Operating Leverage


It is a financial thought quite similar to break-even analysis. Both fixed and variable costs are used in the production and marketing of products. The higher the operating leverage, the faster the speed of increase of total profits after the sales crosses the break-even volume. Likewise, those firms with high operational leverage will suffer losses at a faster rate after the sales volume drops under the break-even point.

Organizations with high operating leverage gain more from sales from organizations that have low operating leverage. Organizations with high operating leverage are more responsive to drop in sales volume, losses will occur at a faster speed.

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.

The Japanese Philosophy


Everyone is aware, to some degree, of the major inroads the Japanese have made and are continuing to make in US markets, including automobiles, electronics, cameras, computer hardware, machine tools, and aerospace. In automobiles, the United States has fought back strongly.

There are many examples where the Japanese have taken over an American plant, kept the same workers, laid off half of management, and doubled productivity! Some of the elements of Japanese philosophy include:

  1. 1. Worker Flexibility: Rather than being specialized, workers are trained to do many different tasks, making for a flexible process and reduced WIP.
  2. 2. Jidoka Quality at the Source: If a bad unit is made, it is not set aside. The entire process is stopped, and everyone looks to find the problem. This again reduces WIP and does not allow continued production a bad goods.
  3. 3. Just-in-Time Production: An item is produced exactly when it is needed. This works best for repetitive manufacturing, so all processes are designed to be repetitive manufacturing. Kanban control systems were developed for this situation.
  4. 4. Uniform Plant Loading: Confusion and shock waves from changing things are avoided by having exactly the same thing made every day. One way to do this is to establish a standard mix of products to be made every day.

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

Same-day Delivery


Same-day delivery, or same-day service, is an excellent promotional scheme for increasing sales at very little additional cost. As the economy becomes increasingly attuned to a “buy it now, have it now” attitude, we become more and more frustrated with waiting days (or often weeks) for purchased products to arrive or for service to be performed. Companies willing to guarantee same-day delivery have found this to be an extraordinarily effective sales tactic that practically ensures a competing edge.

 

Despite the fact that most people regard time as a valuable commodity, few businesses pay any attention to rapid service. Manufacturing, retailers, and service forms want their bills paid on time, but all too often, they do not reciprocate.

 

Although sales tactics that promise and then fulfill same-day delivery within a specific area must always bring in new customers, for some businesses, same-day delivery is impossible.

 

Doing what you say you are going to do when you promise you will do it will inevitably increase service sales as effectively as rapid delivery does in product businesses. It is simply good public relations. Turning it around, when a plumber, electrician, or furnace repairperson promises to take care of your service problems tomorrow and actually does so, the chances are very good that you will call that person again when the service is needed.

 

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 contact www.asifjmir.com, Line of Sight