CHAPTER 6

JUST-IN-TIME MANAGEMENT AND TIME MANAGEMENT

CHAPTER CONTENTS:
Section 1. Deliver In Time Section 2. Material Requirement Planning And Enterprise Resource Planning System Section 3. 80/20 Rule And ABC Management Act Section 4. Time Management

PREFACE

Bill Gates says, The 80s was the age of quality, the 90s was the age of engineering while the era post-2000 is the age of speed. For products of science and technology, logistics speed (smooth flow of goods) is often the decisive point of competition, and often is the synonym of profit. Rapid supply makes traditional business mode have new chance. The loss is not only the time for the difference of one minute or lack of one second, but the uppermost is the chance and profits.
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SECTION 1. DELIVERY IN TIME

(6.1)MANAGERIAL WISDOM: METHOD OF HOLDING

MEETING TO REDUCE BY 80%

Time of 50% of the day, even up to 80% on average for each high-level manager is used to hold meetings, discuss problems and make decisions. Shall we do this? Or do that? Or do nothing? Everyone is anxiously discussing and round in circles at the conference table, and often suffers from an extremely headache, and is exhausted. Dont you think that there is a better way which can reduce 80% of these meetings of headache and eliminate 80% of the stress meanwhile? There is a way which can achieve this goal, and make efficiency have a wonderful improvement, which sounds like magic, but just as all the magic, if you see through it, it is the simplest.

The key to reduce the time of meetings lies in Treatment of meeting procedures, explained as follows: Meeting procedures such kind of procedures refers that participants often put forward various kinds of problems and the conclusion always is What shall we do? New rules anyone who wants to ask questions must be prepared to answer respectively the two questions of problem analysis and Rational decision-making:

1. Problem analysis
a. What is the problem? b. What is the cause of the problem?

2. Rational decision-making steps

a. What are the possible solutions? b. What are the solutions suggested by you?
6

REMARK

When the time for discussing the problems in company is greatly reduced, instead, there are more actions more actions in the correct orientation. Manager will have more time and become more confident. The basic principle for having a meeting and voting is to use the principle of voting without signing ones name to avoid causing unnecessary troubles when getting on with people. To take advantage of the principle of voting by signing ones name to assume the obligations when involving with matters.

(6.2)MANAGERIAL WISDOM: ENJOYING IN TIME

The delicious, crisp and pleasant to taste hot French fries brought back yesterday are eaten heated by microwave.

The

French fries are still hot, but the attractive softness, fragrance and crispness have disappeared. It is no use regardless of the efforts you make, that charming sweetness has lost!
Have

you ever bought an article of clothing that you love, but you love it so much that you hesitate to wear it and solemnly present in the wardrobe? Many years later, when you see it again, you find that it is outdated, so you missed it. Have you also ever bought a too beautiful piece of cake to eat and put in refrigerator? After a long time, when you see it again, but find that it has exceeded the expired date, so you have missed it just like this.

REMARK
It

will be a pity that you do not put on your favorite clothes when you love it most, nor taste the cake and French fries when it is the most delicious which just like that you do not do the things when you would most like to do and should do above all.
Hold

the freshness, hold the passion and hold that feeling. Act immediately when it is the time to insist, grasp and cherish, such as love and work. Do not wait until everything has been different. With the passage of time, the remaining may be endless memories and regret.
The

smart people create the opportunities; less outstanding people grasp the opportunities and the worst people miss the opportunities. A poem says, Tomorrow repeat and repeat. How many tomorrows there are! If waiting for tomorrow all my life, everything will never be done. Enjoy in time and grasp the opportunities in time, by which even if you do not occupy the first, you will not fall behind others.

1.1 DELIVERY IN TIME (DIT)

DIT and automatization are the two major mainstay of Toyotas competitive advantage. If the customers cannot obtain the products they need in the scheduled time, then the whole management of the enterprise will have problems.

The successful achievement of the goal of delivery in time requires the joint effort of all cross-functional departments.
In addition, the achievement of the goal of delivery in time also requires the efforts made in all operation stages Even if the products of the company have high quality with low cost, but the right delivery cannot be made in time, then all efforts will be wasted.

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(6.3) MANAGERIAL WISDOM: ON TIME

Three men went to the railway station together, but when they arrived, the train down the south had already gone away. Although disappointed, they had no idea but to wait for the next train.

Therefore, the three men went to Railway Restaurant to eat, chat and kill the time. Once opening their mouths, they talked and were in earnest conversation, and forgot the time. When suddenly thinking .The time for train arriving at is out, they hurried to grab their baggage and rushed to the platform of the train.
At that time, the train was slowly starting, then the three men hurried to catch up the train that had slowly driven away along the platform. Among them, the two people in front did not take their baggage, so they were faster and finally they jumped the last carriage.
11

(6.3) MANAGERIAL WISDOM CONT.

However, the third man did not catch up with the train because the baggage was heavy and run relatively slowly. He had no choice except to see his two friends go away with the train! Suddenly, the man who did not catch up with the train could not help laughing crazily! What is up? You did not catch the train, why laugh? The ticket officer asked, puzzled. The two friends rushing into the train were to send me off! Remark

For delivery, like taking the train, the key is on time. If the goods cannot be shipped on time, just as that one does not arrive at the railway station, the difference may be only one minute later, but the goal cannot be achieved, and all the preparation before this can be wasted.

