A SEMINAR
PAPER
BY
MR.
AKINBOLURE FOLORUNSO SAMUE
INTRODUCTION
Resources
is the largest single element of cost and as an efficient system of resources
management lead to a significant economy in the total cost. Resources is as
much cash itself and any theft, waste and excessive use of resources can cause
immediate and direct financial losses. The resources means raw materials components,
sub-assembles and finished products.
Resources
management involves a number of issues like the determination of quantity and
quality, purchasing, store issuing and dispatching. Resources management today
is a distinct area of industrial management and plays a very vital role in
production and productivity.
Resources
management is basically a most important functional area of any organization or
undertaking to achieve the best results so far as profitability is concerned. Resources
management covers a much wider field and
deals with all aspects of materials supply and utilization as well as cost. It
is concerned with the entire rage of functions which affect the flow,
conservation, utilization, quality and cost of materials. It covers that aspect
of industrial management which is concerned with the activities involved in the
acquisition, storage and flow of all resources directly and indirectly employed
in the production and marketing of
finished goods. Resources management should therefore be considered as a
function of prime importance for our economy.
This
study therefore, examines the impact of resources management on the sources of
business organization, the objectives and importance, the functions,
disadvantages of resources management and strategies of ensuring effective
resources management in organization.
MEANING OF RESOURCES
According
to oxford Advanced Learner Dictionary, resources simply means a supply of
something that a country, organization or a person has and can use, especially
to increase their wealth. It is any thing that can help to achieve an aim,
especially a book, equipment e.t.c that provides information for teachers and
students.
Based
on what Longman Dictionary of Contemporary English said, resources can be
defined under the following sub-headings:
(a)
Natural Resources: Something such as land, minerals, or
natural energy that exist in the country and can be used to increase its
wealth.
(b)
Money/Property: All the money, properties, skills that you
have available.
(c)
Personal Qualities: Personal qualities such as courage, and
strong mind, that you need to deal with difficult situations.
In business oriented definition of
resources, it simply means the totality of raw materials, components,
sub-assembles and finished products which an organization or company has at
hand.
There are various types of resources
which exists in any country or an organization. Some of which are:
1.
Natural Resources E.g. oil, gas, minerals
2.
Human Resources E.g. Knowledge of employees
3.
Material Resources E.g. Machine and Buildings
4.
Financial Resources E.g. Money and credit
Before one can actually select the
resources to be used, there are criteria which must be considered. Some of
them are:
1.
The nature of the task to be performed
2.
The availability of the resources to be used
3.
The technical know how of the labour
RESOURCES
MANAGEMENT IN PERSPECTIVES
Mencn (1995) defined resources
management as a total concepts involving organizational structure unifying into
a single responsibility, the systematic flow and control of resources from
identification of the need through customer delivery. Included in this concept
are the resources functions of planning, scheduling, buying, storing, moving
and distributing. These are represented by the discipline of production and
inventory control, purchasing and physical distribution.
Sharma (2000) observed it as a
concept that integrates all the activities of planning, scheduling, and
controlling resources from design through production and including delivery to
the customers. Thus, it establishes full responsibility over the material flow
system with full accountability for quality, delivery and cost.
Carter (1985) states that it an
organizational concept in which a single manager has authority and
responsibility for all the activities principally concerned with the flow of
resources into an organization, which includes purchasing, production,
planning, scheduling, incoming traffic, inventory control, receiving and
storing.
Ammer (1969) defines resources
management as the line of responsibility which begins with the selection of
suppliers and ends when the resources are delivered to its points of uses.
Jhingan (2004) recapitulates
resources management as a total of all these tasks, functions, activities and
routine which concern the transfer of external resources and services into the
organization and the administration of same until they are consumed or used in
the process of production operation or sale. There are differences of emphasis between these
definitions, although, all are concerned with management of resources and all start
with the supplier.
OBJECTIVES
OF RESOURCES MANAGEMENT
Objectives of resources management
are the desires and result. According Menton (1995) the objectives of resources
management includes:
1.
To ensure continuous and un-interrupted production by
maintaining a steady flow of resources
2.
To achieve the above objective in an efficient and economical
manner
3.
To effect economies in the cost of resources by purchasing
resources of right quality in the right quantity at the right time, from the
right source and at the right price.
4.
To effect economies in the cost incurred on the resources
after they have been purchased through storage, processing and warehousing
until the finished goods ultimately reached the customers.
5.
To reduce working capital requirements through proper and scientific
inventory control.
6.
To be alive to changes in the market in respect of new
products.
7.
To improve the quality of manufactured goods by the use of
better resources or components and thereby increase the competitiveness of such
goods put on sale.
8.
To increase the competitiveness of manufactured goods by
reducing their process through the cost reduction and value analysis.
9.
To save foreign exchange through import substitution
economizing on foreign purchases.
10. To ensure cooperation
among all departments of the organization to meet materials management
objectives, both at the corporate and functional levels, and to ensure proper
co-ordination in respect of such activities.
FUNCTIONS OF
RESOURCES MANAGEMENT
The following functions, according to
Lenders and Fearon (1997) are included in the resources management. They are
resources planning and programming, resources purchasing, store keeping,
inventory control, resources handling, quality control and inspection, value
engineering, simplification and standardization.
Planning of resources requirement and
its timely provisioning is the essence of the success of resources management. This
function involve the setting up to consumption standard of working out the
requirements for all resources for any given manufacturing programmer,
considering all relevant factors, that is, make or buy, laying down standard
and specification source of supply available, availability of stock, import
substitution, lead time, manufacturing schedule, economic ordering quantity is
considered while programming for resources requirements. Resources planning
also involves maintenance of information system to feed detail necessary for it
better functioning in future.
