Expenditure on Corrective Action
There are various activities being performed that would not have been necessary if the associated information had been clear, concise and valid. The activities include pinpointing of inventory location and accuracy. By knowing the status of inventory, a supplier can plan their supply chain accordingly, lack of which can result in inefficiencies that slow operations and increase costs. The use of redundant processes, like the use of tickets that has to pass through several hands when bar codes can be used to shorten the time and optimization in picking. The establishment of a common route in choosing so as to reduce time spent on the process while moving as well as reduce tear and wear on both goods and the personnel. There is also the issue of having a segmented supply chain processes that may include outsourced operators which may slow down the whole process. The processes need to be consolidated so as to work in harmony and save time by use of appropriate software like the Warehouse Management System (WMS) (Johnston, 2005).
Estimating that the average time spent is a quarter (1/4) hours of the total time taken on an activity per day (8) hours;1/4 ×8=2hrs.That is 2 hours wasted per day if this is to go on for one week then;2×5= 10hrs.This would mean that in a week the time wastage amounts to 10 hours per employee (Johnston, 2005).
The percentage time spent on intervention is; 1/8 of (2×100) =25% hours. This means that 25% of work time is dedicated to intervention per day and week issues (Johnston, 2005).
If the dollar spent on employees per year is $80,000; when the amount spent on intervention is factored in then; 1/4 × $80,000= $20,000 whereby ¼ is the time spent on intervention (Johnston, 2005).
References
Johnston, D. (2005). An investigation of regulatory and voluntary environmental capital expenditures. Journal of Accounting and Public Policy, 24(3), 175-206.