention due to synergies from M&As impacting customers. A Customer Cockpit solution is proposed using data integration, machine learning and dashboards to identify at-risk customers, understand customer experience, and monitor key performance indicators. The solution aims to help companies measure performance, predict churn, and take actions to retain top customers and those likely to defect during M&As.
Business process automation: The past, present and futureQorus Software
With current economic challenges and technology’s exponential growth shaping the way companies operate, automation has an integral role to play in many business processes. When utilized strategically, Business Process Automation (BPA) is a powerful tool for increasing productivity while reducing the amount of resources that are required to complete routine tasks.
By taking over repetitive (and often mind-numbing) tasks and processes, BPA can also play a key role in boosting staff engagement and satisfaction. This in turn increases talent retention and saves the costs associated with hiring and training new employees. With the mundane assignments taken care of by technology, employees have more time to focus on projects that require their unique human capabilities – such as creative thought, strategic decision-making or knowledge-based analysis.
That said, BPA goes beyond just handling routine tasks such as data manipulation or information management. It also covers the automation of complex business processes through the use of advanced technologies.
For more about how document automation should form part of your business strategy visit our website: https://www.qorusdocs.com/document-generation
The document discusses cost analysis and control with reference to Hero Motocorp Pvt Ltd. It defines key terms like cost, cost-benefit analysis, and the need for cost reduction strategies.
The scope of the study is restricted to analyzing Hero Motocorp's cost systems and evaluating ways to modify the current system. Data will be collected from Hero Motocorp officers, journals, accounting records, books, and statistical records.
The objectives are to provide a framework for cost and cost control analysis, examine Hero Motocorp's cost system and objectives, and evaluate and propose modifications to the existing cost system with regards to different cost types and performance cost formulation.
The document discusses trends in outsourcing models moving from cost-focused to collaborative models that aim to provide business value and competitive advantage. It argues that traditional ticket-based pricing models do not incentivize quality, and that outsourcing providers should be responsible for ensuring defect-free applications and business outcomes rather than just fixing tickets. The document advocates for an outcome-based model where providers are paid based on achieving business metrics and key results rather than activities.
As a manager, discuss how you would use or have used the concepts .docxwraythallchan
Cost-volume-profit analysis (CVP) is a tool that breaks down the relationship between costs, production volume, and profits. It is useful for planning and decision making. Variable costing focuses on costs that vary with production volume like materials and labor. It provides information on costs per unit and contribution margins. Managers can use CVP and variable costing together to determine break-even points, decide whether to expand or reduce production, and evaluate options like purchasing vs manufacturing products. The analyses rely on assumptions like fixed and variable costs being accurately classified.
Nature And Theories In Management AccountingLisa Williams
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Study of Managing Business at Reliance Industries Limited”shah kunal
The document is a project report on studying the business management of Reliance Industries Limited. It contains an introduction to Reliance Industries which discusses its size and operations. The rest of the report is divided into groups that cover quantitative analysis, management information systems, marketing management, human resource management, cost and management accounting, financial management, and production and operations management as they relate to Reliance Industries. For each topic, there are sections that discuss concepts and practices used by Reliance Industries.
The document discusses how Accent Serv International can help businesses maximize their profits through revenue management, cost optimization, risk evaluation, and price strategies. They analyze customer data and market conditions to forecast demand, segment customers, optimize prices and inventory, and continuously reevaluate strategies. Their goal is to help businesses understand their production costs and functions, set optimal input levels and prices, and achieve the maximum profit possible given their market conditions and resources.
De nombreuses définitions existent au sujet du Cloud Computing et les fournisseurs les cadrent selon une perspective technique, faisant passer le concept à un mot à la mode (Buzz word) égarant ainsi les décideurs, hommes d'affaires et leur laissant une idée confuse de son importance concurrentielle pour l'entreprise.
Ce livre blanc interactif a pour intention d'expliquer le concept du "Cloud Computing", la définition du concept et les technologies principales sur lesquelles le Cloud Computing est fondé.
Il vous présentera les contraintes et les facteurs de l'environnement d'aujourd'hui qui peuvent motiver l'adoption réussie du Cloud Computing dans la stratégie d‘une entreprise.
