Ms._Sharmistha

FIFO & LIFO are methods used in cost of goods sold calculation. Or they can also be said as methods of managing inventory. Before we get further into understanding FIFO & LIFO, let understand what is Inventory Inventory : It refers to a company's goods in 3 stages of production 1. Goods that are in the form of Raw Materials 2. Goods that are in Production 3. Goods that are finished & ready to Sale Elaborately, the goods that a company has from the beginning added with materials that are purchased to prepare more goods & Subtracted with the goods that the company sold ( COGS: Cost of Goods Sold) , The Result which remains is called Inventory. Inventory Accounting values goods at each production stage and classifies them as Company Assets ( As Inventory can be sold & turned into cash in future ) Therefore Assets of the company need to be properly valued The formula to calculated Inventory : EI ( Ending Inventory ) = Beginning Inventory ( BI) + Net Purchase - Cost Of Goods Sold ( COGS) This accounting method has a direct impact on Key financials, Balance sheet, income statement& statement of cash flows, Therefore, the GAAP( Generally accepted accounting principles) allow Businesses to use one of the accounting methods - LIFO, FIFO & Average Cost. It can also be said that FIFO & LIFO accounting are the methods that are used in managing inventory & financial matter that involve the amount of money a company has to have with the inventory of Raw Material, Parts, Produced Goods, components OR stock LIFO & FIFO are used to manage assumptions of cost to inventory, repurchase of stocks and other various accounting purpose .The equation followed will help determining inventory costing methods FIFO : FIFO stands for First In First Out which means the oldest repository is tracked to have sold First . It can also be said that the cost associated with the inventory that was purchased initially or at the beginning is the cost expensed first. The cost of inventory in FIFO that gets reported in Balance sheer represents the cost of the inventory most recently purchased. It closes resembles the flow on Inventory that reaches first. With FIFO the cost of inventory reported represents the cost of the inventory most recently purchased Example: A supermarket chain would most likely follow a FIFI method of managing inventory to ensure goods with earlier expiration are sold before goods with later expiration dates Lets imagine a company "XYZ" had the below mentioned inventory in stock Number of units Cost 100 units - $100, 150 units- $150, 50 Units - $160 If XYZ company sells 220 units in July, the cost of expense would be First 100 units at $ 100 and remaining 120 units at $ 150. Therefore under FIFO the total cost of sale for July would be $ 28,000 . The ending stock/ inventory would be (30 * $150 ) + (50 *$160) = $ 12500 LIFO : Last in Last out method which assumes last or recent unit that arrive in inventory is sold first.The LIFO method assumes that the most recent products in a company's inventory is sold first and uses those cost instead If the same XYZ company is considered here the 220 units sold incurs the following cost (50 Units * $160 ) + (150 Units * $150 ) + (Remaining 20 Units * $100) = $ 32500 The ending stock/ Inventory would be here 80*$100 = $ 8000 . The Balance sheet here would show $ 8000 under LIFO The difference between the cost of an inventory calculated between LIFO & FIFO is called LIFO reserve. This reserve is the amount by which an entity's taxable income has been deferred by LIFO LIFO Vs FIFO LIFO uses the most recently acquired inventory to value COGS . The left over inventory is extremely old or obsolete. As a Result LIFO does not give an accurate or Up to date value as the valuation is much lower than current price. Also it seems to be unrealistic because companies would not leave their older inventory idle in stock while using recently acquired inventory . LIFO is not a practical method in companies which sells perishable goods which does not reflect the logical production process of using Oldest inventory first Whereas, FIFO can be a good indicator of the value for finishing inventory because the old items have been used up while recently acquired items are basis the current Market price.For majority of the companies, it is the most logical choice as usage of oldest inventory first in production of goods signifies the valuation of COGS that reflects in their production schedule . For LIFO the profits are reduced as compared to FIFO . To sumarize LIFO FIFO Increased COGS Lower COGS Reduced Profits Higher profits Lower tax Liability Higher Tax liability Therefore FIFO seems to be a more logical approach of managing inventory as compared to LIFO

