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Subject:
From:
Terry Baker <[log in to unmask]>
Reply To:
TechNet E-Mail Forum <[log in to unmask]>, [log in to unmask]
Date:
Mon, 20 Sep 2010 21:08:52 -0400
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Bob, very good point, well taken, and something that did not occur to me  
that as CGS it is hidden. Additionally, expediting fees and special shipments 
of  inventory and product sometimes do not appear on the "radar screen" of 
anyone  concerned with product cost, as they should be. Inventory looks low 
so people  assume complimentary costs to be low as well.  
 
Regards, 
Terry Baker
 
 
In a message dated 9/17/2010 6:15:40 P.M. Eastern Daylight Time,  
[log in to unmask] writes:

Hi,

I have seen this "Just In Time" concept used by  management to put a
positive spin on short term financial reports. And, it  is at the expense of
the stock holder.

By paying someone else money  to serve as a temporary owner of the material
a company has more control or  a quarter by quarter profit / loss 
statement. 

The long term result is  more consistent financials but a higher cost of
goods sold.

People  will look at a companies stock options, travel and entertainment
expenses  in a watch for wasteful spending. No one ever digs through raw
material  prices, they simply accept it as Cost of Good Sold with no
questions  asked.

Bob Kondner

-----Original Message-----
From: TechNet  [mailto:[log in to unmask]] On Behalf Of Terry Baker
Sent: Friday, September  17, 2010 2:59 PM
To: [log in to unmask]
Subject: Re: [TN] Response to  Ahne

Sorry folks, the "blue" highlights did not show up, I edited out  Ahne's  
original email. 
Terry. 

In a message dated  9/17/2010 12:21:28 P.M. Eastern Daylight Time,  
[log in to unmask]  writes:

Ahne, I  had a chance to think about your questions, see  my responses 
below 

in blue. 


Supply chain: Do you  mean the chain that stretches  from the design  
engineer
and  the manufacturing engineer of the  product to the design engineer   
and 
the manufacturing engineer of the  part or material needed? Plus  all  those
necessary pieces in between?  (Can you say DFM?)  


My   dissertation was 
limited to a tiny, tiny part  of the supply chain, that  being  the actual 
supply of 
parts  to the manufacturer, and the  ability to remain AGILE,  despite  
extremely volatile demand. It was  necessary to limit it thusly due  to  
the 
fact 
that otherwise you  cannot get your arms around  the subject, and show  any 
relationships.  

What conflict  occurs is that we follow (generally) a  business  model of  
reduced inventory, reduction of cost, long distance Lower  cost   region 
outsourcing, and expect yet to keep domestic demand met  with  customer  
satisfaction 
as a requisite which means that  delivery  to the customer has to be  on 
time. 
My theory in  industry is very  basic which says as volatility of demand   
increases so does the need  for AGILITY in communication to keep the  
supply 
chain  flowing and  meeting the demand of the customer.  That is one tactic 
in a 
war to   keep customers satisfied,  yet at the same time keep your company 
solvent  with an   efficient supply chain. 


However you are right! The  entire  process must be  looked at in aggregate 
with multiple   cross-functional teams and concurrent  design engineering, 
to  
achieve  simultaneous goals of efficient supply chain with   customer  
satisfaction. We have paradigms of servicing the customer,  and we  have  
paradigms of 
supply chain efficiency. What I  am saying is that  the two paradigms  have 
to 
be combined to  produce a GREATER truth in  supply chain efficiency.  
Otherwise  we end up with a board (or a  product) that looks great from a  
design  
phase, but if your demand is  VOLATILE, you cannot  keep the quality, nor 
the  
supply, nor the  flexibility  agile enough to satisfy the customer. This is 
much more  
an   application of Michael Porter's "value chain" in which everyone  is  
involved to  make sure that the end customer ends up with an on   time, 
quality 
product, and  you end up with a quality robust,  agile  product which can 
be 
flexible in  quantity and design, as  the final  product goes through the 
life 
cycle from   introduction, growth,  maturity, and decline. Many companies 
have  
lost their  shirts in one  of the cycles due to a product that  does not 
have the 
ability to move with  overall agility. Lean  concepts are fine, but only go 
 
so far, Total  quality and  business management principles are much more  
applicable,  and  ultimately however you have to deal with the unknown, and 
 
design   and produce with a model of business that allows you to  deal with 
all   
environments, and all types of demand.  

This is just the tip of the  iceberg. My goodness  you are  so right, 
EVERYONE has to be involved,  and not only that: We have  a  tendency to 
compartmentalize people and  give them  conflicting goals of cost  
reduction, customer   
satisfaction, and those priorities all have to mesh  together.   

The real mind blower is, NONE of those people  should  compromise  in their 
goals. Of course we do, but to really drive  a  product you  have to 
achieve 
not a compromise of goals but  goals which are  built  in to the product so 
that 
they are  all achievable. And then as the   product moves through the life  
cycle, the process must be ongoing and  creative.  I have been  in 
situations 
where this does not happen, and  its not very  pretty. 
It looks great when we create it, we have problems   when  we implement it, 
and then when we outsource it, we have  all  kinds of  intercultural 
communication problems which make  it even  more  challenging!

Its good to be talking with you.  The  survey  was admittedly a compromise 
I 
apologize. It became  tedious,  but  with language if you change the 
questions 
too  much then you get  more  interpretation. That is why survey research  
is 
so limited, and  then when  you do case study research you  can lose 
objective view,   actually that's part of a case study  or action research. 


However  I thank  
you immensely  for your time, your feedback, and your  knowledge you have   
imparted to me. I truly believe knowledge is  power, and brings us  out of 
the  
darkness. 

Respectfully,  

Terry  B. Baker (814)-329-7357
Doctoral   Candidate
University of  Maryland University College 
3501  University  Blvd.    East
Adelphi, MD 20783 USA 
Phone:  800-888-UMUC   (8682)
Tom Mierzwa  (Chair, Doctoral  Program)
Monica  Graham  (Admissions and Advisory   Contact)








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