Just In Time (JIT)

Just-in-time (JIT) is best defined as an inventory strategy that exists to improve a business’s return on investment by reducing in-process inventory and associated carrying costs. To meet the JIT objectives, the process relies on signals that are known as Kanban. These signals tell production when to make the next part. When JIT is implemented correctly, it can improve an organization’s: return on investment, quality, and efficiency.

The key elements of JIT, and the techniques for achieving JIT, are:
• Load leveling – This technique involves determining appropriate quantities and types of products needed in a given day to meet the customers orders. This allows organizations to produce products with a variety of customer specifications each day, in a smooth sequence that minimizes inventory and delay.
• Production Sequencing – This involves calculating the pattern for making each product type in the required amount for any given day.
• Kanban – Often referred to as the “nervous system” of lean production, kanban is a key technique that determines the processes of production quantities, and in doing so, facilitates JIT production and ordering systems. Kanban’s “pull” system creates greater flexibility on the production floor, so the organization only produces what is ordered.

Kanban (signals) are a critical part of the Just-in-time system. Therefore, it is important when implementing the kanban system, to focus on four important “rules”.
1. Kanban works from upstream to downstream in the production process (i.e., starting with the customer order). At each step, only as many parts are withdrawn as the kanban instructs, helping ensure that only what is ordered is made. The necessary parts in a given step always accompanies the kanban to ensure visual control.
2. The upstream processes only produce what has been withdrawn. This includes only producing items in the sequence in which the kanban are received, and only producing the number indicated on the kanban.
3. Only products that are 100 percent defect-free continue on through the production line. In this way, each step uncovers and then corrects the defects that are found, before any more can be produced.
4. The number of kanban should be decreased over time. Minimizing the total number of kanban is the best way to uncover areas of needed improvement. By constantly reducing the total number of kanban, continuous improvement is facilitated by concurrently reducing the overall level of stock in production.

Once the just-in-time and kanban systems are in place the benefits that are realized are:
• Reduced setup time – Cutting setup time allows the company to reduce or eliminate inventory for “changeover” time. The tool used here is single-minute exchange of dies (SMED).
• The flow of goods from warehouse to shelves improves – Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management.
• Employees with multiple skills are used more efficiently – Having employees trained to work on different parts of the process allows companies to move workers where they are needed.
• Production scheduling and work hour consistency synchronized with demand – If there is no demand for a product at the time, it is not made. This saves the company money, either by not having to pay workers overtime or by having them focus on other work or participate in training.
• Increase emphasis on supplier relationships – A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important.
• Supplies come in at regular intervals throughout the production day – Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time. When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced.
• Eliminates over production – Overproduction affects the environment by increasing the number of products that must be scrapped/discarded as waste; increasing the amount of raw materials used in production; increasing the amount of energy/emissions/wastes that are generated by the processing of the unneeded output.

JIT also has its share of drawbacks as well.
• Can result in more frequent runs for parts/materials
• May not succeed in reducing/eliminating overproduction
• Overproduction can cause damaged goods and inventory storage space.

The philosophy behind JIT is simple: The just-in-time system is the planned elimination of all waste and continuous improvement of productivity, with the objective of producing the right part in the right place at the right time. Waste results from any activity that adds cost without adding value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty production methods that create products requiring subsequent rework.

By: April

References:
http://www.epa.gov/lean/thinking/kanban.htm
http://www.strategosinc.com/just_in_time.htm
http://smallbusiness.dnb.com/manage/finances/12375503-1.html
http://en.wikipedia.org/wiki/Just-in-time_(business)

Capability Maturity Model Integration (CMMI)

Or how I learned to love continuous process improvement.

At first glance, the name looks like someone, or a group, simply grabbed four words, slapped them together to form a new idea.

The first point is to get our brains around the name. Relating the name to processes, the idea is created for continuous improvement using mature models of a process to improve quality and potentially reduce costs.
One hypothesis is since it was ‘founded’ at Carnegie Mellon, the acronym for CMMI was a tip of the hat to Carnegie Mellon Institute. It is a registered service mark with the Software Engineering Institute (SEI) at Carnegie Mellon University in Pittsburgh, PA..

Breaking down the name…

Capability = able to do something;
Maturity = seasoned, aged, more developed;
Model = a representation, standard or example;
Integration = bringing all ingredients together.

