Practical managerial skills and knowledge
In the current competitive manufacturing industry, every company must employ strategies that will earn a competitive advantage in the market. The approach should help the company raise not only the revenue levels but also reduce production and overhead costs. For the case of Durango manufacturing company, the achievement of a 10% revenue increment within five years requires sound approaches that will improve efficiency, ensure continuous production, lower production costs, and that will eliminate production bottlenecks. This is because; the current opportunities in the market come along with more significant threats. To navigate the industry well, the management requires specific specialized skills and abilities that can steer production to the next levels. Such skills and skills are discussed below.
Practical managerial skills and knowledge
Managerial skills refer to unique attributes or abilities that an executive member of an organization should possess to fulfill specific tasks in the organization. Since the managers are involved in numerous activities such as planning, and decision making, they require skills and knowledge to boost the performance of the company and to enable the company to achieve its 10% growth objectives within the next five years (Van Hoek et al., 2013). They should be done in a timely and effective manner to avoid crisis or decline in the revenues. To effectively manage a manufacturing company, the managers should have proper technical skills. These are the skills that enable them to use a variety of techniques to achieve their objectives. Such capabilities involve not only machine operation but also production software and tools. Don't use plagiarised sources.Get your custom essay just from $11/page
Additionally, Conceptual skills are crucial for managers (Van Hoek et al., 2013). They involve the ability of the managers to present practical abstract thinking and formulation of ideas. The manager should be able to see the whole concept, analyze, and top diagnoses possible problems. The essential management skills include planning, proper communication within the institution, effective decision making, and delegation of duties (Van Hoek et al., 2013). Moreover, managers should have functional problem-solving skills and to continually motivate the employees to work.
Improving operational efficiency
To maximize production and to increase the levels of revenues as part of its objectives, the company needs a sound plan. Effective planning is a complex scenario that involves a variety of activities to ensure that both production equipment and human resource are available where and when they are required (Duran, Cetindere & Aksu, 2015). To achieve this, the management must draw clear production frameworks and risk mitigation plans for continuous production. Effective scheduling of production plans reduces labor costs by eliminating the wasted time. It also improves the process flow and optimization of the use of equipment. Besides, it increases the production capacity of the company hence several on-time deliveries to the clients (Duran, Cetindere & Aksu, 2015). It, therefore, boosts customer confidence. Improvement of operational efficiency involves the forecast about market expectations by estimating potential sales based on the historical and established market trends.
The management should ensure the availability of equipment and human resources at all times. This involves constant training of the employees on the new production methods and proper maintenance of the pieces of equipment. Effective employee monitoring will ultimately ensure that each employee meets the set production goals. Moreover, the company should effectively execute the manufacturing systems (Duran, Cetindere & Aksu, 2015). When the organizational system is implemented properly, impressive results are realized due to the timely feedback. This allows the managers to make correctional decisions as soon as they are detected within the production chain.
The effective operation involves employing preventive measures. A proactive approach by the management reduces damage control. Unexpected malfunction in an institution jeopardizes the schedules of the company. For instance, equipment failure could lead to a stoppage of production and cause other serious issues (Duran, Cetindere & Aksu, 2015). However, this is a crucial area in an organization that the manager can never afford to compromise. Constant preventive maintenance is essential in sustaining efficiency in production. This may also involve the use of modern technologies to perform automatic refills and re-orders of raw materials to ensure that the output doesn’t stop at any given time (Duran, Cetindere & Aksu, 2015). Constant motivation and the use of incentives on employees is a sure way of improving operational efficiency. Such programs increase employee interest in their work hence raising the production levels.
Outsourcing manufacturing
This involves a process of hiring human resources outside the company to assemble or to take part in the building of the entire product. When a business outsources part of their production from a third party, the main motivating factors is to reduce production costs. Outsourcing is good for the welfare of the company (Jiang, Belohlav & Young, 2007). It reduces the overall labor costs. Since the company’s primary aim is to increase productivity and revenues, lowering expenses is one way of maximizing the revenue levels. When a company outsources manufacturing, the costs of production are therefore reduced. It also reduces other overhead costs. A case study in most US companies reveals that outsourcing eliminates overhead costs associated with the operation of a manufacturing facility. Such eliminated prices include utilities, indirect labor costs like quality assurance, shipping and receiving personnel, and maintenance costs.