Dynamic pricing allows companies to maximize profits by continuously adjusting prices in response to changing market conditions. Algorithms analyze internal and external data to predict demand based on price and set prices accordingly. Companies like Amazon use dynamic pricing to change prices up to 3 million times per day. When implemented effectively through data analysis, change management, and ongoing optimization, dynamic pricing can increase company revenues by over 15% and units sold by double digits.
Investment calculations and production automation in weldingOlli-Pekka Holamo
This document discusses factors to consider when evaluating investments in production automation, such as robots, using net present value calculations. It emphasizes that total costs, including indirect costs associated with current manual production processes, must be considered rather than just comparing direct labor costs to investment costs. Three categories of costs are identified: direct costs, indirect costs caused by current operations, and costs associated with resources over time like increasing labor costs. Key performance indicators should be used to compare the total costs per unit of current and proposed automated production concepts to determine the most profitable option.
Automation vs sourcing a strategic framework Neo Group Inc
As automation gains more traction in the market what does that mean for the traditional sourcing? What would lead a company to place its bets on automation?
THE EFFECTS OF OVERHEAD COST IN THE SELLING PRICE OF A PRODUCT. Alex Raji
Abstract
www.projectworld.com.ng
This study aims to examine the effects of overhead cost in the selling of a product determination in the Nigeria automobile manufacturing industry. Specifically, the study looks at the treatment of overhead costs apportionment from the perspective of the profit making effort of automobile manufacturing firms. The methodology used is interview with staff of one automobile manufacturing company in Nigeria taken as a case study: that is innoson vehicle manufacturing co. ltd in Nnewi Anambra State. The findings of this study show that overhead costs apportionment has significant effect on the determination of “true and fair” selling price of an automobile manufacturing firm, especially as service centres are considered in primary apportionment before their shares are re-apportioned to production centres, using an appropriate method. This study, therefore, recommends that automobile manufacturing firms in Nigeria should adopt the activity based costing method of overhead costs apportionment as it considers service centres of the company together with production centres in fair apportionment of overhead costs, taking into account the percentage of services enjoyed by the production centres from the service centres. This would allow room for fairly accurate determination of total cost per unit of their products, which would ultimately lead to effective pricing decision.
Keywords: Overhead costs, Cost apportionment, Activity Based Costing, Selling Price, and Automobile Manufacturing Industry.
Manufacturers are facing increased market competition. It is possible to increase profit significantly, but this requires that we make changes to our management philosophy. A case study is presented of a company that increased profits more than 20% per year for many years after a period focussed on management innovation. Changing the way we manage delivers much more than putting our hopes on new technology. See the originating website at https://stratflow.com/supply-chain-and-operations-toc/
This document discusses predicting customer churn in the automotive after-sales service industry. It describes using machine learning techniques like supervised and unsupervised learning to analyze customer maintenance data and predict churn. Key findings include identifying 4 customer hyper clusters correlated with churn prediction and maintenance visits. Analyzing hyper clusters over time helped understand customer lifetime cycles and predict future maintenance behavior. The predictive modeling and clustering approach helped the automotive company increase maintenance visits by 32%.
Cost management and performance measurements for petroleum upstream industr p...Hamdy Rashed
Cost management and Balanced Scorecard is not appropriate only for manufacturing and commercial industry; cost management is applied in upstream industry such as Petroleum exploration, development and production cost. Many Petroleum Companies don’t pay more attention to cost control or balanced scorecard and especially during exploration phase or small companies except if Companies face financial dilemma, declining production or if they see they cannot meet their planned schedule of Capital program that lead them to not meet their obligation, commitments and required return, therefore, they start considering cost reduction or control. This paper provide management accountant, cost controller, financial controller, financial manager, internal auditor and cost recovery auditor with brief of cost control, how cost is analyzed and managed and performance is measured in Petroleum upstream industry.
The document discusses how robots and artificial intelligence are changing the skill sets needed for finance transformation projects. It notes that routine tasks are being automated, increasing the need for skills like data analysis, project management, and strong interpersonal skills. To succeed, organizations must have the right mix of seniority, experience, and skills mapped to their specific project needs. Maintaining the right grade mix over time, as tasks change, is important for delivering projects and long-term services effectively.