Roughly translating, a seasoned and well thought example of how to do something that is repeatable and efficient using a model or best practices, and those involved learn from their mistakes or successes, constantly evolving or maturing the process which in turn improves quality, reduces costs, etc..

It is a methodology of continuous process improvement and apparently is a standard similar to ISO 9001 (i). The difference being that ISO 9001 sets a minimum standard of quality and CMMI a means to continually improve the development cycle (ii).

From the SEI/CMMI website, ‘CMMI is a process improvement approach that provides organizations with the essential elements of effective processes that ultimately improve their performance. CMMI can be used to guide process improvement across a project, a division, or an entire organization. (iii) Processes are identifiable actions or steps to an end or goal within organizations. Having a process that is poorly defined, insufficiently detailed, unrealistic or any other of a number issues, means the process will be flawed. CMMI helps eliminate those issues. ‘While process is often described as a node of the process-people-technology triad, it can also be considered the “glue” that ties the triad together. (iv)

How does it help? CMMI uses ‘maturity’ stages or layers to identify the age and wisdom of a process or organization. Those layers are initial, managed, defined, quantitatively managed and optimizing. No one step can be skipped to achieve varying levels of maturity.

• Initial- Process(es) that are poorly defined, unreliable and in many cases consistently over budget.
• Managed- Process(es) are still basic but planned and more refined. Some basic measurements and requirements are established.
• Defined- Processes are now defined with specific and generic goals. Further, processes are standardized for consistency throughout the organization.
• Quantitatively managed- Processes now have statistical, quantitative and qualitative measurements for process enhancement, improvement and control.
• Optimizing- Processes are now in focus with continual improvements using the various previously established methods of control, statistical measurements and methods.

Gleaned from a previous class, this is reminiscent of Bruce Tuckman’s ‘Forming, Storming, Norming, Performing’ of group development. Where the ‘initial’ and ‘managed’ phases may be represented by the ‘forming’ phase of a group. ‘Defined’ is represented as ‘storming.’ Layer 4, ‘quantitatively managed’ represents ‘norming.’ And the last layer of ‘performing’ is ‘optimizing.’ At each level, the group/process is sharpened and better organized.

One difference though is CMMI requires organizations utilizing various processes, big or small, to be certified or ‘recognized’ at different levels. Much like using a whetstone to hone a knife as a process is ‘sharpened,’ the process is identified at a certain stage until ‘level 5’ is achieved.

Using the CMMI models (currently V1.2) there are three areas for process improvement also known as ‘constellations.’ Those are 1) development, 2) services, and 3) acquisitions. ‘CMMI models are collections of best practices that you can compare to your organization’s best practices and guide improvement to your processes. (vi)

CMMI-DEV- Deals with development organizations and processes like software.
CMMI-SVC- Relatively new offering for service oriented industries, but similar mature models and best practices for the service industry.
CMMI-ACQ- Refers to models improving processes related to solution acquisitions. Improves control of projects and processes to meet the needs of an organization.

For greater detail and to drive down in the detail of CMMI, please see http://www.sei.cmu.edu/reports/06tr008.pdf

Within all of these is a framework. This framework provides the structure which includes models, manuals and training to build the previously mentioned constellations. This framework also helps identify the levels of maturity. For more detail of this framework and the varying levels at which a process is ‘mature,’ please visit http://en.wikipedia.org/wiki/Capability_Maturity_Model_Integration.

Bottom line, when you see CMMI, think continuous process improvement, at any level and almost any size organization.

By: TD

i http://searchsoftwarequality.techtarget.com/sDefinition/0,,sid92_gci930057,00.html
ii http://searchsoftwarequality.techtarget.com/sDefinition/0,,sid92_gci930057,00.html
iii http://www.sei.cmu.edu/cmmi/index.cfm
iv http://www.sei.cmu.edu/library/assets/cmmi-overview071.pdf page 7
v http://en.wikipedia.org/wiki/Forming,_storming,_norming_and_performing
vi http://www.sei.cmu.edu/cmmi/index.cfm

Lean Six Sigma

The base of both Lean and Six Sigma flash back to the time when the greatest pressure for quality and speed were in the manufacturing of goods. Lean climbed as a method for optimizing automotive manufacturing; Six Sigma was developed as a quality initiative to eliminate defects by reducing variation in processes in the semiconductor industry.

In short, what sets Lean Six Sigma apart from its individual components is the recognition that you cannot just improve quality or just improve speed. You need the balanced processes that can help an organization to focus on improving service quality, as defined by the customer within a set time limit.

