RETURN ON INVESTMENT

METHODS TO MAXIMIZE

WORKING CAPITAL COMPONENTS

RAW MATERIAL, FINISHED GOODS AND GOODS IN SERVICE INVENTORIES, ACCOUNTS PAYABLE AND ACCOUNTS RECEIVABLE WHEN MONEY IS USED FOR WORKING CAPITAL ITEMS, IT CANNOT BE USED FOR OTHER FORMS OF INVESTMENT IDEALLY THE AMOUNT OF WORKING CAPITAL IS MINIMIZED
SMALL INVENTORIES\ RAPID PROCESSING FROM RAW MATERIALS TO FINISHED GOODS

SUPPLY CHAIN MANAGEMENT

ATTEMPTS TO OPTIMIZE WORKING CAPITAL PROCESSES FOR SOME OPERATIONS, THIS METHOD SHIFTS INVENTORIES TO SUPPLIERS AND/OR CUSTOMERS (http://www.manufacturing.net/scm/arti cle/CA524878.html?industry=Supply+ Chain+News&industryid=2380) TYPICAL TRADE-OFFS FOLLOW

(http://www.manufacturing.n et/scm/index.asp?layout=art icle&articleid=CA409514)

JUST-IN-TIME MANUFACTURING
THIS PROCESS WAS OPTIMIZED INITIALLY IN JAPAN
(http://www.strategosinc.com/just_in_time.htm) FOR A BRIEF HISTORY

THE BALDRIGE NATIONAL QUALITY PROGRAM

(http://www.quality.nist.gov/index.html ) SPONSORED THROUGH NATIONAL INISTITUTE OF STANDARDS AND TECHNOLGY (NIST) , MAKES ANNUAL AWARDS TO FIRMS THAT ARE MOST SUCCESSFUL IN INSTITUTING NEW EFFICIENCY CONCEPTS

APPLIED TO A RANGE OF PROCESSES

SPARE PARTS MANAGEMENT

ACTUAL PARTS MAY BE BASED ON RECOMMENDATION FROM ENGINEERS AND VENDORS FOR SOME COMPONENTS COMPONENTS MAY BE DFC IF THEY ARE CUSTOM UNITS MAJORITY ARE PROBABLY CATALOGUE ITEMS , WHICH MAKE THEM WORKING CAPITAL

http://www.insightcontrol.com/ aftermarket/images/STOCKR M.jpg

SPARE PARTS
MANAGING SPARE PARTS INVENTORIES CAN BE ORGANIZED TO MINIMIZE MONEY COMMITMENTS WHILE PROVIDING RELIABLE SOURCES FOR SPARES (fp.tm.tue.nl/beta/publications/ working%20papers/Beta_wp110.pdf)
http://www.friotherm.com/impeller.jpg

OTHER CAPITAL COST COMPONENTS

CATEGORIES SHOWN IN TABLE (6-18) ALLOCATED PLANT COSTS TYPICALLY INCLUDE ITEMS THAT ARE NOT INCLUDED IN COST CENTERS
FUNCTIONAL UNITS NECESSARY FOR PRODUCTION- UTILITIES, LABS, SAFETY & SECURITY, STORAGE OVERHEAD COMPONENTS USED FOR MANAGEMENT ACCOUNTING, PERSONNEL, AND ADMINISTRATIVE PERSONNEL

ALLOCATED CORPORATE COSTS

FUNCTIONAL UNITS NECESSARY TO DISTRIBUTE AND SELL THE PRODUCT
MARKETING, SALES, AND DISTRIBUTION

OVERHEAD COMPONENTS USED FOR MANAGEMENT

RESEARCH & DEVELOPMENT, CORPORATE ENGINEERING, CORPORATE LEVEL

ACCOUNTING, PERSONNEL, AND ADMINISTRATIVE PERSONNEL

VALUES APPLIED TO ALLOCATED COSTS

THESE HAVE BEEN CORPORATE DECISIONS IN THE PAST FOR GOVERNMENT CONTRACTS THE FEDERAL ACQUISITION REGULATIONS NORMALLY LIMIT THE AMOUNTS THAT CAN BE CHARGED TO THESE COMPONENTS (http://www.acqnet.gov/far/) PRIVATE INDUSTRY DID NOT HAVE THESE TYPES OF RESTRICTIONS AND WERE SELF-REGULATED UNTIL 2002 (http://www.aicpa.org/info/regulation02.htm)

