All 1 entries tagged Margin
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March 09, 2009
Resource Utilization involves planning, coordination and control of industrial processes. To use the resource effectively we need to oversee the production process, predict the production schedule. Take an example in FACS module when we play the Winning Margin game, as a production manager I need Well coordination with purchasing and sales managers to make best use of resource in order to have better control of cash and generate more profit for the company.
In order to produce the right volume of product for the contracts signed from sales manager, I need to foreseen the production process to adjust the machine to produce appropriate products and thus make a suitable schedule. This would ensure there is no empty machine left, minimize wasting of resource. Purchasing manager needs to request right unit of raw material, he/she needs to coordinate with production manager to make sure minimal resource is unused and left in the inventory.
Bad coordination with sales manager may cause increase in unsold goods in inventory or insufficient product produced, which cannot generate maximal profit but also take occupation of cash. Bad coordination with purchasing manager may cause inefficient production or inefficient use of cash. If request more than production capability, unused material would be placed in the warehouse that means the resource is not used efficiently, in the contrast, less request may cause machines be left empty, ended up with paying the fixed cost without producing which is also a kind of waste.
In reality, Resource Utilization also needs to take care of time, quality, costs and customer satisfaction of products. As the rules in Winning Margin, we don't need to worry about these factors but if product is produced not in time or with bad quality, or the production cost is too high, it will directly impact on the sales. In large companies, if want to fully use the resource, they also need to deal with people, in order to maximize people's working potential.