Meaning of Cost Reduction A cost reduction program is a type of method which is to improve profitability of the organization or by expected to get a good result that flow to the bottom line of the financial statement and exempted from any serious damage to the organization itself. As this program is much more about reducing cost or reducing expenses of the organization, so a good cost reduction program is all about how to control the damage of an organization. Furthermore, a cost reduction program is said to be improve the profitability of an organization because by reducing expenses, profits are increased without making others changes. On the other hand, if the cost reduction program can matched with a sales improvement program and perhaps, finally it will get the double profit. A cost reduction program must be a complete plan that is results-oriented. A structured cost reduction program will Continue reading
Operations Management Techniques
Flexible Manufacturing System – Definition, Process and Features
A Flexible Manufacturing System(FMS) is a manufacturing system in which there is a certain degree of flexibility that allows the system to react in the case of changes, whether predicted or unpredicted. Flexibility is the speed at which a system can react to and accommodate change. To be considered flexible, the flexibility must exist during the entire life cycle of a product, from design to manufacturing to distribution. Flexible Manufacturing System is a computer-controlled system that can produce a variety of parts or products in any order, without the time-consuming task of changing machine setups. The flexibility being talked about is generally considered to fall into two categories, which both contain numerous subcategories. The first category, Machine Flexibility, covers the system’s ability to be changed to produce new product types, and ability to change the order of operations executed on a part. The second category is called Routing Flexibility, which Continue reading
Meaning of Job Design, Job Enlargement and Job Enrichment
The nature of work and its organization has interested managers, economists and social scientists for as long as people have been employed by others to engage in productive activity. Managers have largely been interested in maximizing output from available resources. Job design can be define as the process of putting together various elements to form a job, bearing in mind organizational and individual worker requirements, as well as considerations of health, safety, and ergonomics. The scientific management approach of Frederick Winslow Taylor viewed job design as purely mechanistic, but the later human relations movement rediscovered the importance of workers’ relationship to their work and stressed the importance of job satisfaction. Trends in Job Design Quality control as part of the worker’s job Cross-training workers to perform multi -skilled jobs Employee involvement and team approaches to designing and organizing work Extensive use of temporary workers Organizational commitment to providing meaningful and Continue reading
A Brief Introduction to Six Sigma Methodology
The creation of Six Sigma Methodology is understood to be traced back to Carl Friedrich Gauss and introduced as a measurement in variation in organizations. Six Sigma name comes from the Greek alphabet “Sigma” which mathematician or statisticians uses in statistics to find a standard deviation. Motorola was the first company to use Six Sigma, to measure the quality of products and services from within. In the process of Motorola using Six Sigma, it helped them to pinpoint mistakes such as finances and operations. Six Sigma’s core philosophy was based on business process and customer requirements, extensive training to employees, focus on the organization, and creating an improved system. Six Sigma Methodology describes a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers and a clear financial return for the organization. Continue reading
Case Study: Zara’s Operational Model
Founded in 1975, ZARA, a Spanish clothing and accessories retailer was originally the brainchild of the Inditex Group owned by Amancio Ortega. Headquartered in A Coruña, Galicia, Spain, Inditex is the world’s largest fashion retailer with ZARA as its international flagship chain store. Beginning with the single store in Spain to the recent launch into Australia, ZARA currently has over 1,700 stores in 78 countries providing exclusive fashion worldwide. ZARA, alone accounted for 64.6% of the Inditex group turnover in 2010. Over time, it has become one of the notable leaders amongst the fashion brands. ZARA was described by Louis Vuitton fashion director, Daniel Piette as “possibly the most innovative and devastating retailer in the world” and CNN described the brand as a “Spanish’s success story” Zara’s Operational Model Shifting from “mass standardization” to “customization” on a global scale is the most interesting aspect of the Zara’s business model. The Continue reading
Difference Between Cost Control and Cost Reduction
A cost reduction program is a type of method which is to improve profitability of the organization or by expected to get a good result that flow to the bottom line of the financial statement and exempted from any serious damage to the organization itself. As this program is much more about reducing cost or reducing expenses of the organization, so a good cost reduction program is all about how to control the damage of an organization. Furthermore, a cost reduction program is said can be improved the profitability of an organization because by reducing expenses, profits are increased without making others changes. On the other hand, if the cost reduction program can matched with a sales improvement program and perhaps, finally it will get the double profit. A cost reduction program must be a complete plan that is results-oriented. A structured cost reduction program will put the company on Continue reading