...Intelligent Cost Reduction Developing & executing a program to reduce cost & create a sustainable operating platform July 2008 Contents Section 1 2 3 4 5 6 Point of view Anatomy of a successful total cost management program Beginning with the business & front office Opportunities in the support units Some lessons learned PwC qualifications to help Page 3 7 11 16 19 21 Point of view Point of view • Cost management is a key issue today and for the foreseeable future – The market is experiencing a severe liquidity crunch and the explosion of a global asset bubble well beyond sub-prime. At the root of this crisis is not only asset values, but the amount of capital in the financial system today versus the size and liquidity of the balance sheets (and off-balance sheet commitments) of financial institutions. This situation is not likely to reverse itself for a number of years. In the environment of de-leveraging and scarcity of capital, we believe fundamental re-thinking regarding business strategies, operating models and cost structures will be necessary. • A pre-securitization baseline may be the appropriate mindset – If one assumes that the securitization markets have significantly contracted in a permanent fashion, then the appropriate way to think about the business may be in a pre-securitization baseline, adjusted for key acquisitions/divestitures, etc. This means that the proper mindset to consider in the business strategy and budgeting area may...
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...Question 1 : What objectives should be adopted in manufacturing with respect to : a) Cost 1) Low-cost operation – reducing cost to generate desired profit “The business unit is growth-oriented with substantial resources directed to new-product/new-market strategies, making it a medium- to high-risk operation. Although investment in product development and capital equipment will be required, the business should retain its low-capital, high-labor-intensive character”. Cost reduction strategy • Cost reduction by design • Lean production cost reduction • Overhead cost reduction • Standardization cost reduction • Supply chain management cost reduction b) Delivery 1) Delivery speed – reduce the delivery time A new automatic system of delivery control and inventory control is suggested to replace the current manual system “The system appears to work quite well for the present situation, but constant expediting and stock chasing are necessary to keep production moving”. “Inventory stock status is computerized by the data processing department. Receipts and disbursements are sent to data processing and then entered into the computer”. “The first priority, after the new computer is installed, will be the conversion of existing accounting and financial systems”. 2) On-time delivery – marketing strategy to attract...
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...the three major subsystems of yokohama's cost management system and how do they interrelate ? The cost management system contained three major subsystems: cost reduction, cost accounting, and performance evaluation. => Cost reduction : how to reduce costs throughout the production process. ( a process given to reduce the different costs). -The corporate and division guidelines were used to prepare the division's cost reduction plans. -One of the primary objectives of these plans was to identify the cost reduction targets for each cost element for the next six months. -Goals included targets such as reducing the material content of a product by 2% per annum. The section was also responsible for finding ways to substitute cheaper materials for more expensive ones, such as by increasing the use of plastic as opposed to metallic components. ln addition, the section was responsiblê for changing subcontractors, production processes, and product designs. => Cost accounting system : generate product costs and inventory evaluation, as well as provide a mechanism ( schema ) for cost control on plant floor. -Inventory control planning was the responsibility of the production management section. Its goal was to improve the turnover and size of finished, raw material, and work-in-process inventories. => Performance evaluation : how well the cost reduction and cost control objectives were being achieved ( performance control panel ). -The profit plan was reviewed...
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...risk management is: a. diversification b. minimize the cost of risk c. hedging d. loss control Answer: b Type: K 2. If unexpected increases in losses from price risk are not offset by cash inflows from insurance contracts, hedging arrangements or other contractual risk transfers, they will result in: a. an increased stock price b. a reduced stock price c. bankruptcy d. increased diversification Answer: b Type: K 3. Johnson Incorporated, located in California, had a $1 million uninsured loss due to an earthquake in 1997. What impact is this likely to have on the firm’s value? a. It will have no impact. b. The firm value will increase by $1 million. c. The firm value will decrease by $1 million. d. The firm value will probably decrease, but the amount of decline will depend on other factors such as the firm’s level of diversification of risk. Answer: d Type: A 4. The cost of risk may include all of the following except: a. the cost of insurance. b. the cost of raw materials. c. the cost of increased precautions to control losses. d. the cost of investments in information to reduce risk. Answer: b Type: A 5. Maximizing the value of the firm is the same thing as minimizing the cost of risk if: a. the managers are socially responsible. b. the cost of risk is defined to include all risk-related costs from the perspective of the firm’s shareholders c. loss control is used effectively d. the managers’ incentives are aligned...