AOGR_Jan2010-Enterprise Level Approach To Informationsmrobb
Oil and gas companies face challenges from industry volatility and financial pressures that force tough choices about strategies. "Drilling" into core enterprise processes and systems offers the greatest opportunity to maximize the value of existing assets by achieving greater operational efficiency, reduced IT costs, and improved supply chain performance. Companies can take three key steps: learn from proven operational models in other industries, adopt a collaborative team approach across departments, and change technology from SCADA to an enterprise operations platform that enables information access and sharing to optimize operations.
Field force automation involves using technology and software to automate the management and dispatch of mobile field workers. This document provides an 8-step guide to successfully implementing field force automation and realizing benefits such as improved productivity, customer service, and invoicing. It discusses selecting the right software and suppliers, piloting the system, and continuing to focus on benefits after full implementation. Case studies are provided of companies like BT, Romtelecom, Northumbrian Water, and Kirklees Community Healthcare that improved efficiency, reduced costs, and better served customers through field force automation.
This whitepaper discusses the use of analytics to help companies retain customers during and after mergers and acquisitions (M&As). It describes the challenges of customer retention due to synergies from M&As impacting customers. A Customer Cockpit solution is proposed using data integration, machine learning and dashboards to identify at-risk customers, understand customer experience, and monitor key performance indicators. The solution aims to help companies measure performance, predict churn, and take actions to retain top customers and those likely to defect during M&As.
Business process automation: The past, present and futureQorus Software
With current economic challenges and technology’s exponential growth shaping the way companies operate, automation has an integral role to play in many business processes. When utilized strategically, Business Process Automation (BPA) is a powerful tool for increasing productivity while reducing the amount of resources that are required to complete routine tasks.
By taking over repetitive (and often mind-numbing) tasks and processes, BPA can also play a key role in boosting staff engagement and satisfaction. This in turn increases talent retention and saves the costs associated with hiring and training new employees. With the mundane assignments taken care of by technology, employees have more time to focus on projects that require their unique human capabilities – such as creative thought, strategic decision-making or knowledge-based analysis.
That said, BPA goes beyond just handling routine tasks such as data manipulation or information management. It also covers the automation of complex business processes through the use of advanced technologies.
For more about how document automation should form part of your business strategy visit our website: https://www.qorusdocs.com/document-generation
The document discusses cost analysis and control with reference to Hero Motocorp Pvt Ltd. It defines key terms like cost, cost-benefit analysis, and the need for cost reduction strategies.
The scope of the study is restricted to analyzing Hero Motocorp's cost systems and evaluating ways to modify the current system. Data will be collected from Hero Motocorp officers, journals, accounting records, books, and statistical records.
The objectives are to provide a framework for cost and cost control analysis, examine Hero Motocorp's cost system and objectives, and evaluate and propose modifications to the existing cost system with regards to different cost types and performance cost formulation.
The document discusses trends in outsourcing models moving from cost-focused to collaborative models that aim to provide business value and competitive advantage. It argues that traditional ticket-based pricing models do not incentivize quality, and that outsourcing providers should be responsible for ensuring defect-free applications and business outcomes rather than just fixing tickets. The document advocates for an outcome-based model where providers are paid based on achieving business metrics and key results rather than activities.
As a manager, discuss how you would use or have used the concepts .docxwraythallchan
Cost-volume-profit analysis (CVP) is a tool that breaks down the relationship between costs, production volume, and profits. It is useful for planning and decision making. Variable costing focuses on costs that vary with production volume like materials and labor. It provides information on costs per unit and contribution margins. Managers can use CVP and variable costing together to determine break-even points, decide whether to expand or reduce production, and evaluate options like purchasing vs manufacturing products. The analyses rely on assumptions like fixed and variable costs being accurately classified.