Consequently, outsourcing increases the demand for company products. This is as a result of access to more capabilities. The company is able to acquire diversified skills, knowledge, and experiences. Additionally, the company will be subject to fewer regulations. Considering a company outside the United States, fewer rules will be applied in terms of labor conditions, use and disposal of waste products, and other bottlenecks that unnecessarily increase production costs (Jiang, Belohlav & Young, 2007).
Moreover, outsourcing production improves the utilization of space and resources. It allows the business to free up expensive office facilities to be adequately utilized. For example, the area that could be used for storage of inventory can be used by the current employees to conduct production processes. This implies that the company assemblies are only delivered when the business requires them. Outsourcing is the best alternative for accessing a pool of skilled labor hence increasing innovation and production (Strain, 2019). An organization may lack consistency in the labor force in terms of experience. Through outsourcing, the company focus now remains on the bettering the quality of the products and meeting the changing demands of the consumers.
Generally, outsourcing is the best alternative for cheaper management and to improve the productivity of the business. It leads to consistency in the supply of skilled labor and increasing process innovation and productivity. Additionally, it lowers the overall production costs by eliminating storage costs and other indirect labor costs like the quality assurance of the personnel (Strain, 2019).
A prediction in the business and economic environment
There are several threats and opportunities that the company will have to navigate through in the next five years. Technological changes in production and the supply chain are likely to affect the operations of the Durango manufacturing company. The company should, therefore, adjust its operational strategies that will ensure that its production chain is up to date with the current technological changes.
Increased level of competition is the biggest threat that Durango is likely to face. To navigate through this, innovation and creativity will play a key role. Additionally, the company should strive to lower the costs of the items while improving the quality of its products. However, this will require the company to devise strategies of effectively utilizing the available opportunities, including contracting and outsourcing of production (Li, 2000). Additionally, the company will require continually carrying out training and hiring more experienced employees and, at the same time conducting effective monitoring on the process. This will enable continuous production processes and quality production.
Strategies for increasing productivity
For every company to increase the levels of production, effective strategies are essential. Strategizing for an increment in the production involves the elimination of workplace politics, increasing the trustworthiness of equipment, suppliers, employees, and all other stakeholders. According to Hopp and Spearman (2001), the variation in production systems in every company has a significant impact on the capacity of the performance of the company. The ability of the managers to measure and understand the production process is essential. A review at some successful strategies employed by global manufacturing companies shows that integrating the complex demands of consumers to produce outstanding qualities of the product gives a competitive advantage to a company.
Companies should devise strategies to elevate the capacity of internal constraints. The first strategy should be the elimination of all the periods of times lost in bottlenecks. An hour lost on a bottleneck is very crucial and translates to colossal loss. The company should also improve the time of processing every unit. It implies that the company should, therefore, perform constant improvement actions in the production approaches, including preventive maintenance of equipment to ensure a continuous production (De Jesus et al., 2014). This ensures that the productivity of both pieces of equipment and human resources is optimized.
The company should improve its quality control systems. The management should devise techniques to ensure that any defective point in production is solved from the beginning. This can be obtained by adopting a 100% inspection of the processes (De Jesus et al., 2014). Outsourcing and contracting is another effective strategy that the company can use to reduce production costs and to increase efficiency in production. Additionally, buying new pieces of equipment, training the employees and motivation of the workers will ultimately increase the productivity of the company.
Manufacturing opportunities
During the period of operation, many opportunities will exist in the market that can be smartly pounced on by the management to increase their revenue levels. The available big data provided by increasing technology is a big opportunity that can be effectively extracted and analyzed. Analysis of data enables the company to identify the major market trends and consumer demands (Isaksson, Larsson & Rönnbäck, 2009). The company will, therefore, produce goods that meet consumer expectations hence increasing the sales.
Moreover, the company can create constant advertisements using various social media platforms on the new inventions and the quality of their products. Social media provides a huge source of the market to every sector globally. This will lead to increased customization of products. This will be effective as a result of the constant flow of information about the market and continuous communication with the consumers (Isaksson, Larsson & Rönnbäck, 2009). The company will assess and address consumer buying behaviors.