Cynefin Framework was first conceptualised in 1999 by Dave Snowden where Cynefin means "Habitat" in Welsh . It has also be defined as a "Sense Making" device. The idea of Cynefin framework is that it offers Decision makers a "sense of place" from which they view their perceptions. . It helps leaders to understand that every situation is different & would require a unique way of approach to decision making . Cynefine outlines Five situational domains that has Cause & effect relationships . These domains offers a "sense of place" which aids in analysing behaviour & decision making The 5 domains are : 1. Simple : It represents the Known & Knowns. This signifies there are prescribed rules or best practices in place and if we do X ( Input) we expect Y ( Output ) ,results are known. The expectation in this domain is "Sense-Categorise-Respond", which means Establish real facts , formulate and categorise them and then respond by following the rule book Ex: If the customer has made expenses in the credit card & faltered making the minimum due - establish the facts , categorise them and respond by applying rule book or best practices. This domain is more like a governing body like Legal structure , Judge which has defined SOPs, rules Proven track records of past empirical data which helps analyse, forecast or guide . Here decision making lies entirely in the realm of reason 2.Complicated: It represents the Known & UnKnowns. This domain requires analysis or niche expertise as there are range of options of right answers that might come to light. The expectation here is "Sense-Analyse-Respond" and apply good operating process. Here it is important to apply a rationale before coming to a decision , which would require analytical thinking, rationale & justification . This province id of engineers , doctors , AI , lawyers where every complicated problem can be analysed , brainstormed to have a possible sequence of move Ex A motorist may know there is something wrong with his bike because the engine is making strange noise , but he has to take the bike to the mechanic to diagnose the problem . The complex problems requires investigation with several options which may be excellent , good practice or as opposed to best practice may seem to be appropriate 3. Complex: It represents the UnKnown & UnKnowns. There is no right decision in this domain & cause & effect can only be deduced from introspection. The expectation here is "Probe-Sense-Respond". This domain is very un predictive and leaders take intuitive risks that are safe in nature and see how it works or approaches, because the results are unknowns and every situation might change wither ways Ex : Let's take the example of Facebook. The founders could not possibly predict the importance of Community operations and Trust & safety . Facebook breached data protection laws by failing to keep users' personal information secure, allowing Cambridge Analytic-a to harvest the data of up to 87 million people without their consent worldwide while people used facebook. When the situation occurred with respect to Vote polling in US elections and it was claimed to facebook directly influencing US elections . The company built on this pattern of Data privacy policy and reinforced Trust & safety to protect privacy and data collection without consent of user also reinstated the community guidelines 4.Chaotic : In this domain - The cause & effect are unclear . The events are extremely confusing and doesn't have wait to have a systematic knowledge based response . In this domain need of the hour and Action or Any action is the only way to respond appropriately . The expectation here is "Act-Sense-Respond". Act to establish a specific Order , Sense to check where the stability is & Respond to turn chaotic to complex. In this situation a Leader should immediately act on first without trying to find the Root cause , bring the stability and then work on transforming situation and preventing re-occurence in future and discern new avenues Ex : A high level escalation from a high profile customer requires to be be immediately acted upon to curb revenue leakage and PR responsibility. 5. Disorder : This domain also known as Dark domain as there is no clarity about which of the other domains apply . The way out here is to break the problem into smaller parts & align leaders to solve each area assigned to them . Leaders then can take part contextually in appropriate ways to solve the constituent parts assigned to them Therefore Cynefin framework allows people to see things from new avenues , assimilate complex concepts and address real problem & opportunities . Using this approach leaders can learn to define framework with their own examples of past experience & scenarios of possible future. Using this framework people can gauge which situation they are in & they can make better decisions or avoid problems that arise if they continue following their preferred management style .

