Managing Capacity For Long-Term Viability Essays Examples
Managing capacity is essential for the viability and growth of a business and company. Businesses that pay keen attention and develop proper strategies for capacity management have remained profitable and viable. Such businesses are able to withstand turbulent times that come with major changes in the business environment such as technological advancement, change in consumer purchasing behavior as well as political and social influences. The key determinant for a company to become viable is long-term profitability which is determined by the demand and production. For a company to be profitable it has to increase production and sales while managing and reducing production costs. Proper capacity management enables a company to achieve this through aligning its production with the market demand. It cuts on costs by ensuring that investments on labor and other facilities are aligned to the required level of production. This makes capacity management an important factor of determining the overall and long-term viability of a company.
Productive time in and organization is used to refer to the time that facilities and resources are used productively towards producing fine products that meet the demands of the clients. Productive time is specific towards customer based production where all goods produced goes towards meeting the market demand. In this case, the resources include all the facilities at the organization such as the machinery at the production plant and the labor. On the other hand, non productive time is the one spent at an organization without producing even a single unit of finished product. This time is very costly to the organization because the facilities and labor provided does not meet their long term objective that is working toward meeting demand and profitability in the long run.
Non productive time can be categorized into two; necessary and inefficient. The necessary non productive time is when production of finished products is not in progress due to other planned activities such as the maintenance of machinery, fixing or replacing of plants to increase production. In this case, the employees can be rescheduled to work in other departments or do routine checks and cleaning that would favor production once work resumes. The inefficient non productive time is when there is no production due to unscheduled activities or unexpected disruptions to work. For instance, the breakdown of machinery may greatly affect production before the employees are rescheduled or given other duties. It adds on the cost and affects a company’s profitability and long term viability.
Non productive time is a great concern to the management of any organization as it could lead to adverse effects not only on the performance of the organization but also the image. A good example of non productive time is depicted in the famous gulf oil spill where Shell lost a lot of revenue resulting from the accident that halted operations at the plant. This is categorized as the inefficient non productive time because production at the well stopped after the accident despite the heavy investment made. Another example of non productive time is when airports are closed abruptly as a result of unfavorable weather conditions or other aspects such as security. In such incidents, millions of dollars are lost not only by the airports but other organizations that depend on these important facilities.
Dosch, Jennifer. “Managing Capacity for Long-Term Viability”. Metropolitan State University
Mahadevan, B. Operations Management: Theory and Practice. New Delhi: Pearson Education, 2010. Print