Six Sigma is a business management strategy realized by Motorola Corporation in 1981. With Six Sigma the goal is to reduce process variation statistically.

Lean is the practice of breaking down processes to the minimum required to be productive while also eliminating non-value added waste. Basically the bloated processes lose weight, or become “lean”. Lean is usually employed by determining and visually mapping the flow of processes, flowcharts can be used. Lean is often employed in five distinct steps—identify value, define value streams, determine flow, define pull, and improve process.

Lean Six Sigma is a business process improvement technique that maximizes value by achieving the speediest rate of improvement in customer satisfaction, cost, quality, process speed, and invested capital. The fusion of Lean and Six Sigma improvement methods is required because:
• Lean cannot bring a process under statistical control
• Six Sigma alone cannot dramatically improve process speed or reduce invested capital
• Both enable the reduction of the cost and reduction of the complexity of business processes. A lean process is a less complex process.

I conducted a brief interview of a classmate who has a foundational knowledge of lean, six sigma, and lean six sigma. I will allow my source to remain anonymous. This is her thoughts.

Lean—“power to the workers”

She explained that with lean the process improvement teams often get the best improvement results by surveying those who actually perform the work in the path of the process. Those with the hands-on knowledge of the flow usually know what is broken and sometimes have improvement ideas that can be included in the BPI plans.

Six Sigma—“solely based on data”

She explained that Six Sigma used alone in BPI initiatives will be focused on data gathering and data analyzing.

Lean Six Sigma—“gives you more tools to work with”

The combination of two seemingly disparate methodologies can prove to solve A BPI initiative from all the angles required to reach genuine and measurable improvement.

One of these tools that will help standardize BPI across a business or organization is DMAIC. I have been discussing Business Process Improvement in the posting for over a dozen paragraphs now, so I was overdue to introduce another complex acronym. Please allow me to define DMAIC.

Define the problem
Measure the key aspects of the current process and collect relevant date.
Analyze the data to investigate and verify cause-and-effect relationships.
Improve the current process based upon data analysis
Control the future state process to ensure that any deviations from target are corrected before they result in defects.

One could write an entire book and hold graduate courses on the use of DMAIC. There are also countless other tools to use with DMAIC. The book ‘The Lean Six Sigma Pocket Toolbook” introduces DMAIC on page one with the well written and inspiring sentence that follows:

The structure of DMAIC encourages creative thinking within boundaries such as keeping the basic process, product, or service.

The book ‘The Lean Six Sigma Pocket Toolbook” also recognizes that some processes are to badly broken ….

From the book—If your process is so badly broken that you need to start from scratch or if you are designing a new product, service, or process, use Design for Lean Six Sigma (DMEDI)

As an outsider researching Lean Six Sigma I have found that using these techniques as a combined BPI toolkit makes a lot of sense and can be very powerful the hands of skilled and dedicated teams. Although, there are purists on both sides of the Lean vs. Six Sigma debate those claims their way is the only way to improve business processes.

I will close by saying that Lean Six Sigma as it has evolved from the two methodologies is very powerful and is logical to use each for its strengths. Use Lean for improved process flow. Use Six Sigma to reduce process variation.

By: Greg

References:
1. http://en.wikipedia.org/wiki/Six_Sigma
2. http://www.articlesbase.com/business-articles/lean-versus-six-sigma-whats-the-controversy-what-the-difference-595677.html
3. http://www.armyobt.army.mil/
4. Interview with IEM Classmate.
5. George, Rowlands, Price, Maxey (2005). “The Lean Six Sigma Pocket Toolbook”, McGraw-Hill Companies

Kaizen

I’m very interested in process improvement concepts. I was somewhat familiar with Lean Six Sigma and other methodologies, but had never heard of Kaizen. So I took this as an opportunity to learn about a new methodology.

Origin
Kaizen was introduced to us by the Japanese just after World War II when Japan’s economy was struggling. But over the last 30 years has gained momentum in the United States, appearing first in the west with Japanese car manufacturers.

It originates from the words represented below – loosely translated, means continuous improvement.

About the Kiazen methodology:
– It is based on the concept that everything can be improved.
– It encourages looking at a current process, whether broken or not, and assessing that process for improvement.
– It is people driven. To ensure success, the process should be embraced by employees, provoking a spirit of collaboration, bringing about improvements internally from within the organization by the people who participate in the workflow. Every worker is encouraged to make small suggestions in support of improvements.
– Its focus is on small incremental changes, always working toward improvement.