Nature And Theories In Management AccountingLisa Williams
This document discusses cost accounting, its role, and ethical considerations. It begins by defining cost accounting as a subset of managerial accounting that helps determine and accumulate product, process, or service costs. It then discusses the role of cost accounting in planning, decision making, and performance evaluation. Finally, it discusses some ethical issues that can arise in cost accounting, such as lack of understanding leading to manipulation, and the need to provide truthful information to users. It also briefly compares absorption and variable costing approaches.
Study of Managing Business at Reliance Industries Limited”shah kunal
The document is a project report on studying the business management of Reliance Industries Limited. It contains an introduction to Reliance Industries which discusses its size and operations. The rest of the report is divided into groups that cover quantitative analysis, management information systems, marketing management, human resource management, cost and management accounting, financial management, and production and operations management as they relate to Reliance Industries. For each topic, there are sections that discuss concepts and practices used by Reliance Industries.
The document discusses how Accent Serv International can help businesses maximize their profits through revenue management, cost optimization, risk evaluation, and price strategies. They analyze customer data and market conditions to forecast demand, segment customers, optimize prices and inventory, and continuously reevaluate strategies. Their goal is to help businesses understand their production costs and functions, set optimal input levels and prices, and achieve the maximum profit possible given their market conditions and resources.
De nombreuses définitions existent au sujet du Cloud Computing et les fournisseurs les cadrent selon une perspective technique, faisant passer le concept à un mot à la mode (Buzz word) égarant ainsi les décideurs, hommes d'affaires et leur laissant une idée confuse de son importance concurrentielle pour l'entreprise.
Ce livre blanc interactif a pour intention d'expliquer le concept du "Cloud Computing", la définition du concept et les technologies principales sur lesquelles le Cloud Computing est fondé.
Il vous présentera les contraintes et les facteurs de l'environnement d'aujourd'hui qui peuvent motiver l'adoption réussie du Cloud Computing dans la stratégie d‘une entreprise.
Dynamic pricing allows companies to maximize profits by continuously adjusting prices in response to changing market conditions. Algorithms analyze internal and external data to predict demand based on price and set prices accordingly. Companies like Amazon use dynamic pricing to change prices up to 3 million times per day. When implemented effectively through data analysis, change management, and ongoing optimization, dynamic pricing can increase company revenues by over 15% and units sold by double digits.
Investment calculations and production automation in weldingOlli-Pekka Holamo
This document discusses factors to consider when evaluating investments in production automation, such as robots, using net present value calculations. It emphasizes that total costs, including indirect costs associated with current manual production processes, must be considered rather than just comparing direct labor costs to investment costs. Three categories of costs are identified: direct costs, indirect costs caused by current operations, and costs associated with resources over time like increasing labor costs. Key performance indicators should be used to compare the total costs per unit of current and proposed automated production concepts to determine the most profitable option.
Automation vs sourcing a strategic framework Neo Group Inc
As automation gains more traction in the market what does that mean for the traditional sourcing? What would lead a company to place its bets on automation?
THE EFFECTS OF OVERHEAD COST IN THE SELLING PRICE OF A PRODUCT. Alex Raji
Abstract
www.projectworld.com.ng
This study aims to examine the effects of overhead cost in the selling of a product determination in the Nigeria automobile manufacturing industry. Specifically, the study looks at the treatment of overhead costs apportionment from the perspective of the profit making effort of automobile manufacturing firms. The methodology used is interview with staff of one automobile manufacturing company in Nigeria taken as a case study: that is innoson vehicle manufacturing co. ltd in Nnewi Anambra State. The findings of this study show that overhead costs apportionment has significant effect on the determination of “true and fair” selling price of an automobile manufacturing firm, especially as service centres are considered in primary apportionment before their shares are re-apportioned to production centres, using an appropriate method. This study, therefore, recommends that automobile manufacturing firms in Nigeria should adopt the activity based costing method of overhead costs apportionment as it considers service centres of the company together with production centres in fair apportionment of overhead costs, taking into account the percentage of services enjoyed by the production centres from the service centres. This would allow room for fairly accurate determination of total cost per unit of their products, which would ultimately lead to effective pricing decision.
Keywords: Overhead costs, Cost apportionment, Activity Based Costing, Selling Price, and Automobile Manufacturing Industry.
