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Sunday, September 17, 2017

Just in Time production and its benefits


 
Amancio Ortega is a founing chairman of Inditex fashion group. He looks after more than 6000 stores in 88 countries. He is most famous for creating ZARA, the retailer. 

ZARA chain uses the just in time(JIT) method of production. In JIT inventory is kept to minimum. The basic assumption of JIT is that inventory is a liability rather than an asset and therefore, should be kept to minimum. Resultantly, capital invested in inventory can be directed to other uses. With less capital tied up in inventory the return on investment can be enhanced.

Most people, in management, think JIT as only inventory management technique rather than as a way of thinking to solve problems. With reduced inventory level, the focus is shifted towards quality production. 

With reduced level of inventory the risk of obsolescence is reduced. The cost on storage can also be saved.

Manufacturing executive understands the importance of JIT but think that their operations are not fit to make transition over to JIT.
Many successful companies are using JIT. A list of companies using JIT includes names like NIKE, Toyata, Hawlette Packard etc. Infact, JIT was born in Toyata.  Although it failed initially in Toyota because its geographical disperse.

Later on it was adopted by other automobile manufacturers. Today it is being used in many of top companies in industries as diverse as computer industry to fashion.

The biggest impact of JIT is not on inventory and ROI but the way it exposes problems in supply chain, which needs to be resolved. And this is where executive think JIT can be hurdle rather than support.

As with other techniques, JIT has its own set of flaws. The reduced level of inventory increases the risk associated with supplier’s failure. Toyota lost billions when plant of one of its supplier caught fire.  

Suppliers are the most important piece in JIT.  For succeeding in JIT you need to have reliable suppliers, who can supply you quality product without delay. A supplier than would ask for a bit more money to compensate for the added reliability.

JIT, for its profitable implementation needs to have some prerequisites. A company can only make transition over to JIT if its cost of storage increases sharply with increase in inventory. Moreover, ordering cost should be negligible.

Generally companies starts to implement JIT from suppliers. Sooner they get fed up with unavailability of JIT suppliers, the one who is willing and able to supply right thing, at the right time, and in right quantity. It is advisable for these companies to start implementing JIT from assembly level to backward the supply chain. Rather than having ready prepared finished goods, they should assembly their products when ordered by customer. Gradually, workers would start having components in easy to assemble form.
   



Wednesday, June 28, 2017

Work Hours: Where more is less

Luxembourg is a heaven for workers, the country where an average worker works only 28 hours in week. The under-worked employees are not problem for employers as well because the worker produces much more in an hour than many, in other countries, would have produced in 3 hours.

The phenomenon of reducing number of hours worked with enhanced productivity isn’t uncommon in other countries. France where average work week consists of 28.2 hours produces 65.6$ worth of value per hour per worker.

United States, the most developed economy, gets 68.3$ from their worker per hour during its 33.6 hour work-week.

The finding of a recent study confirmed economist’s preposition, that long work-weeks are counterproductive. The evidence produced suggests that long hours cause a decrease in creativity.

The curve of productivity shifts towards bottom as it moves towards right. Research, at Svartedalens retirement home, shows that shorter work-weeks can increase productivity among nurses. Side benefits include increased happiness and job satisfaction. Svartedalens is a growing movement in Europe asking for reduced number of work hours.

Eight hour work day is a norm across the world.  Ford Motor Company, in the days of ‘sun up to sun down’ workday, was the first business to implement 8 hour work week. Within two years Ford’s profits doubled encouraging other businesses to follow suit.

These days the nature of employment has changed from physically demanding to mentally demanding. The time boundary of on work and off work has become blurring. Many employees say they found solution to an important problem, at work, during vacation. The modern day jobs demand that a worker brings in more mental energy.


Fresh mind is more creative and therefore more productive during the present economic times. Shorter hours can keep your mind fresh and can save your employer in sick leaves as well.

Friday, April 28, 2017

Baby shark method: the secret of many successful retailing giants

Albert Gubay, the late billionaire, from humble beginning established United Kingdom’s most successful supermarket chain Kwik Save.

It started, in 1959, when he founded value foods. His aggressive price cuttings lead many distributors and suppliers to refuse him.

In 1964, he visited United States learning from there a technique which helped him built his retailing chain. Sooner his Value Foods changed to Kwik Save, a discount retailer chain boosting more than 1000 stores. The growth of his business was a direct result of his use of baby shark method.