Eastern –vs- Western Philosophies
Perhaps one of the things that make Kaizen successful is the eastern philosophy that ALL people are important to the success or failure of the business. Traditional western management styles dictate a divide among staff by work type. Managers are seen as the leaders and the decision makers. They are often removed from the actual workers who are in a better position to provide them with ways to improve a certain process. Or at the very least, inform them of inefficiencies in a process.

The western management style is often, “if it ain’t broke, don’t fix it”. A style that is reactive rather than proactive. Changes are only implemented for reasons that impact the bottom line in a positive way. You almost never see the boss unless something is wrong. This has a negative effect on staff, it fosters negative behaviors, such as employees waiting to be told what to do, instead of acting on their own and feeling empowered to perform their job. I’ve taken the table below from one of my resources, Graphic Products, Inc. I believe it illustrates the differences in the 2 philosophies quite well.

Benefits
Research suggests that where Kaizen methodologies are properly implemented, unexpected results occur. Managers become better leaders, service line staff become better employees and the whole organization becomes more unified, all working toward a common goal. This methodology cultivates an environment of solidarity. But these kinds of realizations are only received by organizations who sincerely seek new, big or small, ideas from all sources.

Toyota, one of the largest automotive manufacturers is a pioneer in Kaizen principles. They claim they received 75,000 suggestions from 7,000 employees – 99% were actually implemented.

Implementing any new process requires change. Change is often difficult to effect in any cultural. According to research, implementing Kaizen principles takes time and dedication, but does produce favorable results when executed properly.

Conclusion
How can you go wrong fostering an environment where every employee is encouraged to look for a way to make a process better?!

In my own personal experience with culture change, it’s important early “in the game” to advertise small wins. Talk about where successes have been realized and what lessons have already been learned and gain some confidence and respect. That goes a long way.

In my research, I found “The 10 Commandments of Improvement” from Gemba Research LLC. They made me think about things with a different perspective. We are such a culture of negative thinking. I like these and plan to use them in future process improvement initiatives.

1. Abandon fixed ideas.
2. Think of ways to make it possible.
3. No excuses needed.
4. Go for the simple solution, not the perfect one.
5. Correct mistakes right away.
6. Use your wits, not your wallet
7. Problems are opportunities.
8. Repeat “why” five times.
9. Seek ideas from many people.
10. There is no end to improvement.

By: Lynn

References:
Gemba Research LLC– http://www.gemba.com
Graphic Products, Inc.– http://www.graphicproducts.com
Army Business Transformation Knowledge Center
Value Based Management- http://www.valuebasedmanagement.net/methods_kaizen.html

The Object Management Group (OMG)

Mission:
With our members, to create software standards that improves the process of developing complex applications while increasing ROI. [4]

The Object Management Group (OMG) was founded in 1989; it is a non-profit, open membership, international consortium in the computer industry. The Chairman and CEO is Richard Soley, President and COO Bill Hoffman and Vice President and Technical Director Andrew Watson are all part of the leadership team at OMG (view diagram below). Funded by its members, [9] OMG provides specifications and has over 800 companies as members. [3] The membership in The Object Management Group ranges from half being software end-users and the other encompass nearly every large corporation in the computer industry today. OMG’s concept of one-organization-one-vote gives every organization (whether big or small) the right and the privilege to be involved in the object management group’s process.

OMG has forces design to develop modeling and integration standards for a wide range of industries and technologies including: Real-time, Embedded and Specialized Systems, Analysis and Design, Architecture-Driven Modernization and Middleware and an even wider range of industries, like: Business Modeling and Integration, C4I for Military and Crisis Response, Finance, Government, Healthcare, Regulatory Compliance, Life Sciences Research, Knowledge Management, Software Assurance, Manufacturing Technology, Robotics, Software- Based Communications and Space. [2] Once your organization is apart of The Object Management Group, the standards and specification will allow you to sharpening your business processes as you get more involved. These standards are set in place for members to raise awareness of emerging standards and give them the ability to tailor them to fit there business needs. Each organization in OMG has the ability to contribute and benefits from the group’s open process when it comes to setting standards, return on investment and mainly building on networking with the group.