Manufacturers are facing increased market competition. It is possible to increase profit significantly, but this requires that we make changes to our management philosophy. A case study is presented of a company that increased profits more than 20% per year for many years after a period focussed on management innovation. Changing the way we manage delivers much more than putting our hopes on new technology. See the originating website at https://stratflow.com/supply-chain-and-operations-toc/
This document discusses predicting customer churn in the automotive after-sales service industry. It describes using machine learning techniques like supervised and unsupervised learning to analyze customer maintenance data and predict churn. Key findings include identifying 4 customer hyper clusters correlated with churn prediction and maintenance visits. Analyzing hyper clusters over time helped understand customer lifetime cycles and predict future maintenance behavior. The predictive modeling and clustering approach helped the automotive company increase maintenance visits by 32%.
Cost management and performance measurements for petroleum upstream industr p...Hamdy Rashed
Cost management and Balanced Scorecard is not appropriate only for manufacturing and commercial industry; cost management is applied in upstream industry such as Petroleum exploration, development and production cost. Many Petroleum Companies don’t pay more attention to cost control or balanced scorecard and especially during exploration phase or small companies except if Companies face financial dilemma, declining production or if they see they cannot meet their planned schedule of Capital program that lead them to not meet their obligation, commitments and required return, therefore, they start considering cost reduction or control. This paper provide management accountant, cost controller, financial controller, financial manager, internal auditor and cost recovery auditor with brief of cost control, how cost is analyzed and managed and performance is measured in Petroleum upstream industry.
Cost management and performance measurements for petroleum upstream industr p...
Shriram Article Version 3
1. MACHINE – PANDORA OR PROMETHEUS FOR MAN?
Shriram Adhishesha
F.Y.B.M.S
A/502 Gulmohar, Poonam complex, 90.Ft Road, Thakur Complex, Kandivali (E),
Mumbai – 400101.
Email: adsram@gmail.com
CBA – Man vs. Machine
Science and Technology Category
2. ABSTRACT
The purpose of business is to create and keep a customer…..Business has only two functions
marketing and innovation.-Peter. F. Ducker.
Both the functions are creativity oriented and can be done by man in a much better manner
than a machine. However without a machine, man cannot render quality product / service to
the customer. While machine can produce goods confirming to Six Sigma quality norms,
man cannot match it. Both are complementary to each other and not supplementary. Man and
machine are not totally mutually exclusive alternatives. However, a quantitative analysis is
carried out to show the financial justification of automation. When it comes to justifying an
automation investment, most businesses tend to overstate the hard quantifiable numbers,
which are usually the costs, and understate the soft correlations such, as higher quality,
reduced cycle times, greater flexibility etc. This is not to say numbers are not important, they
are. But all the numbers must be weighed and evaluated as a part of the whole. One will have
to consider sales; costs and profits all together while arriving at the conclusion. Appropriate
justification can be done for automation by considering all figures together after integrating
with the soft data to arrive at the cash flow statement and an appropriate discount rate has to
be used to arrive at the NPV, which is very much essential for the survival and growth of
organisation in a competitive market. Here there is an implicit assumption that machines are
for the overall benefit of the human society. But history has taught us otherwise. So this has
to be an explicit objective. As we cannot get guidance for machinery and improved
machinery. This raises the issue of machines a Pandora or Prometheus?
3. INTRODUCTION
The purpose of business is to create and keep a customer…..Business has only two functions
marketing and innovation.-Peter. F. Ducker.
Both the functions are creativity oriented and can be done by a man in a much better manner
than a machine. However without a machine, man cannot render a quality product / service
to the customer. With the improvement in technology and systems – high quality general
purpose and special purpose machines with computerised numerical controllers, artificial
intelligence and robotics; flexible manufacturing systems1
, etc. – many factories are able to
produce goods confirming to six sigma quality norms (Six Sigma equates to just under 3.4
defects per million opportunities (DPMO))2
with highly reduced cycle times. Even very high
end labour on its own cannot match it by a big margin. Both are complementary to each
other and not supplementary. Man and machine are not totally mutually exclusive
alternatives. However, a quantitative analysis is carried out to show the financial justification
of automation. When it comes to justifying an automation investment, most businesses tend
to overstate the hard quantifiable numbers, which are usually the costs, and understate the
soft correlations such, as higher quality, reduced cycle times, greater flexibility etc. Do these
translate into bigger sales? Yes, they do. What all these accounting methods fail to take into
account is the machine’s impact on the business as a whole? How does it support the overall
business strategy? This is not to say numbers are not important, they are. But all the numbers
must be weighed and evaluated as a part of the whole. One will have to consider sales; costs
and profits all together while arriving at the conclusion. Appropriate justification can be done
for automation by considering all figures together after integrating with the soft data to arrive
at the cash flow statement and an appropriate discount rate has to be used to arrive at the
NPV, which is very much essential for the survival and growth of organisation in a
competitive market. Justification for purchase of plant and machinery of high value / degree
of automation cannot be done with the help of profit figures alone. One will have to consider
soft data like product quality; reduced process time- the ability to react fast to the customer
requirements; flexibility in terms of product planning, design, manufacturing etc. which will
definitely help the company to obtain better market share not only in its target market but also
in other segments of the market - as the word passes on about company’s ability to give good
quality product in the shortest time. This interrelation of soft data is very important to arrive
at the total economies of the justification of automation. In short, one will have to consider
sales; costs & profits all together while arriving at the conclusion. The traditional model for
justifying the purchase of machinery considers only the cost figures and the profit figures.
This approach is very dangerous when considered from the total business strategy as a whole
for the growth and success of the organisation. The impact on the sales figures alone can
guarantee the growth of the company in long run. The growth in sales will increase the profits
to a very great extent because of the presence of operating leverage provided the costs are
controlled.
4. OBJECTIVES
Automation is financially justifiable.
The need to change the Implicit Assumption of ‘machines are essential for the well-
being and development of humanity’ to Explicit Objective.
Machines and their development is a Pandora or Prometheus?
RESEARCH METHODOLOGY
This is a Conceptual Research – Theory Development. It is based on learning and integrating
various concepts of Production Management, Lateral Thinking, Accounting, Tax Planning,
Financial Management (PV, CBA), etc. to reach to this conclusion.
FINANCIAL JUSTIFICATION
Assumptions
To get a fair idea on the traditional model on financial justification for automation, let us
consider that if one lakh worth labour and machine give the same production which
alternative is better and to what extent.
To arrive at a conclusion we are making the following assumptions:
1. The economic life of asset is eight years;
2. Repairs and maintenance cost is 1% of the machine cost and will increase by 1%
every year;
3. As depreciation rates are different for different types of plant and machinery, we have
considered 20% on WDV basis both under The Income Tax Act, 1961 and The
Companies Act, 1956; Investment Allowance under Sec 32AC of ITA is not
considered due to monetary limits3
.
4. At the beginning of the ninth year machine is sold at book value. For simplicity
purpose, while calculating the present value (PV), present value factor (PVF) of
eighth year is considered;
5. Cost of training and cost lay-off / retrenchment at the end of eighth year is ignored;
6. To arrive at a better conclusion we are considering-
Labour costs will increase at 7% or 10% or 15% or 20% compounded every
year; and
Discounting rate will be 7% or 10% or 15% or 20%.
Analysis
Based on the above assumptions one will arrive at the following conclusions:
A] Based on the present value analysis:
Discount rate being 7% labour would be at least costlier by 588% when wages increase at 7%
compounded, 650% when wages increase at 10 % compounded, 768% when wages increase
at 15% compounded and 910% when wages increase at 20 % compounded.
5. Discount rate being 10% labour would be at least
costlier by 511% when wages increase at 7%
compounded, 562% when wages increase at 10 %
compounded, 660% when wages increase at 15%
compounded and 777% when wages increase at 20 %
compounded.
Discount rate being 15% labour would be at least
costlier by 414% when wages increase at 7%
compounded, 452% when wages increase at 10 % compounded, 526% when wages increase
at 15% compounded and 613% when wages increase at 20 % compounded.