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(6.4) MANAGERIAL WISDOM: FAST DELIVERY, RAPID

BUSINESS GROWTH

In the 1980s, Citigroup translated to the mainstay in the banking sector from a small role in mortgage and lending bank. In 1982, the mortgage payment issued by Citigroup was only 750 million US dollars.

However, it increased to 14.8 billion US dollars in 1987. Although the loan amount of Citigroup only accounted for 3.3% of the total amount of US mortgage loans, it was 37% higher than that of its closest competitor H.F. Ahmanson.
How did it do to grow by nearly twenty times in just six years? Traditionally, in the United States, the application for a loan can be completed for about 45 days.

13

(6.4) MANAGERIAL WISDOM CONT.

During the 45 days, borrowers have great pressure and the period is uncertain; Citibank takes the measure to reduce the time for review greatly, guarantee the completion of review within fifteen days, and coordinate with other promotional activities to increase its volume of business significantly.

Remark

Modern managers must do what they could to reduce the waiting time of customers to enhance the competitiveness of enterprises. No one wants to waste much time on waiting no matter for repairing cars, eating, buying tickets or paying.

14

DELIVERY IN TIME (DIT)

The most important for delivery in time is the required time or speed for transporting goods or the completion of service, and to deliver on time at the scheduled time or to deliver goods in advance when the customers need. Long waiting time is usually the main reason for customer dissatisfaction. All of the companies are often equipped with planning and coordination offices, which take charge in the coordination of matters of cross-functional departments, mainly are responsible for the coordination of quality, cost and delivery in time. One quality, cost and delivery in time feedback forum should be held at least per month to track and review the work progress of various departments, hoping that delivery in time can be guaranteed.

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(6.5) MANAGERIAL WISDOM:

IT IS EASY TO EXAMINE OTHERS BUT DIFFICULT TO MAKE SELF-EXAMINATION

Zhang : Lao Wang, Li and Lin are really wasting time! Si : Why? Zhang : They played mahjong all the night and went to bed until the day broke. Si : How do you know? Zhang : I just watched a whole night!

Remark When you use one finger to blame others, another three fingers (not four fingers) pointing to yourself, so do not only blame others.

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(6.6) MANAGERIAL WISDOM: SERVICE ATTITUDE

DETERMINES THE FUTURE OF COMPANIES AND INDIVIDUALS

One day, a customer who would like to book flight tickets was dissatisfied with the attitude of the waitresses, so she called to complain to the general manager of the company. Customer: General Manager, do you know that the attitude of service workers in your company is awfully bad? General Manager: It should not be! Customer: Well, you pretend yourself to be a customer and give a call to know it? The General Manager considered it to be good, then he called and wanted to have a try. As expected, the attitude of that service worker was really bad, so the General Manager was angry.

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(6.6) MANAGERIAL WISDOM CONT.

General Manager : Do you know who I am? How do you dare to say like this? Service worker : How do I know who you are? General Manager: I am the General Manager of our Company! Service worker: I got it! So you are General Manager! Then do you know who I am? General Manage: I do not know! Service worker: Fortunately, you do not know! Then the service worker hung up the phone quickly.

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REMARK

The enterprise managers who know how to make fortune must have a deep understanding that it provides oneself with convenience and profits if you provide the customers with convenience and benefits. Only in this way can customers keep on coming because long- standing customers are the source of the maximum profits for most of the enterprises. In an enterprise, the front-line to face the customers is service workers who may hold in the lowest position but the most important. Once the customer is offended, then the dissatisfaction of the customer may become his complaints which may spread from one to ten, ten to one hundred and then the businesses of the company are reduced a lot. Customers foremost! For service industry, it requires special attention

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REMARK CONT.

According to the survey of Scandinavian Airlines (SAS), the average time of a customer for contacting with the counter is about 15 seconds,. The 15 seconds is the key to determine the success of an enterprise because the impression of the service on the customer within the 15 seconds often decides whether the customer will come back again or not.
Smile, greeting and asking the information politely are the right attitude of the counter service workers. Seizing the 15 seconds means holding the future of the enterprise and individuals. How can banks, post offices and supermarket counters be cautious?
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REMARK CONT.

Traditionally, for hundreds of years, enterprise organizations attach importance to lower costs, while the requirements for high quality in recent decades have become the common pursuit standard that must be achieved among the top competitors. However, today the speed to send the products to the users within the shortest time has become the source of competitive advantage to distinguish the winners and losers.

21

(6.7) MANAGERIAL WISDOM:

GRASP THE OPPORTUNITY IN TIME
Two salesmen found a new company who is decorated on their way to have lunch. One of the salesmen thought, I should have a good talk whether there is an opportunity for trade after having lunch.

However, another salesman did not think for a second but stepped into the dirty work place, and chatted with people guiding the construction, and finally made a big deal.

The first salesman said to himself with a respectful tone, Ah! It is due to my bad luck only the time for a meal making the difference!

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REMARK

The winners and losers actually have the same hardship.

The

winners spend a lot of time and energy on continuously trying, and trying again while the losers often spend a lot of time in dodgy excuses for escaping from failure. The winners invest their wisdom in the attempt of pursuing of success while losers waste their wisdom in the causes of interpretation of the failure.

Is your time used to make efforts to try or to find excuses?

Losing a

few minutes, what you lost may not only be the time but often the opportunity and profits.
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DELIVERY IN TIME

This is an era stressing speed. In the past, you can receive the quickest possible reply in a week after sending off a letter. In the era of using fax machine, it is expected to receive the reply in the next day. However, in the era of present network real-time transmitting and communication, when they send you E-mail, they expected to receive the response within one hour.

