Saturday, 30 August 2014

Chit Chat: The Pro and Cons of Different Organisational Structures

·      Allows for rapid decision making
·      Capitalizes on specialization of business activities such as marketing and finance
·      Minimizes need for elaborate control system
·      Simple and cost effective
·      Accountability forced to the top
·      Discourage delegation of authority and responsibility
·      Poor products and markets planning
·      Leads to short-term, narrow thinking
·      Leads to communication problems
·      Low employee/manager morale
·      Minimizes career development
·       Accountability is clear
·       Allows local control of local situations
·      Allows new products or regions additions
·      Allow precise control and attention to products, customers, and/or regions
·      Allow room for career advancement
·      Foster internal competitions
·      Promotes delegation of authority
·      Expensive
·      Limited transparency in ideas and resources
·      Foster unhealthy competition between divisions
·      Duplication of functional activities
·      Requires a skilled management force and complex control system
·      Some regions/products/customers may receive special treatment
·     Employees can see results of their work
·      Facilitates uses of special equipment/ personnel/facilities
·      Promote sharing of functional resources
·      Allows clear project objectives
·      Projects are easily halt
·      Costly because due to more resources required
·      Violates unity of command principle
·      Creates dual lines of budget authority
·      Creates dual sources of reward/punishment
·      Share authority and reporting
·      Requires exception vertical and horizontal communication
·      Requires mutual trust and understanding

Friday, 29 August 2014

What’s the Purpose of the Supply Chain?

A supply chain is what we rely on to get products to the end consumers. It is used throughout the entire process of obtaining raw materials and turning them into end products, and sometimes even concerns the recycling of the end product once it’s been used by the consumer. The purpose of the supply chain sounds simple enough, but it involves many different activities and processes, both upstream and downstream.

It involves long term strategic planning and short to medium term managerial planning and control. The supply chain is made up of multiple links and connections that work together to add value to the product at the various stages and ensure the end consumers are satisfied with their purchases. Customers’ needs are the focus but the supply chain has to be cost efficient to ensure the expenses incurred don’t eat into the profits of the company.

Thursday, 28 August 2014

What is the Supply Chain and how is it Structured?

The supply chain includes everything from the basic commodities to the end product that goes to the customer and even beyond to the recycling of the product. There is a flow of materials that has to be managed, taking raw materials and turning them into a product that then goes to the consumer. The supply chain involves a series of partners who each play an important role in the movement of the materials and products. Each of these partners in the supply chain goes through their processes and focus on adding value to the product.

The structure of the supply chain varies but it involves a number of links that ensure the raw materials make it to the customer. For an example the supply chain of cheese involves:
  • The dairy that gets the milk from the cow and ship the raw material to the factory.
  • The cheese factory turns the raw material into the product to the national distribution centre where it could be stored for months.
  • When an order comes into the distribution centre the product is then shipped to the store.
  • Once at the store the product is then purchased by the end consumer who may buy it in person or order it to be delivered.
The first two links concern inbound logistics, the distribution centre is the internal logistics and the second two links are the outbound logistics and as a whole they make up the supply chain.

Wednesday, 27 August 2014

Logistics as a Career

If you’re looking for a challenging career then the position as a logistics manager might be right up your street. It’s highly complex and requires the individual to have multiple skills and be a specialist and a generalist to succeed. The manager must be able to understand all of the different connections that logistics must have within all the other functions and departments both inside and outside of the company. The specialist side of the role means the manager needs to understand all the various logistics activities and have some technical knowledge in these areas.

There are many different roles in logistics and in recent years there has been a strong market in roles including, but not limited to:
  • Logistics analyst
  • Customer service manager
  • Purchasing manager
  • Transport manager
  • Warehouse operations manager
  • Consultant
Logistics is an excellent profession to get into if you’re looking to advance over the years. It’s not unheard of for entry level jobs in logistics to lead onto management positions. The only thing you do need to be aware of is the fast pace changes that are occurring in this industry. It’s necessary to remain focused on learning new skills and adapting to the changes in the market in order to become a successful logistician.

Tuesday, 26 August 2014

What are the Activities in Logistical Channel? – Part Two

Continuing on from yesterday we’re looking at some of the most common activities that take place in the systems and total cost approaches in logistics.

Demand Forecasting
Demand forecasting is all about estimate the demand that there will be for products in a set future time period. Supply chain partners now play an important role in this process and collaborations are required to reduce the inventory levels found in the supply chain.

Industrial Packaging
Marketing and logistics have to consider packaging. The industrial packaging relates to logistics and it need to be protective to protect the products while being transported.

Materials Management
This is where the materials are transported in the warehouse or plant. These movements add costs onto the logistics systems. Logistics managers need to find the most cost efficient methods of managing the materials handling and reduce the number of movements to save on costs.

