Manufacturing Inventories


Manufacturing inventories depend on how much value has been incorporated by the firm:

  1. Raw materials
  2. Components/Subassemblies/Unfinished items
  3. Work-in-process
  4. End items/Finished goods

Raw materials are any inventories by a company which the company has not yet processed in any way. This would include such obvious raw materials as iron ore, sand or glass. However, by definition, it could include computer chips or other expensive items which have not yet been processed.

Components/Subassemblies/Unfinished items have been processed to some extent by the company, but are not yet finished. They may leave production area and be stored off the line, but will still not revert to being called raw material. They already have value added.

Work in process is similar to components, et al. it is actually a mixture of raw materials and components that are currently a part of the production process. So some raw materials may be part of work-in-process, and some components may not be.

Finished goods are simply goods which are finished and ready for sale. They are almost never left in the work area, but are moved out into final storage or packaging.

There is often some ambiguity about classification, since a company may sell some unpainted furniture but paint some for final sale. Is a given unpainted piece to be considered finished goods or not? Perhaps we need a new term for such goods.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Sensible Approach to Strategic Planning


You can design strategies in many ways—usually involving a mixture of analysis, reasoning, experience and intuition. One approach looks at the organization’s strengths and weaknesses in relation to its competitors. If most of your competitors are making low quality products, a good strategy is to make the best products available. Supermarket chains are building very large, out of town stores—so small, convenient, local stores; many airlines compete with cheap, no-frills services.

There are many ways to approach strategic planning. The key to successful planning is to get the best fit between the chosen tools and techniques, the organization’s current culture, capabilities and business environment and the desired outcome. One useful approach has the following steps:

  1. Analyze your organization’s mission and other strategic plans, to find the context and overall aims of this strategy.
  2. Set goals to show the results that this strategy must achieve.
  3. Analyze your existing strategies, finding their aims, seeing how well these are being achieved and looking for improvements.
  4. Analyze the environment in which your organization works, giving the competitors, their performance, customers, products and etc.
  5. Find the factors that will lead to success in this environment, and the importance of each; emphasize the products needed to compete effectively.
  6. Describe the approach that will best achieve success; emphasize the process that can best deliver your products.
  7. Design the best organizational support, including structure, controls and related functions.
  8. Define measures to compare actual performance with planned, optimal and competitors’ performances.
  9. Implement the plans, setting the aims and conditions for other levels of decisions.
  10. Monitor actual performance and continuously look for improvements.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Production Smoothing


Production smoothing (aggregate planning) is an important special case of supply capacity problems for firms whose demand is subject to heavy seasonal variation. The firm can typically produce enough on average, but not during peak periods. It must choose some mixture of:

  • Producing in off periods, and carrying “seasonal” inventories into the peak periods
  • Working overtime in the peak periods
  • Hiring and laying off workers for peak and down periods
  • Subcontracting

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Lectures, Line of Sight

The Bottomless Pit


For many companies the networked enterprise vision became the reality for what appeared to be a bottomless pit into which money was poured with little prospect of achieving the ‘benefits’ that were originally sought. The returns from early investment in IT were problematic. The potion turned those with aspirations to become princesses and fairies into frogs and goblins.

Much of past ‘investment’ in IT has been used to shore up existing ways of working. We have used IT to set our organization in concrete. We have worked hard and spent millions consolidating a bureaucratic form of organization which we are now trying to break down.

IT suppliers, with a mixture of cheek and bravado, have long been in the business of offering solutions to the many problems which their own products have created. They suggest that this or that upgrade may yet turn the lead boots they have supplied into winged slippers.

While overall the introduction of early generations of IT may have had little beneficial impact, it does appear to have widened the gap between the more and less efficient companies. There are ‘winners,’ but for many IT from its origins to the dotcom era has been an ‘honest mirror’ that has confronted them with their own warts and wrinkles.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight