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MANAGEMENTIII
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Task

Classtopic

DueDateIIIB

DueDateIIIA

Class
Participation

ReadArticle#1:ProductionPlanning:Justincase,Justintime,
Fifo,Lifo

October12

October14

Class
Participation

ReadArticle#1:ProductionPlanning:Justincase,Justintime,
Fifo,Lifo

October14

October15

Quiz

ReadArticle#1:ProductionPlanning:Justincase,Justintime,
Fifo,Lifo

October16

October16

Class
Participation

HOMEWORK:Activity36.2
ReadArticle#2:ProductionPlanning:Outsourcingand
subcontracting.Makeorbuydecisions

Homework
DueOctober
19

HomeworkDue
October21

Class
Participation

ReadArticle#2:ProductionPlanning:Outsourcingand
subcontracting.Makeorbuydecisions

October21

October22

Quiz

ReadArticle#2:ProductionPlanning:Outsourcingand
subcontracting.Makeorbuydecisions

October23

October23

Class
Participation

ReadArticle#3:ProjectManagement:Definition,Importance,
ConstructaNetwork

October26

October28

Class
Participation

ReadArticle#3:ProjectManagement:Definition,Importance,
ConstructaNetwork

October28

October29

Quiz

ReadArticle#3:ProjectManagement:Definition,Importance,
ConstructaNetwork

October30

October30

Class
Participation

ReadArticle#4:ProjectManagement:Identifythecriticalpath,
Calculatefreeandtotalfloat,Valueanetwork

Nov4,6

Nov4,5,6

Resources:
http://abdurs.yolasite.com/resources/b%26m%20ebook.pdf

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ARTICLE#1:
ProductionPlanning:Justincase,Justintime,Fifo,
Lifo

Allbusinessesholdstocksofsomekind.Banksandinsurancecompanieswillholdstocksofstationery,andretailers
havestocksofgoodsondisplayandintheirwarehouses.Manufacturingbusinesseswillholdstocksinthreedistinct
forms:
1Rawmaterialsandcomponents.
Thesewillhavebeenpurchasedfromoutsidesuppliers.Theywillbeheldin
stockuntiltheyareusedintheproductionprocess.
2Workinprogress.
Atanyonetimetheproductionprocesswillbeconvertingrawmaterialsandcomponentsinto
finishedgoodsandtheseareworkinprogress.Forsomefirms,suchasconstructionbusinesses,thiswill
bethemainformofstocksheld.Batchproductiontendstohavehighworkinprogresslevels.
3Finishedgoods.
Havingbeenthroughthecompleteproductionprocessgoodsmaythenbeheldinstockuntil
soldanddespatchedtothecustomer.

Justincaseandjustintimestocksystems
Justincase(JIC)holdinghighstocklevelsjustincasethereisaproductionproblemoranunexpectedupsurge
indemand

Justintime(JIT)
astockcontrolmethodthataimstoavoidholdingstocksbyrequiringsuppliestoarrivejustastheyareneededin
productionandcompletedproductsareproducedtoorder

OriginatinginJapan,theJITapproachtostockcontrolisnowinfluencingstockholdingdecisionsinbusinessesall
overtheworld.JITrequiresthatnobufferstocksareheld,componentsarrivejustastheyareneededontheproduction
lineandfinishedgoodsaredeliveredtocustomersassoonastheyarecompleted.

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FIFO
Thefirstin,firstout(FIFO)methodofinventoryvaluationisacostflowassumptionthatthefirstgoodspurchasedare
alsothefirstgoods
sold.Inmost
companies,this
assumptionclosely
matchestheactual
flowofgoods,andso
isconsideredthe
mosttheoretically
correctinventory
valuationmethod.The
FIFOflowconceptisa
logicalonefora
businesstofollow,
sincesellingoffthe
oldestgoodsfirst
reducestheriskof
obsolescence.

LIFO
Thismethodassumesthatinventorypurchasedlastissoldfirst.Therefore,inventorycostunderLIFOmethodwillbethe
costofearliestpurchases.

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ARTICLE#2:
ProductionPlanning:Outsourcingandsubcontracting.
Makeorbuydecisions

Usinganotherbusiness(athirdparty)toundertakeapartoftheproductionprocessratherthan
doingitwithinthebusinessusingthefirmsownemployees.Whenthisisdonebyfirmsinanother
countryitiscalledoffshoring

BUSINESSCASE
CIO.comagainaskedoutsourcingobserverstopeerintotheircrystalballs.Andifthey'reright,2015couldbetheyearIT
outsourcinggetsbusinessfocused,customersembracestandardization,sourcingdecisionsbecomefactbased,andthe
ageoldRFPprocessgetssomerealcompetition.

