Anatomy of Business Operatrion
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This document discusses core objectives and operations of businesses. It explains that commercial enterprises can be public, private, educational, governmental or charitable sectors and each have different objectives like profit, growth, imparting knowledge or effective administration. It then covers topics like defining profit, ways to improve profits by increasing revenues or decreasing costs, cash to cash cycles, inventory components and effective materials management.
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Anatomy of Business Operatrion
- 1. ANATOMY OF BUSINESS OPERATIONS
- 2. FUNDAMENTALS FIRST WHAT ARE CORE OBJECTIVES OF A COMMERCIAL ENTERPRISE ?
- 3. ORGANISATIONAL OBJECTIVES TYPES OF ORGANISATION SECTOR OBJECTIVES PUBLIC PROFIT BUSINESS PRIVATE LONG TERM PROFIT GROWTH EDUCATIONAL Imparting Knowledge OTHERS GOVERNMENT Effective Admninistration CHARITABLE Take care of poor ETC. etc.etc.
- 4. WHAT IS PROFIT ? PROFIT = SALES - COSTS PROFIT - = REVENUE - EXPENDITURE HOW TO IMPROVE FOR A GIVEN CAPACITY LEVEL ?
- 5. HOW TO INMPROVE PROFITS ? RAISE PRICES 1. INCREASE REVENUES INCREASE VOLUME REDUCE COST OF EMPLOYEES (DOWNWISE) 2. DECREASE COSTS REDUCE COST OF PROCESS AND WASTE REDUCE COST OF MATERIALS
- 6. HOW TO INCREASE PROFITS ? METHOD FUNCTIONAL AREA INCREASE SALES REVENUE MARKETING (GET HIGHER PRICE) REDUCE DIRECT COSTS PRODUCTION - INCREASE PRODUCTIVITY - VALUE ENGINEERING DESIGN, R&D - REDUCE MATERIAL COSTS MATERIAL MANAGEMENT REDUCE INDIRECT COSTS ALL - REDUCE INVENTORY - REDUCE REDUNDENCY MATERIAL PLANNING, STORES - REDUCE ORDERING COSTS PURCHASE - REDUCE OTHER OVERHEADS ALL - REDUCE CYCLE TIME ALL
- 7. CASH TO CASH CYCLE. LONG TERM SHORT FUNDS. TERM BORROWINGS CASH RECEIVABLES MATERIALS FINISHED LABOUR GOODS WORK IN PROGRESS (W.I.P.)
- 8. TYPICAL COMPONENTS OF INVENTORY APP.%AGE FUNCTION ITEM OF INVENTORY RESPONSIBLE VALUE GOODS IN TRANSIT 10 INTEGRATED (G.I.T.) MATERIALS MANAGEMENT MATERIALS IN STORES 40 WORK IN PROCESS 40 PROD. ENGG. (W.I.P.) STOCK IN TRADE 10 CUSTOMER (S.I.T.)
- 9. COST CATEGORIES Material Costs Capital costs Interest on Inventory Personal costs Overheads EDP Warehouse etc.
- 10. EFFECTIVE MATERIALS MANAGEMENT Overheads Profit Overheads 10 15 Profit 15 Labour 10 Labour 6 15 15 Materials 54 Materials 10% 60 saving = a 60% increase in profit easier than increasing sales by 60% !
- 11. INVENTOR Y Are those items which are available in plenty but not required and whatever are required immediately are not available. A crazy definition or is it a practical view ?
- 12. PURCHASING Traditionally, Purchasing has been viewed by many as an ORDER PLACEMENT SERVICE, with low levels of performance, and high levels of frustration
- 13. SUPPLY CHAIN MANAGEMENT VENDOR MANUFACTURER CUSTOMER INFORMATION FINANCE MATERIAL MANAGING ABOVE 3 ACROSS 3 GROUPS OF ENTITIES TO ACHIEVE OBJECTIVES OF ALL THE 3 GROUPS IS THE TASK OF SUPPLY CHAIN MANAGEMENT