Managing Business Processes Ch 14, 15, 16, 17, 18

Essence of Managing Entrepreneur vs Manager- what is the difference? What are key management functions? Name 3 styles of manager List 7 key skills of good managers

4 Key Management Functions Planning Strategic-LT Tactical-Mid Operational- ST Organizing Grouping resources to reach objectives Directing Guiding and supervising employees Controlling Compare outcomes w/objectives and make change

Effective Management Think of a person who you enjoyed working with/for that is not a relative. Coach, teacher, boss, clubs What did they do to warrant your admiration? – How did they speak to you/others? – What did they ask of you in terms of performance? – Why did you comply?

4 Management Styles Power – Best in large orgs – Best for untrained, inexperienced or crisis Routine – Keeping the process flowing smoothly – Best in large orgs at middle mgt levels Achievement – Seeks out better methods, empowers employees – Best if close to workers who produce, smaller firms Situational – Selecting and changing styles when needed

Time Management Tips Set and prioritize your goals Delegate whenever possible Plan blocks of time to complete specific activities Schedule on a calendar Schedule your most important work for times when you do your best work Group activities for efficiency Eliminate interruptions

8 Management Skills Human Relations: interpersonal skills, considerate, fair, attentive Communication: including nonverbal Networking: build and maintain professional relationships to develop business Math Problem solving Technical skills Time Management Conceptual skills-link details to big picture

Managing Purchasing ( the act of buying) and Inventory (the act of storing) Ch 15

Purchasing=Buying=Procurement Buy “wisely” – large % of revenue (or savings/investment $) are going to be used for purchases of inventory – 50% of revenues in manufacturing account for inventory – 70% of revenues in retail account for inventory – 85% of revenues in wholesale account for inventory!

Managing the Process Choose the right “quality”, “quantity”, “timing” (if prices increase buy more- where to store it? – economy slowing- buy less) Choose the right vendors. Consider: – Reliability: out of stock? Late? – Distance: consider ship costs, customer service – Service: what help do they provide? Return policy? Repairs? Unscheduled deliveries? – Number: 1 should get 70% of business, divide the rest

Price Matters... but Don’t automatically sacrifice quality/reliability/service for lower prices Squeeze out any discounts – Trade discount (as a wholesaler you should get a higher trade discount than retailer, if available) – Quantity discount (like buying a Costco) – Cash discount (for paying in full in a shorter time frame like 10 days) – Also: advance dating –clock starts date in future 2/10 net 30 as of Oct 1 – Extra dating- 2/10 net 30, 60 extra (2/10 starts after 60 days) – End of month – 2/10, net 30 good until Oct 31 – Receipt of goods (ROG)-2/10 net days starts upon delivery

Follow Through You create a Purchase order (send to vendor) – should have full description of each item, cost per unit, # ordered, and full amount (extension) for each item. Shipping, delivery information, Payment terms should also be included. Payment method: secured funds may be requested-ccard, cashier’s check, wire transfer, cash. Over time they may extend credit Vendor gives you an invoice (you verify order) – item, qty, color, size etc

Inventory Management Ideally find what is “just right” – Too little and you lose sales, have to reorder, verify, stock shelves – Too much and it will cost in terms of: Financing to pay for goods Opportunity cost- what else could you do with that $$? Storage-cost of space Insurance-against damages, fire, Shrinkage- loss due to broken, damages, spoiled, theft Obsolescence-no one wants it anymore

How much to order? Inventory Turnover method or Industry Avg (how many times you sell out in a time pd-usually a year) Method #1 : Net Sales Year(Retail dollars) Avg Inventory Month(Retail dollars) Method#2: Cost of Goods Sold Avg Inventory (at Cost) Method #3: # units sold Avg Inventory in Units Calculate Avg Inventory: Value of Inventory for 12 months 12 or (Beg Inv + End Inv)/2 Then determine how many months to keep: 12 months/turnover rate Then, estimate costs of inventory: Cost of goods sold/turnover

Structured Inventory Control Methods Visual Perpetual: as inventory is sold, it is subtracted from control list automatically using technology Partial: perpetual only kept for items with large % of sales Just in time: responsibility rests with vendor who delivers right before use, minimizing inventory control issues Always take a physical count periodically

Warehouse Basics Receiving and shipping docks Bulk storage area-waiting to be broken down Staging area-items are sorted/organized either incoming or outgoing goods Picking rows-shelved goods Assembly areas-order fulfillment Packing areas-boxing/shipping area Management Office and locker areas Periodic and Non-periodic ordering considerations