1.OutcomesBecometheNameoftheGame
Thenewyearshouldseeanincreaseinmarketfacingprocesssolutionmarketing,campaignmanagement,inside
salesthatenableproviderstoaligntheircompensationandincentiveswiththebuyer'sintendedbusinessoutcomes,
saysMarcTanowitz,partnerwithoutsourcingconsultancyPaceHarmon."Thesesolutionswillincorporateincreaseduse
ofcloudbasedtechnologiestoallowproviderstocompeteanddifferentiatebasedontheiruniqueofferingsandwillallow
buyerstopartnerwithoutsourcedproviderstotransformthewaytheyengagewiththeircustomers,"Tanowitzadds.
Meanwhile,saysSusanDanino,partnerwithoutsourcingconsultancyInformationServicesGroup,"outcomebased
pricingisevolvingasatrueanswertosolvingsomechallengesofupfrontonetimeinvestmentcostswhenitcomesto
contractingwithathirdparty."

2.DawnoftheCloudRobots
In2015,autonomicsandcloudtechnologieswillmeet,arguesJeffAugustin,managingdirectorofoutsourcing
consultancyAlsbridge."Smartrobotswillincreasinglyoperateinthecloud,andwe'llseea'laborasaservice'approach
emergeasclientsandprovidersfindthatintelligenttoolsandvirtualagentscanbeeasilyandflexiblyhostedoncloud
platforms,"Augustinsays."Thiswillbuildevenmoremomentumandinterestinautonomics."

3.CustomersEmbraceStandardization
Cloud,utilitycomputing,andvirtualizationwillconvergein2015,andeverythingwillstarttolookthesamein2015,says
JoshuaB.Konvisser,partnerwithlawfirmPillsburyWinthropShawPittman."Astheindustrybecomesmoreandmore
comfortableworkingwiththecloud,theindustryisbecomingevenmorecomfortablewiththebenefitsofstandardization
increasedefficiency,virtualization,reducedsupportcosts,forexample,Konvissersays."Thus,eveninbespoke
outsourcingarrangements,theremaywellbemoresimilaritythandifference,bothwithinasinglecompany'sformerly
complicatedITenvironment,andacrosscompaniesbothclientandprovider.Thecloud,utilitycomputing,and
virtualizationareconvergingtocreatethisnewoperatingmodelthatwillbecomethenewparadigmforIToutsourcing.

4.RenegotiationReigns
Nextyear,morethan$100billiondollars(yes,billion)worthofoutsourcingcontractswillberenegotiated,saysISG
partnerStantonJones.Andmanyofthosecustomerswillforegothetraditionaltowerbasedoutsourcingapproachfora
multisourcingcloudbasedmodel."Workload[willbe]runfromthemostappropriatecloud,ratherthancentralizedon
dedicatedinfrastructure,"Stantonsays."Thiswillalsodriveawarenessanduptakeofcloudbrokeragesoftware,as
buyerslooktouseanalyticsandautomationtostreamlineandprovidevisibilityintothecloudsourcingsupplychain."

5.SupplierRiskTakesCenterStage

ThismaybetheyearcompaniesgetseriousaboutmanagingtheirITsupplierrisk."Asendcustomersbecomemore
awareofacompany'ssupplychain,thebrandriskthatcomeswithasupplierfailuregoupdramatically,"saysChristine
FerrusiRoss,seniorvicepresidentwithoffshoringconsultancyNeoGroup."In2015,companieswillbegintoreally
integratesupplierriskintotheirdailyoperations,movingfromquarterlymeetingriskdiscussionstomakingkeybusiness
decisionsbasedondifferentriskeventsonarealtimebasis."
PoliticalandeconomicturmoilincountriessuchasUkraineandRussiawillcauseoutsourcingcustomertocareinamore
tangiblewayaboutthelocationsoftheirservicesproviders,saysAtulVashistha,NeoGroups'sCEO."However,even
thoughtheseformallywouldbeconsideredgeopoliticalrisks,becausetheyprimarilyaffectserviceproviders,thelocation
5

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monitoringwillfalltosourcingandsharedservicesteams,"Vashisthasays."Thisistherightapproachaswesee
increaseddisruptionsduetolocationissuessuchasshrinkinglaborpools,changesinlaws,weatherissuesand
economicmalaise."

6.MultiSourcingMultiplies
There'slittledoubtthatsmallerdealsamongmultipleprovidersistheestablishedmodelforITsourcing.Butin2015,
outsourcerspercustomerswillmultiplyevenfurther."

"Thenumberofserviceproviderseachcompanyuseswillgrowdramatically,drivenbygrowingpopularityofcloudin
generalandSoftwareasaService[SaaS]inparticular,"saysScottFeuless,principalconsultantwithoutsourcing
consultancyInformationServicesGroup.

