To evaluate how I utilized both budgets and pro-formas to ensure the adequacy of funds for providing production capacity that was needed to achieve the businesses goals. I want to first start with the definition of both pro-forma and budget; A budget is a basic idea that covers more than a few areas, all in all it’s a financial plan that is made to control costs for operations and results. It can be expressed in a multitude of numerical terms, it also can cover a certain period of time, short, intermediate and long term goals. A pro-forma is also a financial statement but it is prepared based upon assumptions of specific events and transactions that will hopefully occur in the Future, so basically a projected estimate using historical data to form a hypothesis of A financial outcome. The importance of both the pro-forma and budget were huge.
Knowing going into the simulation how much seed money was going to be issued and how much additional money was coming in future investments, gave me an idea of how aggressive or conservative I could be. I was able to to set with an initial idea of how much I could spend for each factor needed moving forward. I was able to understand how much to market, how much to hire and how much I could afford for each of these tasks, as well as how much was coming into pay for future marketing and hires.
Without advertising there are no customers, without a good sales and service staff there are no sales, or an ability to take care of the customer. In the opening quarter of the company I had a 2 million dollar start-up fund. My upfront expenses were approximately $530,000. I also chose to invest in a 3 month CD about $880,000, I made sure in my first endeavor to keep money available and not to over indulge. I took similar approaches going into each additional quarter; thereafter I wouldreview what was spent and estimate what was coming in and at that point I would hire more employees, adjust and raise benefits and increase marketing.
My sales force and marketing expenses doubled from quarter two to quarter three and rose another 49 percent from quarter three to quarter four. These two factors in my opinion are the biggest of a profitable company, as sales and marketing grow and increase your company will thrive. At the end of each quarter I would review the results in these areas and make assessments on how much additional advertising I needed based upon sales numbers of the individual computers Mercedes and the Traveler. Based upon production and the competition I would review to see if I was going to increase the sales force and the compensation plan. The overall outcome of both areas had my company in NWL as the top employers at 83 out of a maximum 84 Score; also in regards to marketing effectiveness in NWL my company had a 92 out of a 97 maximum Score that’s how I used the budget and pro-forma to help NWL achieve its goals.
To evaluate how I employed Just In Time or JIT and Lean Operations to improve operating efficiency in my manufacturing facility, again as part of moving forward I want to define these two strategies before I explain how I use them. A) Just In Time or JIT is a production strategies to improve a business return on investment ROI by reducing in-process inventory as well as the associated carrying cost. This is done by only receiving goods as they are needed in the overall process, this helps cut overall inventory costs. B) Lean Operations simply supplies a customer with exactly what the customer needs when and only when the customer wants it without waste with this constant improvement, the emphasis and focus is on understanding the customer. Both JIT and Lean Operations can help with the overall increase of return on investment or ROI. In regards to how my simulation for NWL worked with these strategies, I would say in NWL ran overly Lean to a fault.
I ran my operation capacity at 65 and my fixed capacity at 75 which was the second lowest of my competitors on both accounts. This was a huge negative for my company since it cost me over 2100 in lost sales. This would have increased my sales by approximately 33 percent which would have lowered the overall production costs and increase profits. I finished number 2 in sales with thehighest average price of computer. With a 33 percent increase in sales had I run a better production operation I would have had a lager profitability for a already profitable simulation. I did not key into the right places when I reviewed the early production numbers which cost me when it came to changing Operating and Fixed Capacities. I was overly cautious and my end result was indicative of this and caused big loses for NWL.
Work Cells vs Traditional Straight Line Production. A Work Cell is defined to be a arrangement of machines and personnel that focuses on making a single product or family related products. Traditional Straight Line Production Is the standard assembly line style of manufacturing. Work may start in one department until that phase is complete. Then the product moves onto the next department for the next phase and the next and so on. The major difference between the two is efficiency and cost differentials.
In a work cell method there are a multitude of benefits, from a reduction in work area needed, speed of production completion and number of associates needed just to name a few. All of which are in line with the thought process of JIT and Lean Operations which in turn increases ROI (return on investment). Five distinct advantages in the work cell vs the assembly line (1)Tasks are grouped, therefore inspections can be immediate. (2)Fewer workers are needed because of cross training. (3)The workers can access more of the work area. (4)Work areas are more efficiently balanced.
(5)Enhanced communication based upon the shape of the work cell. These advantages can help lead to fewer employees reaching higher production numbers. Which in the simulation could have led to smaller start-up companies making more cost efficient production goals happen along with how well a micro computer company could make a work cell arrangement payoff positively.
Evaluation of decisions involving inventory management in the Marketplace Simulation Inventory is defined as raw materials, work-in-progress goods and completely finished goods that are considered to be the portion of the businesses assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most companies possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the company. In the marketplace simulation NWL was not very successful at inventory management in the attempt to run Just-in-Time (JIT) and Lean Operations, I ended up with sold out product and a enormous loss in sales.
The lost sales totaled 50 percent of the total sales, which meant there could have been an additional 33 percent positive sales increase if the inventory was managed properly. These were losses of 1000 Travelers units and 1103 Mercedes units, those totals losses of $3,312,730 in gross profit. That was based upon the final sales and not taking into account any production savings by the increased sales volume. That could have increased gross profit by a minimum of 47 percent, if I had it to do over again paying more attention to the inventories would have been a possible windfall.
A continuous improvement program that could have been used to improve and achieve quality assurance goals could have been either Employee Empowerment or Bench-marking. Employee Empowerment involves employees in every step of the production process. Employee’s are on the front lines and know what is going on in every aspect and on all fronts. If employees find problems they can fix them or help fix them. Whom better in handling an issue then the ones most familiar with the process, if a shortcoming is found an experienced a periodic quality circle can address it. It’s been proven that most quality issues are either material or the process, it’s not usually the employee’s performance.
If a Bench-marking program were to be implemented, the first step would be to established what the benchmark would be. Examples of which are; Percentage of Defects, Cost per unit processing time, Lost sales due to Out-of-Stocks and Customer Satisfaction Rates. If these type of factors were used in my situation, I would have used either Lost sales due to Out-of-Stocks or Customer Satisfaction Rates. mainly because I would have found out possibly a better way of keeping product in stock which could have reduced lost sales as well as a negative customer satisfaction due to no product. The benchmark team can find out what and how benchmark partners were doing to achieve their sales goals by tracking and keeping product stock, whereas to assure customer satisfaction. Then we could analyze the
data from the partners and take the appropriate steps to move beyond and keep the process continually improving.
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