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) ______________________________________________________________________ This email has been scanned by the MessageLabs Email Security System. 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