Material Requirements Planning (MRP)


A production plan may be broken down into three major parts:

  1. The master production schedule (MPS)
  2. The material requirements planning system (MRP)
  3. The detailed shop schedule.

Each of these three parts is often complex. Remember that the aggregate planning level aggregates both products and resources. MPS and MRP are at the one lower tactical planning level: resources remain aggregated, but products are dealt with at the individual product level. MRP aggregates resources by simply assuming any product can be produced by waiting a given lead time. The detailed shop schedule takes the schedule proposed by MRP and produces from it a more realistic schedule that considers actual machine availability. Customer orders basically drive the MPS, which in turn drives MRP, which orders raw materials and production of various stages and quantities in order to meet demand in a timely fashion.

The control of the production system has three parts, each of which uses as input the output of the previous part:

  • Part A—Collect and integrate the information required to develop the master production schedule.
  • Part B—Determine the planned order releases using MRP.
  • Part C—Determine detailed shop floor schedules and resource requirements.

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.

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Power


Power is what everyone wants and no one seems to have enough of. The desire for power is inherent in our very nature and fundamental to our survival.

Nowhere is the pursuit of power more evident than in today’s workplace. Managers are constantly striving to increase their arsenal of power, which is how it should be. Some may use power for selfish gain; others may use it to benefit the company. Regardless of how managers use power, the fact remains that without it they are incapable of achieving anything of significance for themselves, other people, the company, or society at large.

Power operates under the same principle as love: the more one gives to others, the more one receives in return. Unfortunately, many managers assume that there is a limited supply of power.

Most people contribute only a small fraction of their full capabilities, simply because they don’t feel a sense of personal power. They are bound by a bureaucratic management system that does little to encourage initiative and high performance. Almost all the power within the organization rests with those at the very top. Powerless in their ability to achieve results, most people eventually lose interest and settle for mediocrity.

The secret of achieving success as a manager and as a company lies in learning how to release the hidden potential of people. It lies in helping workers on all levels, from floor sweeper to executive, experience a sense of their own power. There are no success limits for the managers who master this art. Likewise, the company that rewards managers for successfully employing this art dramatically increases its ability to achieve its objectives.

If you want to achieve ultimate power for yourself you must get out of your own way. Instead of focusing your energies on the acquisition of power for yourself, focus them on how you can empower the people who work for you. If you are successful in giving your people power, they will surely lift you on their shoulders to heights of power and success you never dreamed possible.

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.

Five Economic Eras


Economic era is a historic period of time in which the commerce of the time is dominated by, but not exclusively limited to, one particular activity, whether that be hunting and gathering, farming, manufacturing or information processing. We have waded through five economic eras:

  1. Hunting and gathering: primeval, from the dawn of human history
  2. Agricultural: approximately 8,000 BC
  3. Industrial: 1776—the year  the Watt steam engine was invented and Adam Smith’s ideas first appeared
  4. Information: 1946—the year of the first electronic computer, the ENIC
  5. Knowledge: 1994—the year of the release of Netscape.

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.

Releasing Each Person’s Potential


Great managers would offer you this advice: Focus on each person’s strength and manage around his weaknesses. Don’t try to fix the weaknesses. Don’t try to perfect each person. Instead do everything you can to help each person cultivate his talents. Help every person become more of who he already is.

This radical approach is fueled by one simple insight: Each person is different. Each person has a unique set of talents, a unique pattern of behaviors, of passions, of yearnings. Each person’s pattern of talents is enduring, resistant to change. Each person, therefore, has a unique destiny.

Sadly, this insight is lost on manay managers. They are all at ease with individual differences, preferring the blanket security of generalizations. When working with their people, they are guided by the sweep of their opinion—for example, “Most salespeople are ego driven” or “Most accountants are shy.”

In contrast, great managers are impatient with the clumsiness of these generalizations. They know that generalization obscure the truth: that all salespeople are different, that all accountants are different, that each individual, no matter what his chosen profession, is unique. Yes, the best salespeople share some of the same talents. But even among the elite the differences will outweigh the similiarties. Each salesperson will have his different sources of motivation and a style of persuasion all his own.