Parts and Service Support
After sales support takes the form of emergency services, spare part deliveries, scheduled services and repairs. It’s important to consider these costs as they are important for the distribution of industrial goods.

Procurement is the process of acquiring raw materials, supplies and parts from outside suppliers in order to fulfil the operations of the company.

Salvage and Scrap Disposal
Salvage and scrap is part of the reverse logistics activities. Salvage is when the equipment could have value in the sum of its parts but isn’t any use as it currently stands. Scrap is when there are no parts that could be salvaged and it could only be recycled.

Warehouse Management
Inventory is stored in the warehouses for different periods of times. Warehousing has a role in both long and short term supply chains and logistics.

Monday, 25 August 2014

What are the Activities in Logistical Channel? – Part One

There are lots of activities that are part of the systems and total cost approaches in Logistics. Over the next two days we’re going to take a look at these activities.

Customer Service
Customer services focuses on the happiness of the customers. This means logistics needs to make sure they get the products they ordered at the right time and at the right place.

Facility Location Decisions
Three factors go in to the success of retailers, location, location and location. Logistic systems will also be successful based upon the locations of the production areas and the warehousing. The decisions around these locations have impacts on the business and are therefore important to consider.

Inventory Management
The inventory is the stock that needs to be maintains to sell to the consumers or to be used in manufacturing and assembly. There are three costs to consider, holding, ordering and being out of stock.

Order Management
Order management relates to all the activities that happen between the time of when a customer places an order and when that order is received by the purchaser. These processes need to be clearly visible with the customer.

Production Scheduling
This is the activity that determines how much a company needs to produce and the time when it must be produced by. This is where production and logistics need to work together.

Returned Products
Returns happen for a number of reasons such as damages, wrong orders, dissatisfied customers etc. There has to be logistical services and systems in place to cope with these movements of products.

Transport Management
The transportation management relates to the different transportation activities that take place within the company. It’s a costly part of the logistics activities so efficiency is key.

Saturday, 23 August 2014

Chit Chat: Important Keys Business Financial Ratios to Know

Type of Ratios
What it Measures
Activity Ratios
Accounts Receivable Turnover
Annual Credit Sales/ Account Receivable
Average length of time it takes a firm to collect credit sales in %
Average Collection Period
Account Receivable/ (Total Credit Sales/ 365 days)
Average length of time it takes a firm to collect on credit sales in days
Inventory Turnover
Sales/Inventory of Finished Goods
Whether a company holds excessive stocks of inventories and how inventories are sold when compared to the industry average
Fixed Assets Turnover
Sales/Fixed Assets
Sales productivity, plant and
equipment utilization
Total Assets Turnover
Sales/Total Assets
Whether a company is generating a sufficient volume of business for the size of its asset investment
Leverage Ratios
Debt to Total Assets Ratio
Total debt/Total Assets
Total % of funds that are provided by creditors
Debt to Equity Ratio
Total Debt/Total Stockholders’ Equity
Total % of funds provided by creditors versus by owners
Long Term Debt to Equity Ratio
Long Term Debt/ Total Stockholders’ Equity
Balance between debt and equity in a firm’s long-term capital structure
Time Interest Earned Ratio
Profits Before Interest and Taxes/Total Interest Charges
The extent to which earnings can decline without the company becoming unable to meet its annual interest costs
Liquidity Ratios
Current Ratios
Current Assets/Current Liabilities
The extent to which a company can meet its short-term obligations
Quick Ratio
Current Assets Minus Inventory/Current Liabilities
The extent to which a company can meet its short-term obligations without relying upon the sale of its inventories
Growth Ratios
Dividends per share
Annual Percentage Growth in Dividends per Share
Growth rate in dividends per share
Earnings per share
Annual Percentage Growth in EPS
Growth rate in EPS
Net Income
Annual Percentage Growth in Profits
Growth rate in profits
Annual Percentage Growth in Total Sales
Growth rate in sales
Profitability Ratios
Earnings Per Share (EPS)
Net Income/ Number of Shares of Common Stock Outstanding
Earnings available to the owners of common stock
Gross Profit Margin
Sales Minus Cost of Goods Sold/ Sales
Total margin available to cover operating expenses and yield a profit
Operating Profit Margin
Earnings Before Interest and Taxes (EBIT)/ Sales
Profitability without concern for taxes  and interest
Price Earnings Ratio
Market Price Per Share/ Earnings per Share
Attractiveness of firm on equity markets
Net Profit Margin
Net Income/ Sales
After-tax profits per dollar of sales
Return on Total Assets (ROA)
Net Income/Total Assets
After-tax profits per dollar of assets this ratio is also called return on investment (ROI)
Return on Stockholders’ Equity (ROE)
Net Income/ Total Stockholders’ Equity
After-tax profits per dollar of stockholders’ investment in the firm