In this method the retailer purchases goods on good payment terms, say for example, 60 or 90 days and then sell these items at or below costs. The interest on cash generated by the sale is then used to expand retailing business.

The interest on trade credit is received in form of discount. By selling these items he generated cash for expansion at the same time being able to pay suppliers when the payments became due. This method is a sort of OPM, other people’s money.

The use of baby shark method, along with other cost cutting methods learnt from West German retailing giant ALDI, he founded the empire consisting of hundreds of outlets. In 1973, he sold Kwik Save for £14 million, the first step to amass his £500 million fortune.


ALDI, the giant German retailer was using this method much before Gubay copied it. In fact, ALDI was where this method of retailing was perfected. Today ALDI owns more than 10000 stores in 18 countries, with total turnover of 50 billion €.

Wednesday, April 5, 2017

5 Most effective ways to study

Since the time of Greek thinkers man is searching for ways to study and memorize effectively. Now a team of researchers led by John Dunlosky has unveiled number of ways in which educators can enhance the effectiveness of learning for their students. Moreover, teaching these strategies to students can also help saving the cost on education and save you from becoming the next target of PEEDA (Punjab employees’ efficiency, discipline and accountability) act.

Surprisingly the most popular methods of study are least effective. Most popular ways are highlighting, rereading, rot learning, and massed practice. 

These methods can help enhance students understanding and ability to apply learned concepts

The most effective ways found are :-

Testing and distributed practice
Tests are termed as necessary evil of our education system but the research showed that testing is a very good way to learn. Teachers can make testing less threatening for students by making them less dramatic and more frequent.  Giving weight age to class tests and quizzes in examination is a good way to make tests fun and less threatening.

Another effective strategy is distributive practicing
Unlike Massed practice, which is done multiple times before moving to the next lesson, distributive practice is spreading your practice over a period of time.  This distributive practice is very effective.

Other promising strategies to learn but enough research have not been done yet are:-

Interleaved practice
Interleaved practice goes one step forward then distributive practice. It is like distributive practice spread over a period of time but this also involves mixing practice of different materials, in a single study session. This can produce good results if already acquired level of expertise in a given subject matter is of high degree.

Elaborative interrogation and self explanation
Elaborative interrogation is trying to explain why some given fact is true. While self explanation is trying to explain how the given information is related to the previous learned information.

Less useful strategies are rereading, summarizing, highlighting, keyword mnemonics, imagery for text are some of the least effective strategies. Although summarization can be helpful in some cases but it needs time to learn hence making it less time and cost effective.


Thursday, March 16, 2017

Superconductivity breakthrough can revolutionize power generation, power distribution and electronics industry.

European researchers on Tuesday announced the development of Superconducting tapes. The statement said that the breakthrough could one day revolutionize the power transmission and power generation industries. The statement went as far as to claim that the technology is already being used in many appliances.

Eurotapes, a European research project on superconductivity has produced 600 meters superconducting tape, said the coordinator of the project, Xavier Obradors, of the Institute of Materials Science of Barcelona.

Superconductivity is a phenomenon discovered in 1911 by Heike Kamerlingh Onnes. Superconductivity is the ability of any material to conduct electricity with zero loss of electric charge. Conventional conductors like copper losses up to 10% of the charge in form of heat.

All superconducting materials discovered till now show their superconductive property at low temperature.  The highest temperature known superconducting material is highly pressurized hydrogen sulfide, whose critical temperature reaches 203 K (−70 °C), the highest accepted superconducting critical temperature as of 2015. The aim is to one day find a material that can work as superconductor at room temperature.

The use of superconductor, if any discovered to work at room temperature, can revolutionize the power distribution, power generation and electric appliances. The use of the material in appliances and other electronics would help manufacture of supercomputers, much lighter and cheaper than today. The power generation can be revolutionized by manufacture of much lighter and much more efficient wind turbines. It can convert small wind turbines into an electricity generation power house.

Wind turbines are a series of wire coils attached to the rotor blade spin in the presence of strong magnetic fields, provided by stationary magnets.  Making the coils from resistance free material can boost power generation.

The power distribution can be changed altogether. Right now, if you want to send electricity from the East coast of the US to the West coast, you could lose at least 60 percent of the energy because of the resistance within the wires. Imagine the superconducting transmission lines carrying charge from Gobi desert in China to London, without any line losses.  The solar panels near the equator can be linked to transmission lines helping better and much more efficient energy mix in favor of renewable energy as at all time there will be sun shining somewhere.