The Group has several specifications combine to form a foundation and framework for multi-platform enterprise interoperability that covers the full software lifecycle, allowing organizations to leverage their IT assets and maximize their return on software investment. [4] At this level these specifications can be produced by either the vendors as products or by the people that will actually use the software (the end user). These specifications are defined and maintain by OMG members and tools have been built to conform to them. [8] The efforts have been the result of some key milestones in OMG’s history since 1989.

So how can The Object Management Group benefit you or your organization if you were to join? Ideally OMG standards are designed to work in any organization and its design to survive constant changing technology advancements and middleware. [5] With some of the Group’s open standards, it allows you to integrate at any point of the process to help advance your end results. OMG gives its members the opportunity to work to improve your current business needs with other industry experts. I have listed some more advantages of becoming a member of the group and the benefits of their meetings:

Benefits (Business/Marketing and Technical)
• Strengthen business network through the development of partnerships: At OMG meetings you’re given a platform to meet other end users, vendors and implementers in your industry that will single handed help you keep a balance on your view and what others are doing.
• Gain Recognition: A good way to grow your business is to gain recognition on a nation level. In which OMG awards their members for their hard work and dedication for upholding the group’s processes.
• Access to Industry Experts: Having direct access to industry-leading experts within OMG’s networks is something that’s second to none. Through collaborations and relationships your able to enhance your operations from some one else knowledge of best practices in multiple domains.
• Become apart of the Technology Adoption Process: All of the OMG specifications – and all of OMG’s Domain specifications – are adopted at the Technical Meetings held four times each year at various locations worldwide. By participating in OMG meetings, you and your company will influence future OMG standards and the direction of the next-generation products that implement them, attain competitive advantages, and acquire a significant head start in developing your own implementation of adopted specifications. Current members often comment that attendance at a single OMG meeting carries more value than a full year’s worth of reading magazines and reports. [1]

In conclusion, The Object Management Group has assisted many different companies with the challenges of evolving technology. The models that the group generates put companies in a position where they can really focus on what actually processes work for them and those that don’t. After Microsoft join the group in 2008 Senior VP Bob Muglia stated that modeling not only provide understanding of what happens in business but it allows you to focus on what happens in the real world and how to use that data. [7] So OMG is very important in business process.

By: Eugene

References
[1] http://www.omg.org
[2] http://www.omg.org/memberservices/OMG-Introduction.pdf
[3] http://en.wikipedia.org/wiki/Object_Management_Group
[4] http://www.omg.org/memberservices/OMG_Backgrounder.pdf
[5] http://www.ibm.com/developerworks/library/ar-bamda/
[6] http://www.microsoft.com/presspass/press/2008/sep08/09-10OMGModelingPR.mspx
[7] http://searchsoa.techtarget.com/news/article/0,289142,sid26_gci1329605,00.html
[8] Daniel Minoli Enterprise Architecture A to Z
[9] http://se-radio.net/podcast/2008-08/episode-107-andrew-watson-omg

Corporate Governance

What is Corporate Governance? As defined by Wikipedia.com corporate governance is “the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed.” Corporate Governance is also defined as the framework of rules and practices to ensure the accountability, fairness, and transparency of a corporation (or company) to its stakeholders (www.businessdictionary.com). Basically we can simply define corporate governance as the guidelines in which a corporation is managed or controlled.

Corporate Governance has been in existence from the beginning of the establishment of publically owned businesses. This was a measure implemented by the government to ensure fairness to stakeholders, proper legal control of the firm’s faineances, and a means of implementing an ethical environment. When we speak of publically owned corporations we are referring to businesses whose shares (or stocks) are publically traded, usually through Wall Street, where the shareholders are entitled to portion of the firm’s profit, and also responsible for the firm’s debts. These shareholders include customers, management, employees, government and the community (www.businessdictionary.com).

Who is responsible for creating and regulating the guidelines of Corporate Governance? The Board of Directors of the corporation. This is a regulate body of stakeholders who are responsible for overseeing and monitoring the overall activities of the corporation. Every organization has its own method for determining who is to serve on its board. Some firms elect their board member while other appoints their board members. Typical duties of boards of directors include:

• governing the organization by establishing broad policies and objectives;
• selecting, appointing, supporting and reviewing the performance of the chief executive;
• ensuring the availability of adequate financial resources;
• approving annual budgets;
• accounting to the stakeholders for the organization’s performance (http://en.wikipedia.org/wiki/Corporate_governance)

Although every corporation is structured differently and the guideline by which they follow are written differently, there are key principles which every organization should follow. Some key principles include:

• Honestly, integrity, trust and ethical behavior
• Openness, disclosure and transparency
• Responsibility and accountability of the Board of Directors
• Code of Conduct

With such detailed regulation, accountability standards and guidelines in place there should never be any issues where corporate governance is concerned. However, greed of money, power, and control are factors that no guideline or law can truly control. Three example of how corporate governance failed due to individual deception to the corporation’s board of directors – Enron, WorldCom and HealthSouth.

