Article on companies decision and profitability

Question

Write an article on the consequences and affects of companies decison on its profitability.

Answer 1

Almost each and every activity or decision made by a company affects its profitability and success in either way. Similar to supplier selection and location selection, selection of computer-integrated manufacturing (CIM) technologies is also an important part for a company, since these technologies are seen as solutions for offering the best performance simultaneously in all customer-related dimensions. This can be achieved by providing benefits like reduced inventory level, frequent production changes, improved ability of producing complex parts with a high degree accuracy and repeatability, less disruption in production, improved dependability of customers, considerable savings in scrap and rework and many others. Investment into such technologies varies from single pieces of equipment to fully integrated factories and this investment can be in any department varying from design and engineering to administrative department. Yurdakul (2004) had proposed an approach which uses a quantitative/qualitative decision support system, provides weights for the various available CIM alternatives for a company and evaluate each alternative to come up with the best alternative that can enhance the competitive position of the company.

Previous studies have used capital budgeting techniques such as net present value, internal rate of return, etc, for financial analysis of investments into CIM technologies. Multi-attribute decision making (MADM) approaches had been suggested for decision making in strategic considerations. Selection of CIM alternatives is one of the strategic considerations and hence Yurdakul (2004) had employed a combined AHP-GP model to choose the best CIM alternative. Yurdakul (2004) had derived variables and equations using the combined model to fit into this decision-making and succeeded in formulating a model. The same is demonstrated using a case study, which is described as below.

The company in the example was a subcontractor manufacturer to large-size assembly and manufacturing companies from Ankara and belongs to the metal machining operation industry. Its competitive strategy was to customize all customer orders according to their requirements in their design and engineering department through their objectives of reduced order sizes and reduced manufacturing lead times. The company also has objectives of manufacturing a larger range of products, widening its customer base simultaneously maintaining the same quality and price, enhancing the integration and cooperation among its departments as well as its customers and reducing its defect ratios. The company set a target level for each of these aims and evaluated various CIM alternatives ranging from CAD systems to PDM system. Pair wise comparisons were made for the improvement objectives initially using Saaty’s 1-9 scale whose weights were used to calculate the weights of the CIM alternative. The GP model was later included with constraints in initial capital investment limits and acceptable achievement limits. Though there were some problems initially, the variables were refined and finally the solutions were obtained satisfactorily. Though the stand-alone AHP and the combined AHP-GP model gave different results, the management found the combined model to give satisfactory and better realistic results. Besides, this model had flexibility of including new constraints, aspiration levels, and improvement alternatives as well as modifies anything when necessary. Though there were some implementation difficulties, they were overcome and the model was successfully used in choosing one or more CIM alternatives as per the company’s needs.