RESPONSES OF SHAREHOLDERS TO ETHICAL LAPSES

VIOLATIONS BY SEVERAL CORPORATIONS (ENRON, TYCO, ETC.) CONGRESS PASSED THE SARBANESOXLEY ACT OF 2002, TO PROVIDE CORPORATE SHAREHOLDERS WITH A MORE ACCURATE ACCOUNTING SYSTEM

SOX MAP

http://www.iflexconsulting.com/images1/section.gif)

IMPACT OF SOX
THESE REGULATIONS: HAVE ADDED COSTS TO CORPORATE OPERATIONS, RESULTED IN CHANGES IN RELATIONSHIPS BETWEEN MANAGEMENT AND BOARDS OF DIRECTORS, GENERALLY IMPROVED INTERNAL ACCOUNTING FUNCTIONS TO http://www.sarbanesoxle PROVIDE CORPORATIONS WITH ysimplified.com/sarboxo utline.shtml BETTER DATA (http://www.pwc.com/extweb/pwcpublications.nsf/4b
d5f76b48e282738525662b00739e22/3b79ecb3fefa cfd085256f94005d5098/$FILE/Finding_the_Silver_ Lining.pdf)

TRANSPORTATION AND DISTRIBUTION COSTS

NORMALLY INCLUDED IN DELIVERED COST TO CUSTOMERS ALTERNATE METHODS NEED TO BE CONSIDERED BASED ON THE TYPE OF PRODUCT

TRANSPORT OF BULK CHEMICALS

LEAST EXPENSIVE
PIPELINE TO THE CUSTOMER OR CONVEYOR TO THE CUSTOMER IF PIPELINE OR CONVERYOR IS LEASED BY THE COMPANY

BULK CHEMICAL TRANSPORT

BARGES ARE ALSO INEXPENSIVE
IF FACILITIES FOR LOADING AND UNLOADING (INCLUDING INVENTORIES) ARE PRESENT IF BARGES BELONG TO COMPANY

BULK CHEMICAL TRANSPORT

RAIL SHIPMENT
MAY BE IN LEASED OR OWNED CARS, UNIT TRAINS. CHARGES ARE HIGH BECAUSE OF LACK OF COMPETITION
http://www.miningtechnology.com/projects/twentymil e/twentymile7.html)

BULK CHEMICAL TRANSPORT

TRUCKING IS THE NORMALLY THE MOST EXPENSIVE FOR BULK SHIPMENTS, BUT NECESSARY WHEN NO OTHER OPTIONS ARE LOCALLY AVAILABLE.

(http://www.braums.com/CR XDQWHFA/HomeWork/Tour/ Trucking.jpg)

OTHER SHIPPING PRACTICES

FREIGHT ADJUSTED PRICING ALLOWS FOR SOME REDUCTION IN SHIPPING COSTS USE OF A COMPETITIVE SUPPLIER TO MANUFACTURE PRODUCTS TO YOUR SPECIFICATIONS AND DELIVER TO CUSTOMERS NEAR THEIR PLANT, REDUCES COSTS TO CUSTOMERS AND SUPPLIERS THIS METHOD
ASSURES PLANTS OPERATE AT HIGHER RATES, SO UNNECESSARY CAPACITY IS NOT CREATED PROVIDES SOME INSURANCE IN THE EVENT ONE OF THE PARTICIPANTS SUFFERS A CATASTROPHIC LOSS THAT RESULTED IN EXTENDED DOWN TIME. CAN REDUCE THE INVENTORIES AT MANUFACTURING SITES IF THE DELIVERY TIMES ARE REDUCED

BULK CHEMICAL DISTRIBUTION SYSTEMS

OFF-SITE WAREHOUSING AND TANKAGE FREES UP PLANT REAL ESTATE FOR PRODUCTION CAN REDUCE HAZARDS DUE TO FIRES OR RELEASES (http://chemical-safety.com/security.htm) MAY BE PRACTICAL WHEN PIPELINE SYSTEMS CANNOT BE ECONOMICALLY USED FOR SMALL QUANTITY CUSTOMERS.
http://www.dairyland.com/media/c ontent_stock_001.jpg

SMALL VOLUME/MASS PRODUCTS

SUCH AS SPECIALITY FOOD AND FINE CHEMICALS OR BIO-PHARM CHEMICALS SHIPPING IS NOT A SIGNIFICANT COST CAN USE TRUCKING OR AIR SHIPMENT MAY REQUIRE SPECIAL HANDLING IF MATERIALS HAVE HAZARDOUS PROPERTIES OR THERMAL SENSITIVITIES.