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Tips & Advice |
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Questions & Answers |
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| OPERATIONS: |
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Planning Plant Capacity: Planned approach for space and equipment
utilization. |
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Q: Why
is it important?
A: It’s important in order to:
(1) ensure the elimination of any
backtracking and/or crisscrossing in the flow of work;
(2) to isolate and eliminate wasted idle
machine time due to downtime or work shortage;
(3) to ensure workers’ productive time
is controlled;
(4) to properly incent workers to meet
maximum utilization of capacity in labor and capital assets.
b.
Q: How often should it be re-examined?
A: It should be analyzed annually
because workers’ skill levels improve, machinery becomes obsolete or
grows old and unreliable, and technology changes causing capacity to
change. Capacity may increase or decrease. Plant capacity should be
reviewed on an ongoing and routine basis (monthly), but major
changes should only occur on an annual basis.
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| Job
evaluations and standards: a written “contract” between employer and
employee. |
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Q: Why is it
necessary?
A: Once optimum capacity of
labor is established, each worker should be instilled with a company
standard work ethic. Employees who know what is specifically
expected perform better. Reviewing and evaluating an employee’s
productivity against known standards consistently and routinely
allows for corrective actions or motivational boosts.
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Q: How
should evaluation take place?
A: Evaluations should be verbal on a daily basis, lasting a
few minutes. Weekly evaluation should be reviewed with employee when
payroll or accounting reports are submitted. Employees are continuously
reminded that quality and quantity of work matters. Every month, a
written evaluation should be discussed with each employee. Cost
Control Planning: the implementation of cost reduction programs
generated through capacity utilization reports, employee suggestions,
and time-motion studies.
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Q: What is
it?
A: It is a written program
implemented with a specific targeted goal. It is NOT analysis, paper
shuffling, or meetings. It is a continuous process that is in written
form, updated constantly, and supervised by first-line managers and/or
shop foremen ensuring that bottom-to-top reporting and accountability
is instilled and maintained. This gives supervisors the power to change
and the authority and responsibility to act on suggestions, encouraging
risk.
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| Order Anticipation: a tool used to
effectively schedule, order materials, and ship on time anticipated
volume. |
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a.
Q: How is it accomplished?
A: Through properly reporting
procedures between sales department and production, order anticipation
can be accomplished. Forecasting is essential. When specific products,
categories of sales, and/or lines are properly forecast based on
anticipated promotional responses, early warning of pending orders,
sales probability of new accounts, production managers can forecast
their needs. Daily and weekly updates to these forecasts should be
reviewed inter-departmentally. The sales department and accounting
departments must also have routine reporting.
b.
Q: Why is it necessary?
A: Training new employees in
advance of a production order and/or hiring additional employees to meet
delivery times and reducing overtime and late shipments
making sure that inventory and/or materials are ordered in sufficient
quantity to meet demand. Senior managers can plan for budgeting and
cash flow needs in advance. A more cost-effective, therefore, more
profit-producing, plan can be implemented to ensure bottom-line results.
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Inventory Controls: those controls and procedures that preserve
inventory integrity, ensure value purchasing, maximize profits through
quality control by item. |
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a.
Q: Who is involved in inventory control?
A: Everyone, with the possible
exception of clerical personnel, should be conscious of inventory levels
and purchasing. Salesman should see what inventory is needed and
in what amounts to ensure maximum volume. Salesman should record “lost”
sales on items not stocked and overpriced. They should suggest which
items are not selling and why. Purchasing should respond with different
buying patterns. Purchasing should coordinate all activities with
planning leads, i.e. sales, production, and financial to optimize costs,
turns, and budgeting requirements. Discount buying volume should
trigger sales promotions and maximize return on inventory. In short,
inventory control is an ongoing process involving department in the
company. Safeguards should be in place to minimize “shrinkage” or
theft.
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| Preventative Maintenance-General
Maintenance: a program that budgets and plans for the proper care of
equipment, capital assets, i.e. buildings, cars, etc. |
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Q: Why
is it important or necessary?
A: Scheduled and planned
maintenance ensures the highest return on assets. By regular
maintenance, parts can be ordered in advance reducing down time.
Breakdowns are reduced, thereby generating more operating time per piece
of equipment. Parts that are needed routinely can be purchased in
quantities, reducing costs and creating higher resale or trade-in value
for equipment.
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Q: What records or controls are
needed in a good preventative maintenance program?
A: Equipment operators should
document any and all existent or potential problems, irregularities, or
depreciation to the equipment or machines they operate. This document
records time, day, and nature of potential concern. All concerns should
be checked immediately.
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| When a piece of equipment or machinery is
purchased, or capital asset acquired, a maintenance schedule should be
planned and budgeted based on obsolescence, age, and/or depreciation
value. |
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| Routine
inspection reports monitoring the condition of the equipment. Routine
scheduled maintenance reports detailing preventative actions and/or
replacement of parts. |
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| Systems
and Procedures Analysis: the method by which control, responsibility,
and costs can be quickly ascertained and maintained. |
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Q:
What kind of information should be gathered?
A: Comprehensive information is
required on product analysis in order to determine what material
is required and when. (See Just-in-Time Inventory.)