7.TheBusinessTakesOver
MoretechnologyserviceswillbepurchasedbybusinessleadersratherthanITin2015."Asconsumerproductslikecars
andwashingmachinesandthermostatscontinuetoembedtechnology,moreandmoreproductengineeringteamswill
treatITandITservicesascorepurchasesandwilltakeoverthosecontractsdirectly,"saysFerussiRossofNeoGroup.
"Thiswillsplitcurrentsharedservicesorganizationsthatdon'tunderstandthetrend."Intheshortterm,itwillalsoshift
powertosupplierswhohavenewbuyerstotargetminustheburdensomebiddingandRFPprocessesofthepast.
"ITwillstruggletomigrateitselfsuccessfullytoaservicebrokeragemodel,pullingdisparateservicesbackinfrom
businessunitsthathaveputtheirownapplicationsinthecloudratherthanwaitforITtoprovisioninfrastructure,"adds
Fueless."IT'scasewillbecompellingwheretheycandeliversavingsthroughrationalization,integrationandsuperior
servicemeasurementandselection."

ARTICLE#3:
ProjectManagement:Definition,Importance,Construct
aNetwork

projectaspecificandtemporaryactivitywithastartandenddate,cleargoals,definedresponsibilitiesandabudget
projectmanagementusingmodernmanagementtechniquestocarryoutandcompleteaprojectfromstarttofinishin
ordertoachievepresettargetsofquality,timeandcost.Examplesofbusinessprojectsinclude:
settingupanewITsystem
relocatingthecompanyoperations
installingmachinery
developingandlaunchinganewproduct
buildingafactory.
Tobecompletedsuccessfully,aprojectneedstobeplannedandmanaged,costsdeterminedandtimesallocated,problems
dealtwithand,eventually,concluded.Formalmethodsofmanagingaprojectofferclearguidelinesanddeadlines.
Thekeyelementsofprojectmanagementinclude:
definingtheprojectcarefully,includingthesettingofclearobjectives
dividingtheprojectupintomanageabletasksandactivities
controllingtheprojectateverystagetocheckthattimelimitsarebeingkeptto
givingeachteammemberaclearrole
providingcontrolsoverqualityissuesandrisks.

ARTICLE#4:
ProjectManagement:Identifythecriticalpath,
Calculatefreeandtotalfloat,Valueanetwork

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Criticalpathanalysisplanningtechniquethatidentifiesalltasksinaproject,putstheminthecorrectsequenceandallowsforthe
identificationofthecriticalpath

THECRITICALPATHANALYSISPROCESS
CPAinvolvesdrawinganetworkdiagramthatindicatestheshortestpossibletimeinwhichaprojectcanbecompleted.The
activitiesthatmustbecompletedtoachievethisshortesttimemakeupwhatisknownasthecriticalpath.Theprocessofusing
CPAinvolvesthefollowingsteps:
1Identifytheobjectiveoftheproject,e.g.buildingafactoryinsixweeks.
2Putthetasksthatmakeuptheprojectintotherightsequenceanddrawanetworkdiagram.
3Addthedurationsofeachoftheactivities.
4Identifythecriticalpaththoseactivitiesthatmustbefinishedontimefortheprojecttobefinishedintheshortesttime.
5Usethenetworkasacontroltoolwhenproblemsoccurduringtheproject.

USINGCRITICALPATHANALYSIS
Constructingasimplenetworkdiagramtoidentifythecriticalpath
Theobjectiveistoseeifanewmachinecanbeinstalledandthestafftrainedtooperateitwithinthreeweeks
(assumeafivedayworkingweek)(seeFigure37.1).Anetworkdiagramusesthefollowingnotation:
Anarrowindicateseachactivity.
Anactivitytakesuptimeandresources.
Anode(circle)indicatestheendofeachactivity.

Theactivitiesinvolvedinthisprojectandtheestimatedtimeforeachactivity(duration)areasfollows:
Stripoutoldmachine(A)threedays.
Ordernewmachineandawaitarrival(B)
oneday.
Preparesitefornewmachine(C)twodays.
Assemblenewmachine(D)twodays.
Installnewmachine(E)oneweek.
Demonstratetoworkers(F)twodays.
Obtainnecessaryrawmaterials(G)one
day.
Trialtestrun(H)threedays.
Youwillnoticefromthediagramthatfromthefirstnode,twoactivitiescanstart.Thisisbecausestrippingoutthe
oldmachineandorderingthenewoneareindependentactivities.Theycanbedonesimultaneouslyanddonot
havetobedoneinsequence.

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