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Quarter 4 The Skillful Adjustment

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Labor is the smallest part of the cost of production, materials cost more. Lean Manufacturing ... Happy customers buy more, pay more ... – PowerPoint PPT presentation

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Title: Quarter 4 The Skillful Adjustment


1
Quarter 4The Skillful Adjustment
  • The following slides are for the introduction to
    Q4 decisions.

2
Q4, Evaluate Performance Skillfully Adjust
Strategy
  • Check overall performance
  • Check financial performance
  • Check customer reaction to brands, prices,
    advertising and sales channel
  • Check employee reaction to compensation
  • Check production operations
  • Check out competition
  • strategic direction
  • tactics
  • markets response

3
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4
Check Overall Performance
  • Check Balanced Scorecard
  • Market demand and market shares
  • Check financial performance

5
Measurement of the Firms Performance
The Balanced Scorecard
6
Why Use a Balanced Scorecard?
  • It is too easy to get caught up in market share
    and short-term profits.
  • Long-term viability requires that managers also
    deliver customer satisfaction and invest in the
    future.
  • The balanced scorecard measures both the
    long-term and the short-term.
  • The best managers will be good in all areas
    measured.

7
Financial performance
Market performance
Manufacturing productivity
Marketing effectiveness
Asset management
Creation of wealth
Investments in the firms future
Human resource management
8
Action Potential of the Firm
Financial performance x Market performance
x Marketing effectiveness x
Investments in the firms future x Human
resource management x Creation of
wealth x Asset management x
Manufacturing productivity
9
Cumulative Balanced Scorecard
Simulation performance will be based upon
cumulative score for quarters 5, 6, 7 and 8
10
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11
Measures of Customer Satisfaction
  • Brand judgment (0 to 100)
  • Price judgment (0 to 100)
  • Ad judgment (0 to 100)

100 indicates complete satisfaction. 70 would be
a good brand and ad rating until new technology
is available in Quarter 5. Price ratings should
be near 100.
12
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13
Goal of Monitoring Customer Satisfaction
  • Give the customer what they want and do so better
    than the competition.

14
Deduce the markets many response functions
15
Based upon customer feedback, skillfully adjust
marketing tactics
  • Revise brand designs or create new ones
  • Revise ad copy
  • Adjust prices
  • Hire more sales people or deploy them differently
  • Adjust or expand web marketing tactics
  • Add or take away elements to find the sweet spot
  • in the customers response function.

16
Competitor Benchmarks
  • Brand and ad designs
  • Prices and sale priorities
  • Channel strategy
  • Sales staffing
  • Ad placements
  • Demand by brand by segment

17
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18
Goals of Competitive Benchmarking
  • Reverse engineer the strategy of each competitor
  • Determine who is a threat and who is not
  • Determine strengths and weakness of competition
  • Emulate good decisions
  • Predict direction of competitive moves
  • Adjust strategy and tactics in reaction to
    competitor strengths and weaknesses and in
    anticipation of future moves.

19
Human Resource Performance
  • Employee satisfaction and productivity
  • Sales people
  • Factory workers
  • Competitive compensation packages and productivity

20
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21
Goals of Human Resource Management
  • Deduce which elements of the package seem to
    drive employee satisfaction?
  • Predict how competitors will adjust their
    packages.
  • Determine how much to spend on compensation
    package and mix of benefits.

22
Financial Performance
  • Firm profitability
  • Brand profitability
  • Region profitability
  • Sales channel profitability
  • Return on investment
  • Asset management
  • Gross margin
  • Net margin
  • Etc.

23
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24
Goals of Financial Management
  • Discover which brands, markets and business
    functions are making the greatest and weakest
    contribution to the bottom line.
  • Deploy resources to correct weaknesses and take
    advantage of strong performers.

25
Managing Inventories and Cash(the razors edge)
  • High production
  • Lower unit production costs
  • Risk of too much inventory
  • Uses up large volumes of cash
  • Risk of brand obsolesce (wrong product in
    warehouse)
  • Low production
  • Low cash requirements
  • Higher per unit production costs
  • Risk of too little inventory
  • Stock outs
  • Lost revenue
  • Customer ill will (unhappy customers)

26
Pull Versus Push Manufacturing
  • Push build to forecast
  • Must forecast demand for each brand
  • Probability of wrong forecast 100
  • Cannot know for sure which brands will be in
    demand
  • Too much demand of some brands stock outs, ill
    will
  • too little of others excess inventory
  • Consumes large volumes of cash all in inventory

27
Pull Versus Push Manufacturing
  • Pull build to order
  • Must forecast total demand
  • Do not worry about forecasts for each brand
  • Mix of brands is not important
  • Result
  • Far less stock outs and ill will
  • Far less ending inventory
  • Far less use of cash

28
Pull Manufacturing
  • Tough things to comprehend
  • Can offer multiple brands if uncertain about what
    customers want
  • Let the market decide only the brands which are
    in high demand will be pulled out of warehouse
    (demanded) and produced
  • Brands which have low demand will not be produced
    too often
  • Makes sense to send workers home rather than
    build inventory
  • If forecast more demand than realize, stop
    production
  • Hard to believe, but it is cheaper to send
    workers home and pay their salaries
  • If continue running factory, a lot of cash will
    be put into boxes and warehouse
  • Labor is the smallest part of the cost of
    production, materials cost more

29
Lean Manufacturing
  • Changeover is key
  • Long changeovers
  • add substantially to the cost of production
  • encourage long production runs in order to reduce
    production costs
  • Long production runs increase
  • Probability of stock outs and customer ill will
  • Reduce the desirability of offering more brands
    which would make more customers happy and create
    more demand

30
Lean Manufacturing
  • Goal is mass customization an ability to build
    any brand that is being demanded without worrying
    about changeovers
  • Drive down changeover time and costs
  • Increase effective capacity because plant can
    produce almost all day, every day
  • Increase fulfillment rate more sales and more
    money in bank
  • Happier customers because greater selection

31
Quality Control
  • Reliability of production process customers are
    not happy
  • Warranty costs customers are sending back
    computers for your firm to fix
  • Quality control program multiple quarters to
    significantly improve reliability
  • Steps in program
  • Inspection (fix problems before shipped) - Q4
  • Variance study (discover how bad is problem) Q4
  • Source study (find causes and solutions to
    problems)
  • Actions to improve quality (invest to reduce
    unwanted variance)

32
Quality Control
  • Easy to postpone
  • Busy with lots of other important things
  • Inspections and system fixes can be expensive
  • Takes a lot of time to get where see significant
    results
  • But can build a differential advantage
  • High reliability is important look at research
  • Happy customers buy more, pay more
  • Can build a significant lead if other firms are
    slow to start

33
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34
Q4, Strategic Assessment
  • Competitor Analysis
  • SWOT (Strengths, weaknesses, opportunities and
    threats)
  • Corrective Actions
  • Control Measures

35
Learning Points for Quarter 4
  • The management of strategy
  • learning from your customers
  • learning from your competition
  • learning from your employees
  • learning from your financial information
  • skillfully adjusting your strategy and tactics
  • Management of resources

36
Learning Points for Quarter 4
  • Using the tools of management
  • accounting reports (financial statements)
  • industry financial benchmarks (industry financial
    ratios)
  • human resource reports
  • market feedback
  • profitability analysis (activity based costing)
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