Supermarket in lean six sigma refers to a predetermined market inventory/storage. It's the location where a predetermined standard inventory is kept to supply downstream process. When any internal or external customer need any item they can retrieve the requisites from the supermarket . The supermarket basis the usage and demand, restocks the supplies .Supermarkets are located near the supplying process in order to have a quick check on customer's buying pattern, usage & requirements . Before we go into further details of Supermarkets, lets understand what is a Three Pull strategy that is often put in use and how supermarket is one of the derivatives from the Three Pull strategies A Pull Process is one where a unit/ workstation starts to work on its next order only when there is an available free slot on the output section . Which means if the demand of any item is high be it from an internal or external customer it would trigger the production of that item . Here the customer pulls order rather than the Push production where items are prepared no matter whats the demand is . The output section is not considered in Push production . In Pull Process the inventories between workstations are managed & it directly influences and maximises the Lead time. The 3 forms of Pull connections are 1. Continuous flow : Products are worked on one by one with maximum inventory of one between workstations 2. Sequential Pull :A fixed quantity is determined & the sequence of product is defined, however a buffer with a defined maximum is allowed between workstations for variance. 3. Replenishment pull: Maximum number of products waiting where which type of product to be used is unknown Supermarket is also known as a replenishment pull system where it manages inventory where variation of parts can be kept without knowing in what order the parts can be taken from the inventory/storage. A customer can take out parts randomly from the supermarket and the supplier replenishes the taken parts after a certain interval. Supermarket can be implemented as connection between process steps when designing a Future state VSM Following are the characteristics of a good Supermarket Supermarkets must have access to wide range of products, which is why they need to be arranged in shelves. A FIFO approach can be followed here where everyone involved can immediately see the state of things.FIFO lanes be implemented when a particular workstation uses different colours and is not aware how many colours they need in a particular day.A Supermarket should contain a FIFO is each lane to help guide which colour used in what quantity for a particular day which in terms will help forecast & strategise production Market location serves an important factor. It is important to help gauge on unit consumption & back it up with demand. Market Locator can be used as a sort of isolator between batch demand spikes & upstream supply .If a market is positioned at loading bay it will automatically receive indications of spikes of demand whenever a truck reaches for loading . So its known in advance when the trucks arrive there is a demand spike over a certain period of time. Thereby designating a location or a marked floor area to be the virtual truck area of moving items from virtual truck smoothly for a chosen period is required in supermarket Products to be placed in plastic boxes , whose size would depend on the size of the material & each box is to be identified with a tag that shows the item details, the supermarket where it is located, supplier & quantity Supermarkets should be located in loops.The sequential operations need to have a similar production pace (Cycle time, Downtime, Changeover time etc.),Have similar requirement of workers ( multi-skilling & multitasking) & hence to be located close to each other The boxes become an indication of Cycle flow & Buffer stock depending on the demand. Each box leaving the supermarket triggers signal for the supplier in multiple forms like Same box needs to be placed . A Kanban card can be put in use to identify when the material goes out and becomes a replenished order and instead of taking out label the whole box can be put in use Thereby supermarket is important as it manages material flow and eliminates waste , it also carries extra items in quantity from a range of a minimum and maximum without interrupting the flow and that results in increase in lead time & associated levels of WIP

What is Obeya Obeya comes from the Japanese word, meaning "Large Rooms" .Obeya is also called as Lean manufacturing tool , where a dedicated room is set aside for employees in the organisation where they can meet , discuss & resolve any issues . The concept behind setting up rooms is to ensure there are no barriers between employees & they can collaborate decide & share information to aid in efficient decision making. An ] Obeya room has far-reaching impacts in the workplace that enhance productivity, save money, increase efficiency, and improve communication. For Example : A company has considered to launch a new Return to office policy , there are series of discussions between different domains required to check on feasibility and Headcount capacity to accomodate whilst adhering to social norms at office , thereby the decision in this Obeya rooms gets formulated as policies and rolled out for larger population in the company. On a need basis Obeya might hosts charts, maps, comparative studies to convey the concerns & requirements , we might also see the usage of whiteboards & other collaborative materials that allow all employees to find solution together or decide upon a certain decision jointly Conceptualisation Obeya came in existence as early as 1990 and the concept was introduced by Toyota during the production of Prius. The then chief Engineer of Toyota Takeshi Uchiyamada who led the Prius project cited that in order to create a new car in such a stringent timeline , he needed to integrate the efforts of diverse experts across different departments - Engineering, Design, Production who would be responsible in the final production of the car. Eventually cross functional teams formed & meeting initiated through Obeya Rooms. The Frequency of number of meeting in Obeya rooms & cross teams collaboration accelerated as the project deadlines approached . Prius remain among the most popular electric vehicle which reached the market a dozen years before competitors , hence the success story drew attention of other business leaders looking to imbibe the best practices from Toyota and have desired outcome. Setting up Obeya Obeya is like a 'ground control' to the lean project mission , hence its becomes extremely crucial to first determine the goal for the project or business strategy before we set up an Obeya room .Obeya rooms bring together different leaders from different departments & be involved in the project . The philosophy behind setting up Obeya is from Lean Where ultimately the end focus is the final product - the results of different specialists working together to create Customer values . Few others facets of an Obeya room include 1. Reports which highlight the problem statement , analysis of the issue, proposed solutions and action plan 2. Charts, Graphs to have a displayed representation of facts & plan strategy to track progress 3.During challenges , visual representation can display proposed solutions. Benefits of Obeya The concept of Obeya is to have all information available to everyone at all times thereby Labelling, signage and visual aid are the key components of an effective Obeya, where the information can be easily understood by all. Thereby Obeya rooms help Organisations to create this value of brining together managers from various functions to solve problems or decide .It gives a clear view of what each team is working, why are they working & how are they mapping the ultimate goal.An Obeya promotes faster & quicker problem solving by speeding up the PDFCA process ( Plan-Do-Check- Act).An Obeya brings togethers Decision makers to implement the PDCA cycle and develop solutions quickly rather than long email chains , communicating over course of days & weeks through arduous meetings. Obeya facilitates effective & timely communication