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(6.8) MANAGERIAL WISDOM: IMPORTANCE AND URGENCY

Once, a little girl asked Yu Youren, the primary leader of Komin Party, whether he put his long white beard inside the quilt or outside the quilt when he slept. Yu Youren had never even thought of this problem. He thought for a moment and answered, I do not know. After returning home, he was still thinking about this matter. Finally when it was time to go to bed, he put on the bed quilt and could not identified whether he put his beard inside or outside the bed quilt when he was sleeping. Several days later, Yu Youren had insomnia. However, he eventually found out that sometimes his beard was put outside the quilt while sometimes was inside, and it was not necessarily the same. Such worries caused his insomnia for several days. People like Yu Youren can have insomnia for several days for the things that should not be cared about, not to mention the ordinary people.

25

REMARK

Do we really know the importance and urgency of the big and tiny things in our daily life? Many people use a long time to deal with small things, and when the time is running out, he worries that the time is not enough to handle many big things. Entrepreneurs have to deal with so many events every day, if time planning is not done carefully and things are not completed according to the importance and urgency, there may be many events handled in haste which will incur a very serious loss to enterprise. In addition, worrying about those problems in fact is useless. Everything should be solved with your brain but not anxiety. Others such as anger, tension, fighting and arguing also cannot solve the problems. Solving the problems relies on calm thought, decision-making and communication.

26

DELIVERY IN TIME

Time basic competition is to reduce the waiting time of the customers, the strategy of reducing all the time required by the delivery of the goods or service, the time to meet the needs of customers, namely, the view that time is money.

This chapter emphasizes that delivery in time is the same as low cost and high quality, and should be highly reputed and valued by the managers in business

27

(6.9)MANAGERIAL WISDOM: TIME IS MONEY

Imagine

that there is a bank depositing US$86,400 in your account every morning, but the daily account balance cannot be carried forward to tomorrow, and once the time for settlement arrives, the bank will delete the payment in full amount that you do not use in that day.
In

such case, how would you do? Surely, the best option is to withdraw in full amount leaving nothing. You must know that everyone of us has such a bank, whose name is TIME.
Every

morning, Time Bank always automatically deposits 86,400 seconds into your account; every day it will automatically write off the time you waste in that day and no time can be carried forward to tomorrow, nor can you withdraw in advance for a moment.

28

(6.9)MANAGERIAL WISDOM CONT.

If you do not properly use these deposits, the loss should be taken by oneself. If you want to experience the value of a millisecond, you can ask a player who missed the gold medal in 100 meters. If you want to experience the value of a second, you can ask the lucky one who barely escaped with his life. If you want to experience the value of a minute, you can ask a traveler who missed the train. If you want to experience the value of an hour, you can ask a pair of lovers waiting to meet. If you want to experience the value of a week, you can ask an editor of a periodic weekly. If you want to experience the value of a month, you can ask a mother giving premature birth unfortunately.

29

REMARK
Time is money, which is a well-known proverb. This article uses the creative ways to encourage people to make good use of time.

Maybe not all of the transplanted seedlings can be harvested, but it can be certain that there is no harvest in the future if the seedlings are not transplanted at present.

So it is not too late as long as everything has a beginning. At present you are the seeder of time, then some day you will become the reaper of time.

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DELIVERY IN TIME
The principles for taking charge in or controlling delivery in time are: If it is not the important project, the phone call can be used to track. For general tracking, under comparing estimated schedule and actual progress, the progress can be known in writing. If it is the important and key project (For details refer to 80/20 Rule and ABC)

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(6.10) MANAGERIAL WISDOM: SET PRIORITIES OF

THINGS

Once a farmer went to the fields at dawn. when he sat on the tractor, he found that there is no gasoline for starting the machine, so he go to buy gasoline at nearby gas station. On the way to the gas station, he remember that he didnt feed pigs yet, so he came back home in a hurry. As soon as he went by the warehouse, he found that potato sprouts too long and he was very anxious, so he want to deal with it at once.
When he was pulling sprouts of potatoes, he thought about no enough woods for the stove in the living room, so he went back for it. When he went to living room with woods, he saw cock seems ill. So he put down the woods but found it doesnt matter. He then went back to living room. The farmer eventually clear up the woods and then he thought: Im exhausted today. But he found what he should do is went to the field, however the sun had set down.

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REMARK

Time is a kind of free wealth and everyone have the same. It is also one of the most precious things that we have but it cannot be replaceable.

Time will be lost away if we cant make use of or hardly use it.
On the contrary, we can solve main problems to reduce pressure if we make effective arrangement. And we can develop a successful and positive way of living.
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1.2 JUST IN TIME MANAGEMENT

Just In Time management is proposed by Toyota in Japan and which has been popularly used in Japan even many top 1000 America incorporations are trying to carry out Just In Time management. The concept of Just In Time management means only necessary parts and quality be in site which is also known as Zero Inventory management which is different from the traditional way that all the spare parts stored in the warehouse and be distributed according to actual production. Just In Time management is similar with buying goods in a supermarket where you just buy what you need

34

JUST IN TIME MANAGEMENT

Traditional ways of manufacturing (conveyer) is a passive way by pushing. Assembly and parts delivered by suppliers is checked after recording and is taken for use in a warehouse. It is a stream of manufacturing process from upstream to downstream.

Just In Time management adopt an active way of pulling.

