Tooling applications supervisor Ernie Buford, for example, is the Smith employee most directly involved with the tool dispensing machine and its inventory. The relationship between the company and its tool supplier requires flexibility on both sides. By letting the company hold on longer to the price of each of these tools, this seemingly simple procedural change improves the cost efficiency of Smith’s process. Smith Tool is not required to pay for any CBN tool until a Smith employee draws it out of the machine. It qualifies as the tool supplier’s branch office because the supplier owns the machine and all of the cutting tools inside. That “branch office” is the tool dispensing machine shown in Figure 3.
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