Enron was formed from the merger of Houston Natural Gas and InterNorth, two large energy companies. Kenneth Lay, the founder, Former Chairman and CEO along with is Chief Financial Officer and other executives falsified financial documents and hid important financial information from the company’s board of director. However, after years of deceitfulness the lies of these executives caught up with them. In October of 2001 it was revealed that Enron was not the profitable business as it claimed to be but in debt by over $500 Million! How in the world can anyone hide $500 Million? – Poor auditing practices and no checks-and-balances procedures.

WorldCom, now known as MCI, Inc., is another example of how poor accountability, auditing policies and corporate governance lead to the downfall of a major corporation. WorldCom, a telecommunication company was one of the largest in America. In the late 1990’s and early 2000’s the growth in telecommunication industry began to slow down. The CEO, Barnard Ebbers, convinced the board of directors to give him a $400 million personal loan to cover some personal finance endeavors. After that major mistake, the board naively took to word of the CFO, Scott Sullivan; Controller, David Myers; and General Accounting Director, Buford Yates in accepting reports where they falsely presented financial growth and stock profit.

Last example of how an individual’s greed can make corporate governance guideline fail is the HealthSouth Scandal. Richard Scrushy, the founder and CEO of HealthSouth falsely reported company’s earnings in the sum of $1.4 billion. However, Scrushy did not act alone. He worked with other executives to pull this scandal off. Here it is again a large corporation with corporate governance in place but what good is it to have such guidelines when scandals such as these still taking place.

The issues with Corporate Governance are: standards are rapidly changing and the old standards are no longer working, company trust has diminished greatly and must be re-established, conflict of interest of the CEO must be dealt with as well as accountability conflict of staff, breach of board of directors and management concern in shareholders’ interest, and passive, non-independent board of directors made up of member selected by the CEO or chairman of the board.

One means to control such corrupted behavior is legislator implemented the Sarbanes-Oxley Act of 2002. After the Enron and WorldCom and other major corporate scandals, Senator Paul Sarbanes and US Representative Michael Oxley enacted a US federal law to enhance or set new legislative standards for all US public company boards, management and public accountants. Sarbanes-Oxley contains 11 titles that describe specific mandate and requirements for financial reports. They are:

1. Public Company Accounting Oversight Board
2. Auditor Independence
3. Corporate Responsibility
4. Enhance Financial Disclosure
5. Analyst Conflict of Interest
6. Commission Resources and Authority
7. Studies and Reports
8. Corporate and Criminal Fraud Accountability
9. White Collar Crime Penalty Enhancement
10. Corporate Tax Return
11. Corporate Fraud Accountability

The Sarbanes-Oxley Act is a great way to address the weakness of corporate governance, but as the article, Issues in Corporate Governance, state there are three basic necessities to ensure financial stability: 1) sound leadership at the firm level which includes effective risk management and internal control; 2) strong prudential regulation and supervision to ensure that markets operate in a fair, transparent, and efficient manner, and the participants comply with the rules; and 3) effective market discipline (Current Issues in Economics and Finance, September/October 2002). As author Jorge E. Guerra says in his article, The Sarbanes-Oxley Act and Evolution of Corporate Governance, accountability is the key to the success of corporate governance. Guerra states “The corporate governance process must be reengineered into one that guarantees performance excellence by management and the board of directors when performing their agency duties as trustees of shareholder confidence.” I agree. It starts are the top – the board of directors and management. If there is accountability at the top there is no way a corporation should fail.

By: Tamecia

References
1. http://www.businessdictionary.com
2. http://en.wikipedia.org/wiki/Corporate_governance
3. http://www.nysscpa.org/cpajournal/2004/304/perspectives/nv5.htm
4. http://people.wku.edu/brian.goff/corpgove.pdf
5. http://www.globalchange.com/corporategovernance.htm
6. http://www.corporatenarc.com/enronscandal3.php
7. http://www.associatedcontent.com/article/162656/worldcom_scandal_a_look_back_at_one.html