This way is from downstream to upstream and the upstream supplying necessary parts. Production order is sent according to demand of the next work process. Only necessary items is produced and no items will be in stock even no storehouse is needed.

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(6.11) MANAGERIAL WISDOM: REVERSE THINKING

a.

Research of Michigan University Institute indicate prove that staff who make whistling and singling during work have much lower efficiency than those who complain all day long. Staffs who are not satisfactory with the work or company, they will do most of job. The general life insurance system is carried out by paying a monthly premium by the insured. The beneficiary will get the money after the insured passing away. An insurance company in Japan do the different way. He pays 1.7 million yen as security deposit. He can receive 17,000 yen after 3 years and another 40,000-50,000 yen his extra bonus. He can receive bonus until the insured pass away and then the insurance company will stop to pay for it. the event at last.

b.

36

(6.11) MANAGERIAL WISDOM CONT.

A story about Golden Fingers in Japan. A beneficiary of the insured died at young age and his family members keep one of his fingers in a frozen chamber and prevent from decay. They didnt declare for death. His family receive insurance benefit by this finger until he is118 years old. The insurance company discovered

C. Zoo animals in general is fixed in a cage for visiting, such as Taipei's Zoo. While Liu Wild Animal Zoo is a man locked up in the car, and let the animals freedom on the grass, which is a kind of reverse thinking.

Remark Reverse thinking can disclose deeper philosophy and facts. Complaining staff was usually considered as uncooperative people. However, they conversely did more job the others after research. They afforded to achieve the companys mission and work in earnest.

37

JUST IN TIME MANAGEMENT

The practice is opposite with way from up to downstream which can be seen as a typical example of reverse thinking. Some people conclude it as Go against the historical traditional. It is different from traditional way of up-to-down circulation. Reverse thinking can disclose deeper philosophy and facts.

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TABLE 6.1 INVENTORY TURNOVER TIMES OF ENTERPRISES

IN

USA AND JAPAN Japan

11.9 times

Industry
Car industry

U.S.A
5.6 times

Automobile parts industry

Home products industry Electronic industry

3.9 times

11.3 times

3.7 times

6.5 times

3.2 times

6.0 times
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TABLE 6.2 COMPARISONS OF DIFFERENT PURCHASING

WAY IN

USA AND JAPAN

Number of factories Few parts supplier and only one suppliers More parts supplier and it is supplied separately

Japan

U.S.A

The distance Delivery between Way of time supplier and covenant purchaser Parts Short distance Long-term supplier can contract and reduce time close of delivery cooperation relationship Takes too Long distance One-year much time contract and for reducing no further of delivery cooperation time

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JUST IN TIME MANAGEMENT

Just In Time Management is known as the best way of production. However, it is not applicable for all of enterprises. We must assure that all satellite plants or parts suppliers produce perfect parts and assemblies and delivered to each production line of companies in time. Zero-inventory may have more advantages than disadvantages. Its better to adopt MRP system or ERP system (See next section) which is computerized management and more benefit can be obtained.

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(6.12)MANAGERIAL WISDOM :
BUSINESS OPPORTUNITIES
A

devoted mother go to worship with his children, a vendor is selling ice-cream with sound horn and pass by when they are worshipping. The child wanted to eat very much and cried for her mother for money.
The

mother just ignored her at first but the child just cried without a pause. The mother cant stand her and said to her: May I buy it for you after worship?

The children still argued for ice-cream and said: No. later the vendor will go away, but you can worship for Buddha, because it is still there.

42

REMARK

Its important to grasp opportunities or business opportunities.

Everything has its priority order. You can never let opportunities pass you if you make priority order in advance.

As a saying of Chairman Mao goes: All time is no time when it is past.

43

44

SECTION 2. MATERIAL REQUIREMENT PLANNING AND ENTERPRISE RESOURCE PLANNING

45

(6.13)MANAGERIAL WISDOM: MAKE GOOD PREPARATIONS ALL THE TIME

Once a policeman worked for more than 30 years in his position. He was promoted from a policeman to police officer until he retired.
He

never engaged in any arm robbery and never started a gun.

On the day before his retirement, he saw someone who was robbing a bank and then he pull out a gun. Unfortunately, the man also had a gun and he shoot him to death.
He

was dead just the day before his retirement because the gun he had without any bullet inside.
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REMARK
Train

an army for a thousand days to use it just for one day. Managers should always make full preparation for positions and work.
Any

small details may make great impact on the company.

As

in the case of horse racing, the first winner can get double reward of the second. Horse of first winner is not faster one time than horse of the second winner, just for a distance of one nose.
Good

preparations of normal time will make great difference at a vital moment.

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2.1 MATERIAL REQUIREMENT PLANNING (MRP)

Material Requirement Planning is implemented mainly by using of MPS, BOM, IM and outstanding orders not computer calculation to get material requisition. At the same time, you can get to know time of purchasing, suggestions and practical skills used for order adjustment. The system aims to avoid long-term and large qualities of inventory before making production of parts and assemblies.

The procedures for decisions of amount of purchasing is explained as follows:

a) Materials, implementation of the project (Material Requirement Planning, MRP) is the use of master production schedule (MPS)
48

MATERIAL REQUIREMENT PLANNING CONT.

b) Bill of material(BOM)

c) Inventory master (IM) and the outstanding orders, etc., via "computing" d) Learned all kinds of dependencies materials demand conditions

Material Requirement Plan on the implementation of the company, the requisitions for the implementation of the materials under the program, the computer system's outputs or results (see Figure 6.2). The difference between the time that hundreds of massive raw materials and spare parts entering the library is great. Some are ordered in local places which may cost about several hours to served. Some are ordered from abroad, and it may cost about several months
49

MRP SYSTEM ARCHITECTURE

50

DECISION PROCESSES OF PURCHASING AMOUNT

1.