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...risk management is: a. diversification b. minimize the cost of risk c. hedging d. loss control Answer: b Type: K 2. If unexpected increases in losses from price risk are not offset by cash inflows from insurance contracts, hedging arrangements or other contractual risk transfers, they will result in: a. an increased stock price b. a reduced stock price c. bankruptcy d. increased diversification Answer: b Type: K 3. Johnson Incorporated, located in California, had a $1 million uninsured loss due to an earthquake in 1997. What impact is this likely to have on the firm’s value? a. It will have no impact. b. The firm value will increase by $1 million. c. The firm value will decrease by $1 million. d. The firm value will probably decrease, but the amount of decline will depend on other factors such as the firm’s level of diversification of risk. Answer: d Type: A 4. The cost of risk may include all of the following except: a. the cost of insurance. b. the cost of raw materials. c. the cost of increased precautions to control losses. d. the cost of investments in information to reduce risk. Answer: b Type: A 5. Maximizing the value of the firm is the same thing as minimizing the cost of risk if: a. the managers are socially responsible. b. the cost of risk is defined to include all risk-related costs from the perspective of the firm’s shareholders c. loss control is used effectively d. the managers’ incentives are aligned...
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...PRODUCTION PLANNING AND CONTROL FOR REDUCING MANUFACTURING THROUGHPUT TIME Amey Dhar Dubey (fy7096) Arpit Sharma (fe2365) Bhavditya Sisodiya (fw6052) College of Engineering Wayne State University Detroit, Michigan ABSTRACT This paper scans the present state of Production Planning and Control (PPC) regarding the manufacturing industry. PPC needs to undergo internal and external changes by being more dynamic and properly utilizing resources and delivery performance. In order for this to happen, the concept of crashing much be applied to better understand of how different factors affect PPC systems performance. Crashing is reduces project time by overlapping or performing two or more different steps simultaneously using additional resources (PM PrepCast). Crashing the network is the reduction of project duration by contracting and compressing the network at minimum cost. Project duration can often be reduced by appointing more labours to project activities. However, when appointing more labours, the project cost increases due to overtime and more resources being used. Time and cost requirement must be balanced to reduce project duration. The gist of this paper covers production time, along with the cost applying the concept of crashing. In addition, time management with optimum cost is vital for any project. A method to obtain optimum cost and project duration minimization is outlined. This is achieved by fully crashing the critical path or by removing non-added...
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...The horizontal integration is not consistent with maximizing stockholder wealth when there are no appropriate prospective targets. This might occur, for example, if prospective targets have organizational cultures or business practices that differ sharply from the firm’s, then post-merger integration of the two firms may be very difficult or impossible; or, if there simply are no rivals that offer complementary skills or assets. Another drawback to horizontal integration is the possibility of antitrust regulation. When a firm already dominates a significant market share, it may not be possible to increase that share by merger or acquisition due to the opposition of regulatory agencies. There are a number of reasons that a company might pursue horizontal integration, in spite of its drawbacks. But if these reasons are not present, then a company should not consider horizontal integration. These reasons include the need to realize increased economies of scale or the need to acquire additional assets in order to be competitive in the industry. It would be better to enter a new business area by acquisition when a company is considering implementing horizontal integration or when they are pursuing vertical integration and the company is lacking the distinctive competencies to compete in an industry and uses capital to purchase a company that possesses those competencies to establish a quick presence and reputation. Acquisition allows a company to purchase quicker than it takes to...
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...and Control 6 Conclusion 7 Executive Summary This case report addresses many factors when decisions are made in identifying and working strategically with custom designed components and assemblies. De Havilland Company especially Kim Tomar has a decision to make. A RFQ proposal by Marton Enterprises could bring cost reductions down by 60% for this particular assembly and help with streamlining BOM cost to achieve a reduction of 25%. There’s risk to using a new vendor, including delivery and trust and even if the correct SSB members are evaluating the proposals. There are discrepancies that need to be reviewed and questioned by the Operations, Logistics and Sourcing staff and hidden costs not noted on the price breakdowns ie: soft and hard tooling costs. Marton must prove to the SSB group and OLS that their proposal is solid and can manufacture and meet spec’s as identified by De Havilland Engineers. There also needs to be plan to increase capacity should there be an upswing. My recommendations include two options including a primary and secondary vendor model (mitigating risk of custom components and shortages and working with the existing vendor Dollard Plastics to looks for ways of continuous improvement through design and factory lean initiatives to realize savings. The drawback is resources. Implementing a new vendor or otherwise looking at “Leaning the process” through design and manufacturing require resources. Hopefully the assembly cost for...
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...Quality Management Of Aqua-Fun ----Case 1 in Chapter 6 Team 4: Yudan Ding Wenqian Xu Xianjing Zhu Yukun Chen SCHM2301 Prof. Omar Elwakil 10/08/2013 Quality Management of Aqua-Fun 1. Cost of Quality Analysis A focus on quality management demands that the total cost and benefits of quality performance be first understood by everyone in the company. In order to successfully launch a companywide Six Sigma, the first step is to dig out all relative cost categories that associated with managing quality and quality failures. The marketing research and other similar costs categories should all be included in the Cost of Quality (CoQ) analysis. 1.1 Identification of Cost Categories Based on Roberta’s current CoQ analysis, there are 18 cost categories with question marks that she either did not have data for or wasn’t sure about including. For the prevention costs, Roberta is having problem with the costs of marketing research, customer/user perception surveys/clinics, supplier quality planning, supplier quality planning, quality program planning and reporting, and other prevention costs. As mentioned earlier in the case, Roberta wasn’t sure how the marketing manager would feel about including marketing research as a category in the CoQ because it seems that marketing research as well as the customer perception surveys have no direct relation with preventing product defects. In fact, the fast development and introduction of new product is a key factor that differentiates...
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...Running head: CONFLICT RESOLUTION AT GENERAL HOSPITAL Conflict Resolution at General Hospital Verisha Barrett Strayer University Leadership and Organizational Behavior BUS 520 Dr. Edward Olanrewaju August 20, 2010 Conflict Resolution at General Hospital Conflict happens daily, whether it happens individually or between two or more individuals. Conflict can be bad or good depending on how an individual or group respond and understand conflict. Conflict when viewed results from caring. When each person involved in the conflict needs something. Each person becomes frustrated because he or she realized that he or she has to give up something that he or she likes or cannot obtain something that he or she desires. Discuss the conflict that is occurring at General Hospital. “Conflict is a process in which one party perceives that its interests are being opposed or negatively affected by another party.” (Hellriegel & Slocum, Jr., 2011, p. 384) There are different levels of conflict, these are: * Intrapersonal Conflict – “The conflict that is happening inside of an individual is intrapersonal conflict. This type of conflict takes place when there is an inconsistency in our ideas, attitudes, emotions or values.” (Cox, 2009, p. 1) * Interpersonal Conflict- “Interpersonal conflict is the conflict that takes place between individuals--friends, family members, couples or even strangers. These types of conflicts usually take place when people communicate directly...
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...Analysis: A Way to profit improvement & cost Reduction Learning Objective 1. how to identify the value added activity 2. how to rectify the non –value added activity 3. application in profit planning & cost reduction INTRODUCTION Competitive advantage for a company means not just matching or surpassing their competitors, discovering what the customers want and then profitably satisfying, and even exceeding their expectations. As barriers to inter-regional and international trade are diminishing and as access to goods and services are growing, customers can locate after identification and «the best of what they want, at an acceptable price, wherever it is in the world. Under growing competition and, hence, rising customer expectations, a company's penalty for complacency becomes even greater. A strategic tool to measure the importance of the customer's perceived value is value chain analysis. By enabling companies to determine the strategic advantages and disadvantages of activities and value-creating processes in the market place, value chain analysis becomes essential for assessing competitive advantage. Value analysis or value engineering is one of the most widely used cost reduction techniques. It can be defined as a technique that yields value improvement. It investigates into the economic attributes of value. It attempts to reduce cost through a. design...
