Operations and Supply Chain Management The Core

14 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
SOLUTION
The first step is to get comparable data on Honda. One Web site that has these data is, again, www
.aol.com/stock-quotes/. Hyperlink to this site using your browser and then enter HMC in the “AOL
Quotes” block at the top of the page. Then, from the menu next to the stock price quote, select “Key
Ratios” and then “Full Key Ratios Data.” Finally, select the “Efficiency Ratios” tab to see the measures.
Check to see that you have the correct data.
Example data for Honda on the date this chapter was written is added to the data from exhibit 1.5
as follows:
A COMPARISON OF AUTOMOBILE COMPANIES
EFFICIENCY MEASURE TOYOTA (TM) FORD (F) GENERAL MOTORS (GM) HONDA (HMC)
Days sales outstanding 30.76 140.79 76.43 70.73
Days inventory 35.72 26.65 35.41 44.97
Payables period 39.78 61.95 73.71 38.82
Cash conversion cycle 26.70 105.48 38.13 76.88
Receivables turnover 5.09 2.59 4.78 5.16
Inventory turnover 10.09 13.70 10.31 8.12
Asset turnover 0.59 0.63 0.67 0.75
Next, we need to try to understand the data. Starting with cash conversion cycle time, Toyota is
the winner. Toyota does an outstanding job matching supply to demand by getting paid quickly by
dealers, which is reflected in days sales outstanding. It also pays its suppliers quickly, compared to
Ford and General Motors.
On Ford is strongest in inventory turn. This is surprising since we might expect Toyota to be
strong here, given its reputation in managing inventory. It is interesting to see how Ford is weakest in
receivables turnover, which may relate to the amount of credit it is giving customers in order to sell
vehicles. In asset turnover Honda is the best, with a highest value indicating that it makes great use
of the company assets.
•
CAREERS IN OPERATIONS AND SUPPLY CHAIN
MANAGEMENT
LO1–3 Know the
potential career
opportunities in
operations and
supply chain
management.
So what do people who pursue careers in OSCM do? Quite simply, they specialize in
managing the planning, production, and distribution of goods and services. Jobs abound
for people who can do this well since every organization is dependent on effective performance
of this fundamental activity for its long-term success.
It is interesting to contrast entry-level jobs in OSCM to marketing and finance jobs.
Many marketing entry-level jobs focus on actually selling products or managing the sales
of products. These individuals are out on the front line trying to push product to potential
customers. Frequently, a significant part of their income will depend on commissions from
these sales. Entry-level finance (and accounting) jobs are often in large public accounting
firms. These jobs involve working at a desk auditing transactions to ensure the accuracy
of financial statements. Other assignments involve the analysis of transactions to better
understand the costs associated with the business.
Contrast the marketing and finance jobs to OSCM jobs. The operations and supply
chain manager is out working with people to figure out the best way to deliver the goods
and services of the firm. Sure, OSCM people work with the marketing folks, but rather