Project Champion : A project champion is a person who ensure supervision from initiation phase to execution phase. Their role deals with helping project members in completion. From creating a project charter to liaising between stakeholders to map efficacy & thereby help execution. They act as single point of contact between executives responsible executing the project including project managers & senior management . Six Sigma champions set the direction for selecting and deploying projects. They ensure, at a high level, that projects succeed, add value, and fit within the organizational plan. They Translate the company’s vision, mission, goals and metrics to create an organizational deployment plan and identify individual projects. The key responsibilities of Project Champion are : 1. Benchmarks & maps efficacy time to time 2.Modifies project on a need basis 3.Monitors and proposes changes for successful implementation 4.Conducts Risk Management and helps eliminate any risk 5.Does Priority decision making 6.Focuses on continuous improvement while executing a project 7.Reports to Senior Management from time to time Project sponsor: A project sponsor is the person who is ultimately responsible for the project. Among other tasks, the Project Sponsor is the person who: - Signs off on the resources that are needed for the project He is responsible for initiating, ensuring, approving and establishing series of important /key aspects that can sum up to the company's vision. mission, governance & value benefit realization. Project sponsor is also called the owner of the process who represents sponsoring the business unit The key responsibilities of Project Sponsor are : 1. Goal : The Project sponsor should ensure that the Business need is considered & has been prioritized 2.Funding & resources: Securing the funding & resources required for implementing the project 3.Communication: Clearly communicate the aspect & mission of the project with the team & relevant stake holders 4.Scedule: A project sponsor is supposed to have a key maintenance of adhering to the schedule 5.Resolve Issues : There may be situations of decisions in changes and conflicting objectives. The Sponsor takes control of these issues and ensures that they are solved efficiently and effectively 6..Support: Project sponsors provide time to time support in terms of clarification, progress management & guidance Sponsor Vs Champion : Do we need to have separate roles? While apparently we see both the roles are important in initiation of six sigma projects however as per my notion they requisites can be aligned and mapped to one role ie Project Champion. We need not require a separate bandwidth & cost for the role of a Sponsor . The Roles & responsibilities of a Sponsor can easily be aligned with Champion, as Champions are defining, measuring, implementing & executing the entire project & even liaising with stakeholders and senior management from time to time. In general, the need for a separate role is directly proportional to the size of the organization & the project. Project Champion’s role ties well into that of the Project Sponsor, and hence it makes logical sense to have both assumed by the same person in every project and every organization. Champions have in-depth knowledge & are certified MBBs and is well versed to take on responsibilities and map up with the Sponsor's role. Champions translate the company’s vision, mission, goals and metrics to create an organizational deployment plan and identify individual projects and they are aligned till the end where they would have better visibility & understanding and demonstrating the same to Senior Management . Champions would also have the visibility on number of resources & funding required for the project. Rather, they would be in better situations to understand these dynamics and can easily take up this responsibility from Sponsors & execute them Hence I feel the roles can be merged as one .

What is CLV? Customer Lifetime value ( CLV) also well known as Lifetime Customer Value ( LCV ) or Lifetime Value( LTV) is a predictive forecast of the net profit that the business can expect from the lifetime of an existing customer though business relationships . To explain in an elaborative way, it is like a monetary value to customer relationship with the brand/company, where present cost/ value counted vis-a-vis the future revenue that will come into account if the customer continues to maintain loyalty to the brand /company. CLV serves as important aspect to ensure steady cash flows in the company and that can yearn profit for the Organisations . The key aspect to CLV is customer relationships & customer service which can improve the CLVs and thereby increase revenue OR have a recurring revenue in the Organisation Let's take an example to understand the concept a little better . I would like to cite an example from one of my past organisations in Telecom industry For any new acquisition a certain amount of money is spent by the organizations . Let's assume Cost of acquisition here of a particular customer with a Tele communication Service Provider is 500 INR. Here the cost incurred by company are Telecom backend staff cost who ensures validation checks of Distribution of SIMs Runner cost Warehouse Database maintenance cost Background & Address verification team Cost Activation team cost So a company has nearly invested 500 INR for onboarding a particular customer . Now the customer has taken a post paid plan which is a recurring monthly cost of 499 INR for 90 days . Eventually the company gets a revenue turnover of 1497INR which is way more from 500INR which was initially spent on acquisition . Here the customer is judged to be profitable, and acquisition of additional similar customers are acceptable. Likewise its important for the company to retain this customer as this customer in future would yield enhanced revenue.So they have special retention offers from time to time rolled out for high revenue generating customers One of the major focus for telecom is to improve CLV through retention plans & relationships (Ex : Free Netflix , Amazon, Zee+ subscription for 1 year with 599INR recharge or 499 INR post paid plan for 1 year , Birthday wish published on Newspapers for High Value customers , Differentiated customer service for High value customers) In order to further build loyalty, telecom also focuses on conversion of any prepaid customer to postpaid which would yield higher , recurring revenue in future So the crux is , companies need to evaluate, predict the financial forecast of a customer & thereby ensure retention wherever there are high CLV. Higher the CLV, higher the indicator of market fit , higher the brand loyalty & higher the recurring revenue from the existing customer Therefore CLV in Telecom is calculated : Customer acquisition cost multiplied by Customer average recharge frequency or Postpaid plan then finally divided by the Life span of the customer with the company.