The rampant individuality fascinates great managers. They are drawn to the subtle but significant differences among people, even those engaged in the same line of work. They know that a person’s identity, his uniqueness, lies not just in what he does—his profession—but in how he does it—his style.

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

Release of Free Cash Flow


The project entry typically has a finite life. Its dividend policy is usually specified contractually at the time any outside equity financing is arranged. Cash flow not needed to cover operating expenses, pay debt service, or make capital improvements—so-called free cash flow—must normally be distributed to the project’s equity investors. Thus, the equity investors, rather than professional managers, get to decide how the project’s free cash flow will be reinvested.

 When project is financed on a company’s general credit, the project’s assets become part of the company’s asset portfolio. Free cash flow from the project augments the company’s internal cash resources. This free cash flow is retained or distributed to the company’s shareholders at the discretion of the company’s board of directors.

 Project financing eliminates the element of discretion. Investors may prefer to have the project company distribute the free cash flow, allowing them to invest it as they choose. Reducing the risk that the free cash flow might be retained and invested without the project’s equity investors’ approval should reduce the cost of equity capital to the project.

 The sponsor is not necessarily placed at a disadvantage under this arrangement. If the sponsor is considering additional projects that it believes are profitable, it can negotiate funding for these projects with outside equity investors. If they agree to fund any of these additional investments within the project entity, the dividend requirement can be waived by mutual agreement and the funds invested accordingly.

 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

New Product Process


New products actually build up the way rivers do. Great rivers are systems with tributaries that have tributaries. Goods that appear complex are just collections of metal shapes, packaging material, fluids, prices, and so on. A good anology is the production of automobiles, with a main assembly line supported by scores of subsidiary assembly lines scattered around the world, each of which makes a part that goes into another part that ultimately goes into a car in that final assembly line.

 If you can imagine the quality control people in auto parts plants evaluating each part before releasing it to the next step, you have the idea of a new product evaluation system. The new product appears first as an idea, a concept in words or pictures, and we evaluate that first. As workers turn the concept into a formed process of metal, or software, or a new factory site preparation service, that good or service is then evaluated. When a market planner puts together a marketing plan, its parts are evaluated separately (just as minor car parts are) and then evaluated again in total, after it is added to the product.

 The fact that we evaluate the product and its marketing plan as separate and divisible pieces is what lets us telescope the development process into shorter periods of time. There was an era when we went through a new product’s development step by step, nothing “ahead of its time.” But today we may be working on a package before we actually have finished product, we may be filming part of a commercial before the trademark has been approved and finalized.

 This sometimes causes some backtracking, but the cost of that is less than the costs of a delayed introduction. It does require, however, that we have thought through carefully the item’s overall development needs—and, which of those needs are crucial, and which not crucial. Any evaluation system must cover the crucial ones.

 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

Creating Strategic Slack


In considering strategies for supporting or protecting core distinctive competences and growing new ones, the issue of resource demands has to be considered. One means of releasing resources is to review those distinctive competences that are no longer central to the strategic future. As is often the case in organizations, competences and distinctive competences emerge, and become embedded into the culture/conciousness of the organization. However, as organizations change their strategic direction, the utility of these competences may reduce, sometimes with them becoming completely irrelevant. Identifying these will free up resources—creating strategic slack. Where competences (or the activities supporting them) are to be withdrawn, careful considration of how this is to be achieved is necessary (who needs to be consulted? What needs to be put into place?) so as to ensure that the resources are freed up rather than covertly protected.

 

An obvious means of freeing up resources is through outsourcing. Through building the business model, those areas that are considered potential candidates for outsourcing will have been scrutinized. Often organizations outsource units, departments and tasks without considering the overall impact on the business model, or on a distinctive competence. Understanding how the particular area or task to be outsourced fits in with the overall model can thus ensure a more sustainable and coherent approach.

 

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

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