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| Consideration is given to the record,
material, quality standards, work center capacity, operating methods,
standards, and sequence of operations and scheduling. Planning also
takes into consideration the floor layout, transportation of product,
and storage. Management should know the cost of production, i.e. labor,
both direct and indirect; raw materials; supplies; small tools;
inspection; and profit lost to idle time of employees and machinery. |
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Q: How
should it be gathered?
A: Through control charts,
dispatching and inspection. A system of records is maintained in order
to ensure continuous control is exercised over the release and progress
of orders; overall material movement, i.e. delays, stoppages, etc. Can
be checked and a progress report comparing actual with planned
activity. A lag immediately shows up and the factors responsible are
quickly ascertained. Monthly and quarterly reports contrast estimated
and actual performance pertaining to production, labor, expenses, etc.
Other reports note idle time, down time for machinery, etc. This
affords management with direct control over waste.
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| Pay for
Performance: an incentive wage plan that compensates employees for
risk, performance, and quality. |
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Q: Who
should be on pay performance plans?
A: Everyone!
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ADMINISTRATION-ORGANIZATION |
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| Organizational Structure: the skeletal
system of every business from which every other structure or system
depends upon for form. |
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Q:
Exactly what is the organizational structure?
A: Organizational structure
begins with the company or corporation’s legal entity and ends with how
the newest employee is integrated into the whole. Personality, business
philosophy, and management style plays a crucial role in the organizing
principles of every business. It describes how the vision of the
company is interpreted, relayed, and carried out.
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Q:
Does it really make a difference?
A: Absolutely. Besides the
obvious tax and basic functional differences between sole
proprietorships, partnerships, and various corporation designations,
issues like succession plans, i.e. selling the business, delegation of
authority, delegation of authority, delegation of
responsibility, and employee loyalty and morale, all are affected by the
way in which a company structures itself. Turnover is a chronic problem
in a poorly organized company.
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Q:
What is the defining criteria for setting up an organizational
structure?
A: Ownership goals!
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Ownership Goals: the driving force behind the business principle-- |
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| “WHAT
THE CLIENT WANTS.” |
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a.
Q: What specifically are ownership goals?
A: Simply put, every business owner
or principal has an overriding need to accomplish something or get
something.
There are five categories in which most
of these needs fall. They are:
1)
Succession issues
2)
Growing the business
3)
Controlling the business (sometimes referred to as scaling
back)
4)
More time for leisure
5)
Positioning for profit or “cashing in.” In cases of multiple
owners or family-run business, there can be more than one goal. This
gives rise to conflicting interests.
b)
Q: What hinders the principals from reaching their goals?
A: Failure to clearly define and
write out goals is probably the leading factor. Second, management is
unlikely to have an objective view of itself. Their view is likely to
be distorted, prejudiced, and inhibited in many ways. Third, owners are
further limited by time pressures and are easily distracted by the daily
drive for new business and steady profits. And last, although few are
willing to admit it, they lack the expertise necessary to bring about
their goals or build a staff to help them. Why should they? There is
no continuing need for such staff. They have concentrated in the past
on being an “expert” in their particular field, leaving little time for
broad exposure. This is the single most important reason to turn to
trained professionals. |
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Conflicting Interest: diametrically opposing “wants” leading to a
stalemate, or worse, between principals and even between employers and
employees. |
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Q: What are
some examples of conflicting interests?
A: When one owner/principal wants
the status quo and another wants a change in direction, i.e. higher
growth, better controls, more effective delegation. Differences of
opinion regarding such issue breeds anger, antipathy, and most
generally, stalemate. A more subtle example is when employees’
expectations outpace those of management’s. This leads to morale and
productivity problems. Turnover is another area affected by this
example. Additionally, financial constraints or outside control by
banks or other financially interested parties cause conflicts to arise.
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Q: What can
be done about conflicts of interest?
A: Owners must recognize that
win-win solutions exist in the overwhelming number of cases. Third
party mediation is almost always necessary and can dramatically help to
bring about a positive outcome. Before any resolution is reached, all
parties must acknowledge the areas of conflict, agree to seek a
solution, and agree to abide by the solution reached. |
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Q: Can
personality play a role in conflicting interests?
A: Yes, of course. Temperament,
training, experience, individual frames of reference, and assigned roles
are bound to cause honest conflicts. For instance, an analytical
partner may lack the people skills necessary to carry out the aims
and/or wants of a more sales oriented partner. They may also differ on
whether sales volume or profit is the most desired goal. |
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| Activity in Management: the kinds of
meeting, reporting, delegation of authority, and planning that exists
within senior management of the company. |
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Q: Is it
important for management to have a clear assignment of systems?
A: It is imperative that management
set the company’s standards. Management must practice what it
preaches. Furthermore, if systems, delegations, communications, and
implementation is to occur properly throughout the company, it is
extremely important the management set clear objectives. The clearer
management is on company goals and procedures, the more likely the rest
of the employees are able to buy into those goals and implement them
successfully. |
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Q: How often
should management meet, and what should be discussed?
A: Depending on the size of the
company, management should meet at least once a month, and in many
cases, as often as once a week. Management meetings should be well
planned with specific agendas for each meeting. Management should
continuously make sure that they are in agreement as to company
direction and long-range plans. Weekly meetings should cover reporting
systems and implementation strategies of short-range efforts aimed at
accomplishing long-range goals. It is important that these meetings
also allow for the discarding of stale policies and the generation of
new ideas. |
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