during the last five years is economic value added (EVA). EVA is simply a way of measuring an operations real profitability. It takes into account the true cost of capital after-tax operation profit minus the total annual cost of capital. Incredibly most corporate groups have looked at the cost of their borrowed capital, but the cost of equity capital that shareholders have contributed appears nowhere in their financial statements. Until managerial accounting this takes this into account so that managers know whether they are covering all their costs and adding value to the company, company managers wont achieve the benefits that have accrued to several companies.1.5Functional Tactics in Production/Operations Management (POM)POM is the core function of every organization. That function converts inputs (raw materials, supplies, machines and people) into value enhanced output. The POM function is most easily associated with manufacturing firms, but it also applies to all other types of businesses. POM tactics must guide decisions regarding:1.The basic nature of the firms POM system, seeking an optimum balance between investment input and production/operations output,2.Location, facilities design, and process planning on a short-term basis.Key Functional Strategies in POMFunctional Strategy - Typical questions that the functional strategy should answerFacilities and EquipmentHow centralized should the facilities be?How integrated should the separate process be?To what extend should further mechanization or automation be pursued? Should size and capacity be oriented toward peak or normal operating levels?PurchasingHow many sources are needed?How should suppliers be selected, and how should relationships with suppliers be managed over time?What level of forward buying (hedging) is appropriate?Operations planning and ControlShould work be scheduled to order or to stock?What level of inventory is appropriate?How should inventory be used (FI...