The company should also adapt to specific revolutionary changes in the production types of equipment. Modernization and mechanization of the system not only increase the production levels but also lowers the costs. Acquisition of technologically advanced machines and hiring of experienced employees will ultimately increase the production levels of the company (Miller, 2010). The company is likely to thrive best by using the available modern and relevant production, packaging, and delivery methods. It should consider the use of online platforms in making purchases and sales. This increases efficiency the levels of revenues as well.
The uses of financial statements and ratios
Financial statements and proportions are essential for decision making for the entire interest parties in the business. The most important financial statements are the income statement and balance sheets. However, reports of cash flows are essential to the stakeholders. The board of directors in Durango manufacturing company will require the financial statements to review the performance of the management. They will also use the accounts to assess the overall performance of the company. For the smooth running of the business, the managers will also need the financial reports tom make crucial managerial or production decisions (Patel, H. et al., 2019). Other essential ratios, like the equity ratio, will enable the directors to decide the amount of long-term capital that would be raised for making precise business decisions.
Shareholders in the business and potential investors require financial reports to make decisions. They will get to learn on the performance of the company and hence decide whether to re-invest their dividends or to withdraw their shares. For instance, if the revenue levels increase, more shareholders will be interested to re-invest their dividends and vice versa. The shareholders will also examine the operating profit margin to make more advanced investing decisions (Patel, H. et al., 2019). The financial statements and ratios are essential for other business partners, including lenders (e.g., banks), the creditors, and suppliers.
Fraud risks
In the process of its production, the company is likely to face the challenge of fraud. This could be as a result of the vulnerability in the IT control systems or other factors. During the period of economic uncertainty in the manufacturing industry, the number of fraudulent activities is likely to increase. Potential fraud risks that the management of Durango should watch out for include corruption (Halbouni, Obeid, & Garbou, 2016). They include constant complaints from bidders and suppliers of the raw materials, price outliers on the awarded contracts, close association with the suppliers. Such corrupt acts result from personal interests, bribery, and as a result of obtaining illegal gratitude. Returns or deduction trends by the customers is another form of fraud. The company could also face fraudulent disbursements such as check tampering, expense reimbursements, and other billing schemes. These may include payments outside the accounting systems, unusual payment patterns, and alterations with essential financial statements (Halbouni, Obeid, & Garbou, 2016). Moreover, fraud can take the type of revenue overstatements and asset overstatements. For example, there could be instances of difficulty in the collection of receivables, vague responses from analytical inquiries done in the business, low payments on receivables with personal interests.
Detection and prevention of fraud using technology
Fraud leads to substantial financial losses in a company. Therefore, they must be detected and prevented earlier to ensure no more losses are incurred. The organization should install a chain of automated solutions to detect fraud. These will help eliminate “human error” as always the central claim in the event of fraudulent acts associated with manual controls. The company should consider the introduction of Enterprise Resource Planning (ERP) applications, including Oracle or SAP (Halbouni, Obeid, & Garbou, 2016). There are widely used solutions in manufacturing companies. The apps will help detect and monitor control for the risks. Additionally, the applications will also effectively monitor security processes.
The company should also consider using configurable controls with unique and user defined-settings. These will determine the tolerance limits and the ranges and ensures data integrity checks. The company should, therefore, take full control of the configurable controls and strengthen the checks and balances in production, communication, and reporting (Halbouni, Obeid, & Garbou, 2016). Additionally, the company should consider assisting the auditors in combating any forms of fraud through data analysis or using CAATs. The earlier detection schemes reduce the extent of losses as a result of fraud.
Conclusion
To conclude, the company requires to put much effort to improve production efficiency and to reduce several overhead costs. Identified strategies like outsourcing, hiring experienced employees, preventive maintenance of pieces of equipment will not only increase the quality of products but also improve the company image. However, the company should be ready to adjust to various technological changes in manufacturing in the next five years. Technology presents the most substantial opportunity due to the available big data from consumers that the company can use to analyze consumer demands and the buying trends. This will increase the sales of the company. However, the company should install controls over the operations of the company to prevent the financial losses that may arise from fraudulent activities. The use of configurable controls with user-defined settings is the best alternative for the prevention of fraud.