The essential activity of the transformation industry is to process various purchased raw materials and transform them into new finished products.
Sometimes the change in the physical or chemical characteristics of the raw materials is complete, and in other cases it is relatively small. Raw materials that have not yet been processed are included in an inventory of those materials.
In any case, the industrialist does not sell the raw materials identical to how he buys them. Its cost of production is not the purchase price, but the manufacturing value of the raw materials in articles that the consumer wants, through the use of manufacturing methods.
The production function ranges from the acquisition of the raw material, its transformation, to obtaining the finished product.
At the center of production is the technology of transformation. Any production process can be conceived as an input-output system, that is, the manufacturing company has a set of resources that we call inputs. A transformation process acts on this set and converts it into a modified form that is the products.
The manufacturing process consists of an input current situation and an output potential. The input stream is made up of the raw materials used in the product, the operation consists of converting the raw materials (together with equipment, time, labor, money, management, etc.) into finished product, which constitutes the output or production potential.
Scheme of transformation as input flow process and output potential
The main objectives of managing the transformation process are:
- Produce good quality products, without economic harm to the company, that is, minimizing costs without detriment to their quality. Satisfying production needs. Minimizing costs without lowering product quality. Maximizing profits, without neglecting labor problems company personnel. Increase production capacity in accordance with company planning. Obtain productivity, that is, achieve a balance between manufactured products and the resources used to manufacture them. This is the essential goal of production management.
Functions of the Transformation Industry.
Purchase function.
It consists of acquiring the raw materials necessary for production, of adequate quality and at the most favorable price, as well as ensuring their delivery by the supplier, in accordance with the established dates.
To ensure the continuity of productive operating operations, the raw materials that must be used are generally purchased in advance of immediate needs.
As they are received at the factory they are stored in the materials warehouse, waiting to be used in production.
This function should include a statistic on the behavior of the supplier to serve as a basis for placing future orders.
Production function.
Assumes responsibility for transforming raw materials and materials into finished, acceptable and inexpensive products. It covers the basic factory resources that are used: machinery, raw materials, labor, also adding services and money. It is the vital activity of transformation operations for the collection, recording and control of costs in an industry.
Distribution function.
When the manufacturing processes have been completed, the original raw materials have been converted into finished products, which are transferred to the finished goods warehouse. Here the responsibility is assumed to pack the finished items, fill customer orders and continue until sales are charged.
The activities of the distribution function are:
- Operations of handling and storage of finished products and shipping them to the customer's place. The costs of promoting customers and making sales. The operations of registering and collecting customer accounts.
The activities of a transformation industry are analytically divided for accounting purposes into the following stages:
- Acquisition of raw materials: Covers the purchase of raw materials at reasonable prices, whose value is made up of the amount of the supplier's invoice, plus additional transportation and handling expenses, until reaching the factory warehouses when these expenses are in charge of the company. As they are received at the factory they are placed in the raw material warehouse awaiting use in production. Raw Material Requiry: As raw materials are needed in the transformation processes, they are removed from the raw material warehouse and they go to the manufacturing plant, through written requisitions of materials. Allocation of labor: In the plants, the workers transform the materials, along with the machinery, into finished products and the cost of their work is applied to production.Incurrence of indirect production charges: During the manufacturing process, manufacturing expenditures such as: Depreciations are necessarily affected. Lubricants Materials. Application of indirect production charges: The cost of indirect manufacturing charges is applied to the production itself by means of a quota based on a certain amount per hour of labor or a certain percentage of labor. The application fee for indirect charges to production is equivalent to the amount of indirect charges incurred during the period. Product termination: When the production processes have been completed, the original material has been transformed into a finished article. The finished product is transferred from the warehouse of finished articles to the applicable values for raw material,labor and indirect production charges, as reflected in the respective cost records.
General Organization of Modern Industrial Enterprise
There are three reasons to be interested in the organizational structure of a manufacturing company:
Knowledge of the company is required to know the administrative and control provisions that govern the organization.
With knowledge of the structure it can be used to obtain statistical information and identify responsibilities and take preliminary action.
Obtain the assurance that the structure is as it is presented and that the departmental positions of the people are identified.
The organization consists of the process of defining and grouping the activities of the company in such a way that they can be assigned in the most logical way and executed in the most efficient way. Determining the relationships between the functions to be performed and those who are going to perform them, with what authority and responsibility, is objective in the concept of organization.
The general objectives of the organization are the following: It
allows the leader to achieve the essential objectives of the industrial company in the most efficient way and with the least amount of effort, through a work group and a directed force.
Eliminate duplication of work.
Assign to each member of the organization, a responsibility and authority for the efficient execution of their tasks or activities and that each person within the organization knows who they depend on and who depends on it.
A modern organization allows the establishment of adequate communication channels so that the established objectives and policies are achieved more efficiently, down to the lowest levels of the organization.