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...medical center has resulted in their patient occupancy to drop from 90 percent to 65 percent. It has also resulted in a lost of revenue for the organization. To compete with the medical center, General Hospital’s CEO Mike Hammer is determined control costs and increase revenues within the organization. Mr. Hammer is unable to persuade the Director of Medicine, Dr. Williams or the hospital’s board of trustees to contain costs within at the hospital. In addition to this problem Mr. Hammer assigned Marge Harding, the hospital’s COO to dictate and solve the situation. Ms. Harding enjoyed challenging physicians so she allowed her ego and ulterior motives to achieve her personal goals. Dr. Williams and the rest of the physicians were furious that Dr. Boyers was fired and they worried about the potential legal liabilities for the inaccurate EKG reports. The type of conflict that has occurred is the intergroup conflict. Intergroup conflict refers to opposition, disagreements, and disputes between groups or teams (Hellriegel/Slocum, 2011). Within the case the conflict involves Mr. Hammer, Ms. Harding, the physicians, the medical staff, and the hospital board of trustees. This group cannot agree on ways to control physician-driven costs that will cause the hospital to encounter survivability issues. 2....
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...The main uses of cost accounting as follows: 1. Helps in Ascertainment of Cost: Cost Accounting helps in the ascertainment of cost of each product, process, job, contract, activity etc. by using different methods of costing such as Job Costing and Process Costing. 2. Helps in Control of Cost: It helps in the control of material costs, labour costs and overheads by using different techniques of control such as Standard Costing and Budgetary Control. 3. Helps in Decision making: It helps the management in making various decisions such as – (a) Whether to make or buy a component (b) Whether to retain or replace an existing machine (c) Whether to process further or not (d) Whether to shut down or continue operations (e) Whether to accept orders below cost or not (f) Whether to expand or not (g) How much reduction in the selling price should be made in case of depression? 4. Helps in fixing Selling Prices: It helps the management in fixing selling prices of products or services by providing detailed cost information. 5. Helps in Inventory Control: It helps in inventory by using various techniques such as ABC analysis, Economic Order Quantity, Stock levels, Perpetual Inventory system and Continuous Stock Taking, Inventory Turnover Ratio etc. 6. Helps in Cost reduction: It helps in the introduction of cost reduction programme and finding out new and improved method to reduce costs. 7. Helps in measurements of Efficiency: It helps in measurements...
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...Sulphuric and carbonated. Answer: D 5) The "vertical zone" of influence could be described like what of following? A) The damage caused mainly by ground level concentration or an air pollutant or by concentrations in the upper atmosphere. B) The damage caused mainly by ground level concentration. C) The damage caused mainly by air pollutant in the lower atmosphere. D) The damage caused mainly by water. Answer: A 6) What would be the correct definition of "global pollutant" from below? Pollutant B) Pollutant C) Pollutant D) Pollutant Answer: A A) concentrated concentrated concentrated concentrated mainly mainly mainly mainly in upper atmosphere. in lower atmosphere. in the ground. in the water. 7) Which of the costs from below should be marginal...
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...Harvard Business School 9-195-108 rP os t October 14, 1994 Yokohama Corporation, Ltd. (B): Cost Management System op yo Yokohama Corporation, Ltd., was created as a joint venture between a Japanese automobile manufacturer and the Japanese government. Yokohama was founded in July 1939 and began production in late 1942. The objective of the firm was to manufacture hydraulic systems for automobiles and trucks and associated equipment under license from a German firm. The venture was successful and within a few years had diversified into other automotive products, including fuel pumps and transmission systems. tC Manufacturing inside Japan was undertaken at five facilities: Ranzan, Ibaraki, Chiba, Hiroshima, and Maebashi. The original production facility, the Ranzan plant, was opened in 1940 to produce hydraulic products. In 1992, it manufactured four major product lines, including electronic fuel-injection control systems, in-line injection pumps, automatic timing devices, and fuel-injection nozzles. It produced products for the injection pump and hydraulic & pneumatics divisions. The Ibaraki plant was built in 1965 to manufacture injection nozzle holders for the injection pump division. The Chiba plant was built in 1970 to manufacture air-conditioning equipment for the air-conditioning division. The Hiroshima plant was built in 1982 and manufactured injection nozzles for the injection pump division. Finally, the Maebashi plant was built in 1990 and was responsible for the...
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