Master Production Schedule MPS

MPS data of demand forecasting, sales plans, customer orders.

2.

Bill Of Material (BOM)

BOM stands for structure of material for determination of standard amounts of a finished product needed, compared with actual demanding materials.

3.

Item Master (IM)

IM shows storage data of all finished products, semi-finishproducts, raw materials and materials.

4.

Outstanding orders:

Delivery time of order by manufacturers for orders issued, such as parts in transportation.

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(6.14) MANAGERIAL WISDOM : MOVE THE OFFICE TO

THE SIDE OF STOVE

General manager Lai BO in Zi-Lu Chocolate Company is entrepreneur who can change ideas of his subordinate by decisive actions without any empty preaching. Once a day, he went to his factory for inspection. He found that the temperature processing zone on the third floor is hotter than stoves and the workers were working there with sweat.

He asked the plant manager: Why no air conditioner installed on the third floor? The director said this problem only can be solved after budget and approval.
52

(6.14) MANAGERIAL WISDOM CONT.

The general manager thought so and he called the maintenance staff and asked them go to the third floor and said: Please move office desks and documents of plant manager to the third floor at once.

Then he said to the plant manager: You first work here now and move back after the air conditioner is installed.

Remark

Managers should seek ways to be successful and do not look for reasons of failure.
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DECISION PROCESSES OF PURCHASING AMOUNT CONT.

The main function of MRP is to reduce delayed materials for the purpose of control of material inventory amount. MPS decides how many tables and meals for each table and menus before a banquet . BOM is the total number of raw materials, say scale of fish, shrimp, meat, fruits, vegetables etc. IM means the current inventory in a refrigerator, freezer or storage house. MRP has become a basic management infrastructure in production management of modern factories.

54

(6.15)MANAGERIAL WISDOM:3 RIGHTS IN PURCHASING

3R

in purchasing:
1. 2. 3.

Right quality Right cost Right delivery

Remark
Right

delivery can be classified in the following types:

Right quantity Right time Right place Right service Right source

With Right quality and Right cost collectively named as 7R which are top 7 important items considered in purchasing and also important subjects of making contract. Each time when we sign sales contract we must check whether this 7R is included or big trouble will be caused.

55

2.2 ENTERPRISE RESOURCE PLANNING (ERP)

2.2.1 Introduction
ERP is a set of finance accounting guided information system for meeting needs of customer order including purchasing, financing, production, source needed for inventory and sales business. ERP can make effective integration and planning for the purpose of improving business performance and reducing cost. ERP includes all data needed in all management functions of enterprises, such as all kinds of information system. E-commerce and supplying chain management is based on ERP system

56

ENTERPRISE RESOURCE PLANNING CONT.

Enterprises may become difficult in operation without ERP system.

ERP is a computerized information system runs through enterprises which integrates all kinds of information of different department and providing a centralized database, single application system and single usage interface.
ERP is a set of computerized software package designed on the basis of the best practical process in benchmark enterprises of industries which integrates information on various departments within the enterprise so that operating information can be provided to decision makers as a basis after calculation and communication.

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2.2.2

Features of ERP

ERP systems is applied to many different parts of the computer modules and each modules is interconnected and have the following features:
1. 2.

3.
4.

The integration systems and its accuracy. In time of information Fast respond Saving costs

58

SECTION 3. 80/20 RULE AND ABC MANAGEMENT METHODS

59

(6.16) MANAGERIAL WISDOM: 80% OF WEALTH

BELONGS TO

20% OF PEOPLE

The annual Human Development Report released by United Nations on September 9th,1998 showed much data on serious rich-poor gap. 20% of people from High-income countries whose consumption accounts for 60% of the world's output and services. On the contrary, 20% of the worlds poorest people whose consumption on account for 1.3% of the whole world. The report also pointed out that the world's three richest individuals had more money than gross domestic product (GDP) of the poorest 48 countries of the world. The world's 15 richest individuals is is whose property worth more than GDP of the all of sub-Saharan African countries. The 32 richest people of the world is the one whose property worth more than total GDP of South Asian countries.

60

3.1. 80/20 RULE

80/20 rule, also known as Pareto rule or key points analysis (key management). Uilfredo Pareto is an Italian scholar and he has found that 20% of people owns 80% of income in national income statistics, so he proposed Pareto Rule or Law of the Vital few.

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THE EXAMPLE OF 80/20 RULE

80% of work is completed within 20% of time in daily work, managers spend a lot of time in cars, airplanes or drive out for eating. You will go to restaurant (about 20% of nearby restaurants) which you are familiar with for dinner. While 80% of your orders accounts for 20% of all the dishes and will not order different dishes for each time. 80% of time you see 20% of shortcomings of the other. The top 20% of salesman account for 80% of whole business of the company.

62

(6.17) MANAGERIAL WISDOM: ONLY SEE TREES,

NOT THE WHOLE FOREST
A professor

came to the classroom and draws a dark spot on the whiteboard. He asked the class: "What is this?" Everyone answered in unison: "A black spot." The teacher asked in surprises: "Only one black spot? You didnt see such a large whiteboard?"
Remark
When

one goes into a forest, he often sees individual trees but not the whole forest. When one looks up and he only see clouds, without seeing the blue sky. At the beach, People only see waves not seeing the whole sea. There are too many managers who could only see "point" and not "line" or "entirety not "General", so they always think in a narrow way.