Purchasing function include locating
and development of sources of supply market research for purchasing, calling
for tender selection of suppliers, negotiating, entry into contract and issue
of purchase orders mentioning specification, delivery schedule
and other forms and conditions. Purchasing function also include suppliers performance
evaluation, preparation of materials budget with the help of resources planning
and inventory control sections.
Store-keeping involves receipt,
custody and issue of materials or resources. The resources received against
purchase order placed by purchase section are kept for in the store after they
are inspected and checked for quality as per specifications, physical condition
and quantity. The resources are kept in such a way that they requires minimum
handling and remains well protected against any damage or loss. Resources are
issued from the store against the authorized indents or store issue vouchers
and proper record is maintained for receipt and issue of resources. Physical
verification and salvage and disposal of surplus of resources is another key
function of store keeping.
Inventory control is a systematic
location, storage and recording of goods in such a way that desires degree of
service can be made to the operating shop s at minimum ultimate cost. Inventory
control has the following functions to run the store effectively:
(a)
To ensure timely availability of resource and avoid build up
of stock
(b)
Technical responsibility for the state of the materials
(c)
Stock control system can be developed and followed.
(d)
To maintain specific raw material
(e)
To protect the inventories
(f)
Pricing of materials supplies
(g)
To develop policies, plans and standard essential to achieve
inventory control objectives.
Various functions related to store
keeping requires lot of handling starting from receipt of resources, inspection
storage and issue, item should be handled in such a way that it requires
minimum handling. For large stores, suitable material handling system not only
economizing handling, but also space provides better working condition and
effective distribution system.
Quality control in simplest terms, is
the control of quality during manufacturing. Quality of a product itself
comprises several manufacturing and engineering characteristics which make the product to meet the
performance expectation the designer and
the customers. These characteristics are dimension, chemical property, sensory
property. In other words, quality includes appearance, performance, life,
dependability, reliability, durability, maintainability, smell, taste, feel,
sound. Inspection is the process of sorting good from bad and reject the bad. Inspection
is defined as the act of comparing material, products, or performance with the
established standards. The objectives of inspection are: to detect error in
manufacturing system, to protect the customers from receiving a product that is
below the quality level, and to compile information regarding the performance
of the product with specifications for the use of engineering production,
purchasing, quality control and other divisions.
Value engineering is a tool of
management which approach the question of saving cost from the point of view of
value. In other words, value engineering is a study of relationship between the design
function and cost of part keeping this in view, reduces the cost through change
in design, modification in specification of materials used, changing the source
of supply etc.
Simplification is a form of
standardizations for the reduction of the number of types of products within a
definite range to that number which is adequate to meet prevailing need at the
given time. Specification reduces range of products, their types, size and also
reduces their complexity of manufacturing procedures. Standardization is the
setting up of standard for quality of raw materials, sizes and performance etc
of any product. It is helpful for checking the quality performance and value of
product.
PROBLEMS OF
RESOURCES MANAGEMENT
The following are the problems of
resources management according to Uzor (2004). Resources manager having a sound
grasp of all the divers activities involved are difficult to recruit. The difficulty
is obtaining personnel qualified to handle sub-function procedures, particularly the resources organization, is a
significant limitation of resources management. Critics of the resources management form of
organization emphasis that it is difficult if not impossible, for one person to
co-ordinate and control the many variables of resources operations effectively
and the effective co-ordination is too difficult to achieve merely be
established a new organizational structure.
Others feel that production control
and purchasing departments will be neglected under such an organization.
Resources management may be suitable for some undertaking examples, firms which
process basic raw materials such as sugar, where the product process are
subject to frequent and resources
quality is crucial.
SYMPTOMS OF
POOR RESOURCES MANAGEMENT
According to Shama (2003), the
following are the symptoms of poor resources management:
1.
High rate of order cancellations
2.
Excessive machine down time due to resources shortages
3.
Periodic lack of adequate space
4.
Large scale inventories write down because of price decline,
distress sales, disposal of obsolete or slow moving items
5.
Widely varying rate of inventory losses
6.
Large scale write down of the time of physical inventory
taking
7.
Continuous growing inventory quantities
8.
Inability to meet delivery schedule
9.
Uneven production
CONCLUDING REMARKS
Effective resources management is important
for a balance growth and effective running of the organization. It is important
that resources cost, resources supply and its utilization is controlled in such
a way so as to result in:
1. Maximization of production
2. Reduction of cost of production
3. Maximization of profit.
This is achieved by reducing materials
cost, preventing large amount of capital locked up in inventory for long and by
improving the capital turn-over ratio.
The study, however, recommends the measure
for effective resources management in organization. There should be proper
co-operation and co-ordination between various departments dealing with
materials, namely; purchasing department, store department, receiving and
inspecting department etc. there should be contract purchasing department under
the control of the component and expert purchasing manager and standardization
of items held in stock. This is the method of reducing to a minimum , the
varieties of stock held without detriment to the need of the users maintenance
of stock levels. The maximum and minimum re-order level of stock items, the
resources requirement of organization should be properly planned ahead so that
production budget of the firm may be met.
Other includes, control by budget of
resources and equipments purchases. The management should see that no resources
is purchased without authority, that is, without the purchase requisition
signed by the person authorized to do so, that all transactions involving
resources are checked by reliable and independent persons. There should be
regular reporting to the management regarding purchase, issue and stock of
materials. Special report should be prepared for obsolete items shortage,
return to suppliers etc. in the store, bin cards must be maintained for each
items of materials and then cost account too should be maintained to show the
list of stock held at any time together with their values
There should be efficient purchasing system
which ensures that materials are obtained at the right quality, at the required
price and at the right time, and goods received into store must be inspected
and ensure that they conform with the specification as stated on the order.
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