Quality Circle is also coined as Quality control circle which is participatory management technique where small circles are formulated who meet up periodically to evaluate the Quality or to solve the problem at hand. The concept came into picture in 1950 and later formalised in 1962 & then widely propagated and further structured by Kaoru Ishikawa. The Quality Circle had 4 steps to identify & solve a problem Plan- Do- Check -Act The concept is existing now with Kaizen and Six Sigma methodologies , as Quality circle have the advantage of continuity & the circle remains intact from project to project The Quality circle used 7 quality tools which are even now in use and helps understand RCAs better and help control and improve Quality Ex : Cause & Effect diagram, Pareto charts. Process Mapping , Graphical tools ( Histogram, frequency diagram, pie charts), Run Charts & Control charts, Scatter plots , Correlation , Flow charts As the aspects of Six Sigma would be Define, Measure, Analyse , Improve, Control for any gaps identified in the existing process & thereby fixation , recovery & control, Likewise from a Quality circle prerogative , now we have separate Process management, Process excellence teams who evaluate quality time to time & thereby try to run simulation and help business to improve efficiency . Few Advantages of Quality Circle 1. Detection of Quality Deviation 2. Acceptance by Customers 3. Timely delivery 4. Improve productivity Hence the concept is even relevant now !!

Standardized Work in LEAN refers to the systematic determination and documentation of work element sequence and process for each operation. It encompasses all the safety and quality aspects required to support employees and customers while identifying waste which can be eliminated to reduce cost and improve productivity. The three elements of standardized work are, 1. Takt Time : It is the Rate at which products must be produced. It is equal to Available production time / Customer Demand (units) 2. Work Sequence : The steps and in order by which employees do the task. 3. Standard Inventory :Minimum quantity of parts and raw materials needed to run operations Standardized work helps organizations by : a) Reducing variation b) Create a flow of work( Structure of work) c) Minimize hazards d) Ensure Continuous improvement Example of a Standardized Work : Order processing in a Electronic shop Sequence of steps : 1. Enter the customer information with full name & Address - ( 1 min) 2. Enter order details : Product details, Payment mode, Warrantee Details, Discounts, EMI options -( 2 min) 3) Retrieve items from stock (1 min) 4) Print invoice & share with customer Total invested time 4 min Inventory : Electronic Items in shop Documentation :: Flow Chart, SOP

The Product portfolio matrix helps to make right product portfolio decisions. The product portfolio matrix also called growth share and BCG matrix. Its a 2 *2 matrix. The horizontal axis of the Matrix denotes the amount of market share of a product and its strength in the particular market. The vertical axis of the Matrix denotes the growth rate of a product and its potential to grow in a particular market. The matrix categorizes products as · Question marks :High Growth, Low Market shares (basically uncertainty) · Stars : High Growth, High Market shares (High competition) · Cash cows :Low growth, high market shares ( most profitable) · Pets (also known as dogs). Low growth, Low market shares (Less profitable) There fore in all categories Question mark, Stars, Cas Cow , Dogs they can be considered for Six sigma of DMAIC & DMADV approach , however Question Marks & Starts become the top priority on account of their huge growth potential , followed by Cash Cows . Dog category can be exempted due to less benefits but high cost involvement

North Star Metric also abbreviated as NSM helps in ensuring companies focus on their growth in the long term during a period of several years of infinity & that can only change if there has been significant change in Companies Mission & Vision . The same can be better understood with the amount of value that the company brings to its customers ( Might be different factors like Improve Productivity, CSAT, NPS , Simplifying products etc), NSM need to be Time bound, Measurable, & should bring in Value proposed to customers The main benefits in Long term of North start are as follows : 1. One Focus One Goal : Entire company has one focus . The different sub teams can have different business metrics to look forward to, however the ultimate focus is One 2. Clarity & Transparency : Everyone can see how well the company is doing. 3. Customer centricity: Amount of value that the company brings to its customers