63

80/20 RULE

80/20 rule is the key to master law of rules and priority. Completion of 20% of the daily important means completion of 80% of work. Each manager may do things on the basis of 80/20 rule every day and work in order of priority. If there is no order of priority (which determines what to do in advance), people will make mistakes, things will be delayed even company will suffer heavy losses.

64

3.2 ABC MANAGEMENT METHOD CONT.

ABC Management Method is 80/20 rule in practical use of management. The application is as follows Take manufacturing plant as an example, if the total amount of purchasing all the stock (materials) is 100%, and the sum of all the is 100% (see Figure 6.3 and Table 6.3).

65

ABC MANAGEMENT METHOD CONT.

a)

In general, the commonly used high value inventory (materials) takes the majority of the total amount of its inventory (about 70%), but the proportion of its items only about 10%, this is classified as A category.

b)

The low value inventory takes 10% of total amounts, but the portion of project is as high as 65% or more, this is classified as C category. B category takes 20% of total amounts (value) and 20% of items respectively between the two categories.
66

c)

67

ABC MANAGEMENT METHOD

70 % 65 %

25 %
20 % 10 % Value Item 10 %

Item

Item

Value

Value

68

(6.18) MANAGERIAL WISDOM: ABSORB THE MOST

IMPORTANT PRINCIPLE OF LIFE WHEN YOU ARE STILL YOUNG

In the class, a professor first put a jar on the table and then take some fist-sized stones from the table which can just go into the jar. The professor then put most of these stones into the jar and asked the students: "Is this jar full?" "Yes!" students answered in union. "Really?" Professor said with a smile, and then took out a bag of gravel from the bottom of the table. He fell it down to the jar and shake, add some more and then shake. he asked the students class: "How about this time now?" This time, only one student whispered with shy: "Perhaps not yet full! "Very good!" The professor took another bag of sand and then slowly poured into the jar and asked after completion: "Now you tell me if the jar is full or not full?"

69

(6.18) MANAGERIAL WISDOM CONT

"Not full!" This time his students answered in confidence.

"Excellent! Very good!" The professor once again praised his students. After praising them, the professor took a large bottle of water and pour it into the jar which appears full by fist-sized stones, small gravel and sand. The professor asked sternly :"What inspiration can you learn from above?" Class get into a silence. The professor smiled and said: You dont have chance to throw big stones into the jar if you firstly fill the jar with small gravel and sand. So have you ever think what is your big stone in your life?

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REMARK

Education in Taiwan often only teaches the students how to study well for a good school, but few teach them how to spend a worthwhile life and what is the most important principle of life (large stone or core value). In other words, most people will put in small gravel sand and water (bits and pieces) to fill the jar (of life), but few people really know the importance of "first putting into the most important stone into the jar". Maybe you should think over before go to bed tonight or at other quiet time this issue: "What is the big stone in my life?"
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ABC MANAGEMENT METHOD CONT.

a)

ABC Management Methods of purchasing are as follows: Category A is the most important items of materials (Vital few).

It should be purchased periodically by managers from manufacturers.

b)

"Economic order methods" (see Figure 6.4) is applied in purchasing of category B materials.

It should be conducted by team leaders and supervisors. Purchasing at the minimum total cost and purchasing quantity according to the sum of total order(purchasing) cost and stock (possession) cost.

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TOTAL COST OF ECONOMIC ORDER

73

TOTAL COST OF ECONOMIC ORDER

1.

Order (purchasing) cost:

If the salary of procurement staff and procurement managers, the cost of post and telecommunications cost and time cost of accounting staff are the same in treatment and procedures, a large quantity means low cost; Quantity increase with decrease in orders.

2.

Stock (possession) Cost:

calculated by average stock amount to total annual cost, such as capital cost, depreciation cost, storage costs, handling costs, outdated risks, insurance, taxes, lost, and damage cost.

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TOTAL COST OF ECONOMIC ORDER CONT.

3. Category C belongs to the most unimportant materials (trivial

many). Two-bin system would be applicable. (see Figure 6.5): they shall be purchased by "buyer".

For example, two reel of tissue papers in toilet and another will be opened after finishing one reel. And then another reel of paper will immediately be put there in case no papers be used for emergency. However, for many kinds of low price products such as screws, nuts, stationery, etc., two bin system is appropriate.

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(6.19) MANAGERIAL WISDOM: CARPET WEAR AND

UPDATING

-80/20 RULE

Georgia Co. Ltd is a carpet supplier which only sells carpet in the past; now it will rent carpet which is a piece of bonding carpet, rather than a whole piece of carpet. Georgia's deeply understand that 80% of wear and tear appears in 20% of area. Wear and tear only exist in a particular place. Usually most of areas is good and perfect and do not need to be replaced by new one. In rental plans of Georgia, carpet with wear or damage on it will be replace by a new piece on there. The whole carpet always looks like new.
76

REMARK

Just-for-wear area, it looks like a new carpet! Why replace the whole carpet? And you can save 80% of expense, that is application of 80/20 rule.

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ABC

management can also be used on sales management of customer with assuming:

1. 2. 3.

Category A is customers with business transactions in the year. Category B is customers without business transactions in the year or customers failed to make deals with them. Category C is customers obtain from business directories, exhibitions to vendor information, from the newspapers or Yellow page.