Discount rate being 20% labour would be at least costlier by 343% when wages increase at
7% compounded, 373% when wages increase at 10 % compounded, 429% when wages
increase at 15% compounded and 495% when wages increase at 20 % compounded.
As per the analysis the financial conclusion is that the unit will have to go in for machinery.
B] Based on the charge made to the profit and
loss account:
If we consider only on the charge made to the
profit and loss account, labour will be costlier by
861%, 959%, 1151% & 1384% at 7%, 10%, 15%
& 20% compounded wage increase respectively
over a period if eight years. This means, the unit
will have to earn so much extra contribution to
break-even. The above analysis clearly reveals
that the use of labour is costlier when compared to
the use of machinery.
LACUNAE OF TRADITIONAL APPROACH
The criterion for consideration given above is that, given the same amount of production
which one is better. The underlying assumption made applicable for both alternatives in the
above working is that the output will be of the same quality, lead time will be the same and
the flexibility to adapt to market requirements will be the same. It is very well known that use
of sophisticated machines and adopting flexible manufacturing systems will enable a
company to give a better quality product, reduce its manufacturing lead time and increase the
flexibility in capacity, etc. This will definitely have a better impact on the market and the unit
will have better chances to capture a better share of its target market and sometimes even new
markets may open. This growth opportunity not being available for low quality products, the
two alternatives are not comparable unless sales figures are considered to arrive at the profit
figures. Do improved product quality, flexible capacity and superior response agility really
translate to bigger sales figures? Yes, they really do… What all of these accounting methods
fail to take into account is the machines impact on the business as a whole? How does it
support the overall business strategy? “A decision of this magnitude must be based on a
sound, high level business strategy, not on some short range financial or accounting
7% 10% 15% 20%
7% 5.88 5.11 4.14 3.43
10% 6.50 5.62 4.52 3.73
15% 7.68 6.60 5.26 4.29
20% 9.10 7.78 6.13 4.95
Wages
Increase
Discount Rate
Break-Even(No. of times) Considering Cash Flow -
Present Value
Year 7% 10% 15% 20%
1 4.76 4.76 4.76 4.76
2 5.94 6.11 6.39 6.67
3 7.25 7.66 8.37 9.11
4 8.60 9.35 10.68 12.13
5 9.94 11.10 13.26 15.72
6 11.17 12.83 16.02 19.82
7 12.26 14.47 18.89 24.39
8 13.17 15.98 21.81 29.38
Total 8.61 9.59 11.51 13.84
Breakeven (No. of Times)
6. procedures. This is not to say numbers are not important, they are. But all the numbers must
be weighted and evaluated from the part of the whole.”
IMPLICIT ASSUMPTION EXPLICIT OBJECTIVE
Without considering the benefits of improved sales, reduced costs (operating leverage), these
figures still show investment in machine is highly beneficial. While this point is proved
(where both can give the same results) certain points which need to be considered are the
extreme damage it can cause to humanity e.g. improvement in machinery leads to
improvement in arms leading to greater calamity. Wars over the last five centuries have
proved it – the negative impact of the war has been disproportionate compared to the
improvement in the technology. We have also exploited and on verge of exhaustion of
critical resources due to use of advanced machinery. We have not learnt our lessons and in
spite of huge effort in educating Environmental Science, the damage is increasing to
environment. If Social Impact is considered overall, the cost – benefit analysis will go for a
toss. Currently improvement in AI, Robotics and allied technologies is very high and the
science fiction movies like, ‘I, Robot’, ‘Terminator Series’, ‘Resident Evil series’ ‘Total
Recall’, etc. show the damage machines can do to the society at large. As Edward De Bono
says “The need to be right all the time is the biggest bar to new ideas”. So we need to move
ahead but take immense precaution due to the inherent dangers involved. Again as Edward
De Bono says “You can analyse the past, but you have to design the future”. This will
require one to be highly creative. (Creativity involves breaking out of established patterns in
order to look at things in a different way – Edward De Bono). All along machines were
developed with an implicit assumption that they are required for the betterment of the human
society. We have seen above certain negative developments which have hurt the bio-cycle
(and estimated to increase further) and caused immense damage in wars. Many are not
comfortable with WMDs. Another factor is certain unintended developments which happen
either in the research process or at the time of usage. This makes it necessary to make the
implicit assumption to explicit objective. With this the potential damage could be reduced.