The discovery can one day lead to environment friendly power generation and power consumption. The race to develop first superconducting material at room temperature is yet to yield any viable results. The team in United States has announced the production of metallic hydrogen, a possible superconductor at room temperature, through application of pressure much more than at the center of Earth.

Australian researchers earlier mentioned that wind turbines two to three times more efficient than present ones can be manufactured using superconductors and would be ready to be installed on Australian shores till 2019.

Japanese team has hinted that they have discovered that critical temperature of materials can be enhanced by soaking materials in red wine.

Superconductivity research can one day free us from dependence on fossil fuel and make Earth a better place to live in for our children.

Monday, March 6, 2017

Growth of Islamic Finance in Pakistan

Assets of Islamic banks have doubled in the last four years and SECP is now considering amending laws and giving tax relief to enable them to issue sukkuk bonds and real estate investment trust.
“The assets in Islamic banking (in Pakistan) have doubled, jumping from Rs837 billion to Rs1.6 trillion, from 2012 to 2016, now accounting for 11.7% of the total banking assets,” said Securities and Exchange Commission of Pakistan (SECP) in a handout on Saturday.

Read more about Islamic Finance
Non-banking financial institutions (NBFI) enjoy more support in religious classes of the country than Islamic banks. This is evidenced by stronger growth of assets in Sharia-compliant NBFI. The market share of assets in Islamic NBFI has grown from 14%, in 2002, to 33% now.

 “The SECP has recently conducted two consultation sessions with market participants to facilitate issuance of sukuk and real estate investment trust (REIT),” said Usman Hayat, head of the Islamic Finance Department at the SECP.

“The SECP is analyzing industry proposals and it shall consider making appropriate amendments to the relevant regulations, further reducing the cost and hassle for both issuers and investors. The industry proposals pertaining to tax issues regarding sukuk and REIT are being referred to the FBR,” he added.
At present 21 banking organizations are offering Islamic banking services in the country through 2,322 branches in 112 districts across the country.  “The SBP has a holistic approach to the promotion of Islamic banking and is providing enabling policy environment, Sharia governance, risk management, and capacity building,” says Ghulam Muhammad Abbasi, head of the Islamic Banking Department at SBP.
The assets of Islamic financial institutions are growing at a rapid pace but it is yet to be seen as how Islamic is the Islamic finance.

Thursday, March 2, 2017

Who owns PSL cricket teams

Pakistan is a cricket loving nation. The cricket matches between Pakistan and India are biggest sports event and therefore good business opportunity for sponsors.

Pakistanis use to spend a lot of time on watching the game as it is long game unlike football.

Pakistan Cricket Board in its effort to reintroduce international cricket in Pakistan, established Pakistan Super League (PSL). PSL is a single entity and has five cricket teams as its franchises. The commercial rights to the initial franchises were sold for PKR 9.85 billion ( 91.4 million $) for a span of 10 years in December 2015. The first session, held in 2016, yielded 2.6 million $ in profit.

Owners of these teams are:-

Karachi Kings is owned by ARY Media Group. ARY Media Group is owned by  Salman Iqbal, whose net income for year is 90 million$.1 Karachi King was sold to ARY Media Group for a period of 10 years, from December 2015, for 26 million$, thus making it the most expensive PSL team.                                                                                                                                                                                                                                   
Lahore Qalandars are owned by Qatar Lubricants Company limited (QALCO). QALCO is the only state-of-the-art lubricants blending plant in Qatar. This company is headed by Rana Fawad. It is the second most expensive team after Karachi Kings and was priced at 24 million $ in December 2015.

Peshawar Zalmi was sold to Haier Paksitan for 10 year period against 16 million US dollars. Javed Afridi is the CEO of Haier Pakistan. Haier Pakistan is subsidiary of Haier Group Corporation based in China.

Quetta Gladiators is owned by Omar Associates, a Karachi based company. The company was founded in 1969. Nadeem Omar is presently the CEO of the company. The group was basically a construction company but now the group is planning to enter into mining sector. The group acquired the franchise for 11 million$.

Islalmabad United Leonine Global Sports won the bid for franchise rights of Islamabad United for a decade against 15 million$. Leonine Global Sports is owned by venture capital firm Leonine Global which is based in UAE. The sports entity Leonine Global Sports also owns a franchise team in Hong Kong T20 League. The venture capital firm is owned by Ali Naqvi.  Ali Naqvi is a renowned businessman having business interests in different countries.

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