Sales department then can use the strategy as:

1. 2.

3.

Strive to expand transaction with A category customer, Enhance category B customers for category A customers, Enhance category C customers for category B, which will be the goal of sales department.
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(6.20)MANAGERIAL WISDOM:
HAPPINESS LIES IN YOUR MINDS
A young woman went to a Chinese medicine clinic. She had several days without meal and sleep, therefore she was out physical fatigue and loss weight increasingly.

After

observation of her vein and tongue, the old Chinese medicine doctor said: You have lot of anguish in your mind there is no serious illness.
The

young woman was very happy after hearing his words and began to talk all her troubles. old Chinese medicine doctor also asked her some other things: How is your love from your husband?
The

young woman said with her eyes blazed with glory: I have a boy and a girl. They are both very smart and thoughtful.
The Old

Chinese doctor asked: Does your crop reduce every year?

79

(6.20)MANAGERIAL WISDOM CONT.

woman shook her head, said: No! Ive get good harvest in consecutive three years!
Young

young woman said with smile: He loves me very much and never be angry with me in decade of marriage.
The Old

Chinese medicine doctor asked: Do you have children?

After

asking these questions, the old Chinese medicine doctor put two piece of paper filled with words in front of the young woman.
On

one paper written her distress and the other for her happiness.

said to the young woman: You just put a few (20%) worried things too seriously (80%), and has neglected most of the joy around you!
He

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Remark
Most

things in life is not very smooth is wrong, but many persons take it as a truth.
They Life

just take 20% of unhappy things too seriously (80%).

should be like this: 99 of 100 things are happy things.

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SECTION 4. TIME MANAGEMENT

82

(6.21)MANAGERIAL WISDOM: ALWAYS EARLY FOR 10

MINUTES
Managers

should always be early for 10 minutes for a meeting so that you can wait at your ease.
You

may rush for time if you are in a hurry and you may even not have any time for a rest.
Be

early for 10 minutes for school, work and appointment and then you can control all things. Bernard Shaw said: A year has 365 days, 24 hours a day, while there are 12 hours are night time, so you have 183 working days left except 182 days.
George

Except 52 Sundays and 52 Saturdays, you have 79 days left for working.

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(6.21) MANAGERIAL WISDOM CONT.

And

then except about four hours for meals and TV time each day, divided by total 24 hours of one year is 60 days, and you have 19 days left for working after deduction. Except 8 days or national holiday and 10 days of Annual leave, you can only work today.

Therefore, you must hold on today!

Remark
Early

for 10 minutes shows that you take your time and pay much respect to others and you have good self-control. What George Bernard Shaw says may not be a fact but it still very reasonable. Life is very short and time you can spend in your study and work is very limited. So do not miss the precious day in a year.

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TIME MANAGEMENT

The most important resource in ones life is time. Peter Drucker said:

Time is the most shortage resources in the world, unless well managed, otherwise nothing you can achieve.

Those who can control their time to complete things are master, host and pleasure managers of time. The key to success is learn how to effectively manage your time.
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TIME MANAGEMENT CONT.

Time Management is increasingly become an important factor that influence the competitive advantage of a company. The skills of time management are directly and obviously interconnected with productivity of managers and success of enterprises.

Time management means skills of accomplish things in the shortest time that is to yield twice with half efforts.
Time is one of the most valuable resources to managers.
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(6.22)MANAGERIAL WISDOM: TIME IS VALUELESS

Li Bai (the most famous poet in China) once said that: Time is just like a passing guest of ones life.

Remark

The ancient people once said that: An inch of time is an inch of gold, but you can't buy that inch of time with an inch of gold. The saying tell us time is very precious in the world. Now people said that:
Time

is money, efficiency is life. Time is closely interconnected with efficiency. It seems that time is plentiful but lost time is never found again.
87

Time is the most precious resource.

REMARK
One or a company can accomplish nothing if no time is available.
You

can learn ways of time analysis on time management of this section. Besides that, it purposed to make you know about your understandings on time management and you can also learn how to manage time by time management system and improving skills.

In addition, time management skill is very effective which can reduce your pressure and enhance your productivity, you can also learn about ways of doing things at ease.
This

section mainly focus on time analysis, time planning, implementation and control and explain ways of time management by it.
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4.1 TIME ANALYSIS AND PLANNING

The first step for successful time management is to know about how you spend your time. If you work for a long time indicating bad time management and the working efficiency is definitely low. People dont really know how their time is wasted unless they start to analyze the actual time schedule of daily working records and then they understand the importance of time management.

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(6.23)MANAGERIAL WISDOM: HOLD ON NOW

American Management Consultant Eder Blice ever said: "Yesterday is a canceled check, tomorrow is a promissory note, today is cash in hand, and therefore you should understand that today is the only day that we can make use of!
Remark

For

any people, time is money and life. The best way to make use of time efficiently and manage time is to plan your time. You will eventually find surprisingly that most busy people often have most of time because these managers grasp the most important key to success: that is time management.
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4.1.1 DAILY WORK RECORD TABLE WHICH

RECORDS DAILY WORKS
Daily work record table is to record the works of every 30 minutes to track your daily Activities. These records can make you understand how you use your time. Make daily record and give track of time in a month. Record things you do every 30 minutes in a whole day. Its may be tedious but you remember what actually you did just now.

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4.1.2 ASSESSMENT OF TIME USAGE

1)

Check daily work record sheet and how much time you spend on things of high priority (HP). How much time spent on things of low priority (LP)? How do you spend most of your time?

2)

Most time Expenses (MT).

Not enough Time (NT).

3)

4)

Whats your daily interference? Whats make you didnt finish things you want to do? How to avoid interference of those things?
What kind of work can be delegated (D) by others? Some administrative work and who you can assign you work to?
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5)

6)

How much time does your boss (B) spare you? And how about your subordinate(S). How much do others not in your department control your time? How much time can you control by yourself? How to save much more time for yourself?

7)

Whats the crisis(C)? How does the crisis result from? For what you did or what you didnt do? is there any possibility of another crises? How can you avoid these crises? Do you have any plans to cope with crisis? Is there any habit, mold or tendency that does good or bad for your business? How to change it into advantages?
Make a list of top 3-5 things that waste most time. Ask for yourself: how to manage your time effectively? An effective managers live now but they concentrate their eyes on the future.
93

8)

9)

10)

11)

4.2 IMPLEMENTATION OF TIME MANAGEMENT: ESTABLISH A TIME MANAGEMENT SYSTEM

Properly manage your time will increase trust from subordinates. The time management system has been proved effective by many managers and the efficiency of which is very high. Time management systems may improve the individual's work performance, and every manager should spend one month to make record and analysis.

94

(6.24)MANAGERIAL WISDOM:
IMPLEMENTATION OF TIME MANAGEMENT
a greedy businessman consult the God: Great God, millions of years have passed away. What kind of definition do you give on time in your eyes? Millions of years is just like a second in my eyes. Answered the God. How about billions of dollars in your eyes? asked the businessman. Hundreds of millions of dollars is just a penny for me. Answered the God. Thus, the businessman kneeling on the ground and beg that: The Almighty God, ah! Please pity me a poor man and give that penny. Yes, Ill give you a penny. Businessmen are wild with joy and want to turn away at once. God then added: Ill give to you after one second.
Once 95

Remark

The

opportunity of delusion of something for nothing, such as lottery, gambling, fraud, etc., is very rare.
Only

by practical hardworking and step by step you will achieve fruitful results.

96

4.2.1 FIVE IMPORTANT FACTORS OF TIME

MANAGEMENT SYSTEMS
1)

Priority: we do not have enough time to do all the things, but we can spend time to do things that is important firstly.

Urgent things 1
Vital things

Not urgent things 2

3
Not important things

97

2)

Delegation:

An effective manager should know how to assign normal and daily work to his subordinate and what he needs to cope with is primary and non-daily tasks. Refer to appendix table 6.2 for details and you can learn much from it.

3)

Objective: managers should develop daily objective, weekly objective, monthly objective and yearly objective. Planning: managers should develop operational plan for the achievement of target. Schedules:

4)

5)

you can make full use of planning chart such as Gantt chart or PERT diagram to carry out arrangements. You must develop schedules for a day and each week.

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4.2.2 TIME MANAGEMENT SYSTEM AIMS TO

DEVELOP EXPECTED WORKING PLAN

a) Tomorrows itinerary schedule:

You should make scheduled working list of next day before leaving for work which may takes you 10 to 20 minutes. The trick is as follow:

1.
2. 3. 4.

5.

Plenty of time Concentrate on doing one thing Performing tasks at prime time Try to arrange time for contingent event Do not execute tasks before the priority is decided

99

b). Make schedule of next week by working plans of next week (table 6.7)

Make planning on tasks of next week on Fridays (20 minutes is needed) of every week. Make priority of these tasks and divided into three types: high priority, medium priority and low priority (daily tasks). All tasks of high priority must be dealt with in scheduled time and other things not necessary may be extended to next week. The last two columns of the table is time spend and scheduled time which may decided on actual conditions.

100

c. Make schedule on tasks of next week according to working schedule of next week

Working schedule helps you complete target of next week properly and do it when you are making plans. You should arrange things not controlled firstly and add some necessary meetings. Things under control should goes last. Managers should spare 50% of time to deal with unexpected events.

101

4.3 CONTROL OF TIME MANAGEMENT

The core of time management lies in you know exactly when to do things in correct time. Make comparison of plans and schedules.

That means your time is spent on things not important if the two are not coordinated with each other.

Time management system is successful by a set of system for checking.

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(6.25) MANAGERIAL WISDOM:

ATTENDING CLASS AS SCHEDULE
The

first U.S. president George Washington often held banquets for members of Congress in White House during his office.
He

started banquets on schedule regardless of persons not present even if only him.
Remark
Many

people are not on time. Its very important to be on time wherever you are. Punctuality stands for your respect to others and is what reputation of individuals and cooperation lies in.
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APPENDIX TABLE 6.1 SENSITIVITY ANALYSIS TABLE(3 MINUTES)

ITEMS
I spent about 15 minutes on independent thinking and planning and other issues on my work I make clear and written target for myself and define the completion time I formulate working plans of each week and an item of the table is listed on the basis of priority. I try to accomplish the most important tasks immediately I fully understand 80/20 principle and take it as a guidance of doing things I make flexible time schedules in case of any emergency I try to assign tasks to others

WHAT I DO? A B C D

A A

B B

C C

D D

A A A A A A A

B B B B B B B

C C C C C C C

D D D D D D D
104

I deal with a copy of document for just one time

Eat less for lunch avoiding nod in the afternoon

I try to stop normal interference(guest, meeting, and phone call) from work I refuse requirements or requests that may take my time or influence

END OF CHAPTER 6

105