PANDORA OR PROMETHEUS
Another view against the machine is, one does not know whether it falls under ‘Obedient
Knowledge’ or ‘Forbidden Knowledge’4
. Weapons of Mass Destruction will definitely not
come under Obedient Knowledge. The Answers to inquisitiveness of development does not
always lie in Obedient Knowledge. Discovery of such answers may sometimes threaten
humanity. This becomes more difficult going by the fact that we tend to favour personal
good when there is a clash with common good. The proof for this is the rogue elements
(State and Individuals) who threaten the society with advanced weapons. With this we can
say that machines are required for development of human society but should be handled with
extreme care so that machines are used only for the wellbeing of the Society at large.
Unguided curiosity with action leads to Forbidden Knowledge. Effects of which are
disastrous over a period of time. The magnitude of risk is very high here. (Everybody can
take a decision but managing the impact of the decision is very difficult - few can control the
intended impact and may be none can control the unintended impact of the decision.) This
7. Depriciation Repairs Depriciation Repairs 7% 10% 15% 20%
20,000 1,000 6,800 (660) 6,140 5,738 5,582 5,339 5,117
16,000 2,000 5,440 (1,320) 4,120 3,599 3,405 3,115 2,861
12,800 3,000 4,352 (1,980) 2,372 1,936 1,782 1,560 1,373
10,240 4,000 3,482 (2,640) 842 642 575 481 406
8,192 5,000 2,785 (3,300) (515) (367) (320) (256) (207)
6,554 6,000 2,228 (3,960) (1,732) (1,154) (978) (749) (580)
5,243 7,000 1,783 (4,620) (2,837) (1,767) (1,456) (1,067) (792)
4,194 8,000 1,426 (5,280) (3,854) (2,243) (1,798) (1,260) (896)
16,777 Nil 16,777 9,764 7,827 5,485 3,902
Total 16,149 14,619 12,649 11,183
(1,00,000) (1,00,000) (1,00,000) (1,00,000)
(83,851) (85,381) (87,351) (88,817)
Present Value
Purchase price of Machinery
Cash Flow
Dep.+ Repairs
Net Cash Flow
Before Tax After Tax
makes it very imperative to get guidance before going in the new path. As we don’t know
from whom to get guidance this leads to a question whether machines are a Pandora or
Prometheus?
CONCLUSION
Theory 1: ‘Automation is financially justifiable.’
Theory 2: ‘The need to change the Implicit Assumption of ‘machines are essential for the
well-being and development of humanity’ to Explicit Objective.’
Theory 3: ‘Machines and their development is a Pandora or Prometheus?’
From above we can conclude that automation is financially justifiable and there is a need to
move from the implicit assumption of ‘machines are essential for the well-being and
development of humanity’ to Explicit Objective. As we don’t know whether machines fall
under obedient knowledge or forbidden knowledge we need to get guidance. And we also
don’t know from whom to get the guidance. So we are not sure whether machine is a Pandora
or Prometheus for man?
REFERENCES
1. Production and Operations Management by S N Chary, The McGraw-Hill
Companies, 4th Edition, Page No. 39.1 to 39.
2. http://www.villanovau.com/resources/six-sigma/what-is-six-sigma/#.VJ0eW14AKA
3. Students Guide to Income Tax by Dr V K Singhania and Dr. M Singhania, Taxmann
Publications, 2014-15, Page No. 146-148. Schedule XIV of The Companies Act,
1956. Schedule II of The Companies Act, 2013 is not considered as it will be
implemented from this year only. Deferred Tax is not considered as depreciation rate
is assumed to be the same under both the Acts.
4. http://www.wisdom-square.com/movie-prometheus-analysis-conclusion.html
5. Genesis concerning Adam and Eve in Genesis 2:16–17
6. Tax Rate considered at 34% (Tax 30%, Surcharge 10%, Cess 3% = 33.99%).
TABLES
A. Calculation of Cash Flow when Labour ₹ 1, 00,000/- P.A. is Employed: