A Resource Approach to Production System Research

By the concept of material resources we generally mean raw materials, materials, fuels, energy, cooperative products, etc. from which the ready-to-use products are prepared through the transformation process. To this group of elementary production factors, we also refer to materials that do not enter into the articles of manufacture but are used in the production process.


By resources technological equipment, also referred to as tools of labor, we mean the various material means by which a person influences the materials to carry out the transformation process. We also refer to this group of resources the production conditions necessary for the transformation, such as production buildings, lighting systems, warehouses and vehicles.

At the heart of the transformation process is the workforce as a resource. With its physical or intellectual impact, the workforce, directly or indirectly through the technological equipment, makes deliberate qualitative changes in the material resources, thus transforming them into a finished product.

The transformation process in an industrial enterprise can only begin if the financial resources are available to buy the primary factors of production.

The production system of an industrial enterprise

There are two main flows in an industrial enterprise’s production system:

  • material is related to the supply of production resources, the transformation of these resources into finished products and their realization
  • cash flow is related to the valuation of resources, the transformation process, and the realization.

The transformation process in an industrial enterprise is a continuous process of converting material flows through its valuation into cash flow. The movement of material flows is realized under the influence of physical laws and is the product of engineering, while the valuation of material flows and transformation as a process is carried out in the economic sphere and is subject to economic laws. The cash received from the sale can be deducted from the owners of the enterprise, but most often they are re-invested in the enterprise for the purchase of material resources and development of production, and again they become a material flow.

Management decisions

Each management decision ultimately reflects this value chain and determines the overall effectiveness of the transformation process. A more detailed understanding of the essence of the basic concepts in the chain from a management perspective is needed:

The cost of an enterprise here refers to all costs of an industrial enterprise, whether or not related to manufacturing activity. For example, the purchase of consumables for personal use, representative expenses beyond the fixed limit, are expenses for the enterprise but are not recognized by the tax authorities as inherent.

Manufacturing costs

Intrinsic production costs are actual payments made by an enterprise in connection with the delivery of resources, their transformation into a finished product and its realization. These are expenses that are recognized by the tax authorities under current law and deducted from revenue in determining the entity’s income.

Calculation costs are the technologically determined costs of production and production

The income of an enterprise All income of an enterprise from business activities, financial income and management income

Enterprise income value-added to an enterprise for a given reporting period

Profit is a value expression of a product that is pure for the enterprise, reflecting the result of production and economic activity.

The resource approach reveals the elementary factors of production. In the economic life of the enterprise, they are presented as assets and liabilities of the company. The assets reflect the future economic benefits of the entity and the liabilities reflect the source of the financial assets for the purchase of the assets.

In the entity’s life, this relationship is reflected in the keeping and accounting of two balances:

  • balance of assets and liabilities
  • balance of income and expenses (income statement)

Production process characteristics and structure.

By the production process, we mean the set of interconnected labor and natural transformation processes in the preparation of a particular product. Reference: What is Production management

Manufacturing processes can be classified into several common features: the type of industry, the type of operations and the end product, the type of materials processed and the nature of the physicochemical processes, the nature and mode of effect on the materials, the nature of the passage of time.

Types of production processes

Depending on the industry, we distinguish production processes into:

  • mechanical engineering
  • ferrous and non-ferrous metallurgy
  • chemical industry
  • construction
  • others

According to the physicochemical properties of the materials, the production processes are classified into the following types:

  • a mechanical cutting (turning, milling, grinding, sorting, transporting, etc.)
  • hydraulic (eg rewinding and regeneration of transformers, etc.)
  • thermal (tempering, heat bending, electric heating, cooling, etc.)
  • diffusion (drying, etc.)
  • chemical (electrolysis, anodizing, oxidation, etc.)

Depending on the nature and manner of impact on the materials, the production processes are divided into:

  • manual
  • machine
  • hardware-manual
  • hardware

Characteristics of production processes

According to the nature of the production processes over time, they are divided into:

  1. interruptible
  2. uninterrupted

Depending on the role of production processes in the preparation of the final product, the processes are divided into:

  • basic
  • ancillary
  • additional
  • lateral

Basic are those manufacturing processes that are directed directly to the transformation process of materials into a finished product for which an industrial enterprise is specialized.

An example

For a New York Marketing company, a major manufacturing process, for example, is project management processes associated with creating software applications.

Ancillary to these production processes are those that create the necessary conditions for the normal flow of the basic production processes. These include, for example, project management processes for the maintenance and restoration of technological equipment, the development of tools and mobile applications, internal management systems for the supply and storage of materials, etc.

The additional ones include the production processes for the extraction and processing of auxiliary materials and products. These processes are not related to the main ones, but they are carried out in the enterprise to increase the economic efficiency of the main production and close the cycle of the entire production preparation and realization.

The lateral production processes are related to the beneficial use of waste materials from the main production.

For example, for the Electrical Appliance Enterprise, we have:

Main production:

  • manufacture of automatic washing machines
  • production of boilers;
  • manufacture of cookers;
  • production of party grills and more.

Auxiliary production:

  • repair and maintenance;
  • instrument holding;
  • energy economy;
  • transport economy;

Additional production – production of different types of packaging for the prepared products;

Lateral production:

  • preparation of agricultural equipment from waste material;
  • preparation of souvenirs and other waste material.

To manage production processes, the type of production is essential. Depending on the volume of production, the seriality and repeatability of its production, as well as the type of technological equipment used, we distinguish the following types of production – single, serial, mass.

Type of production

The type of production is a complex character of the technical, organizational and economic features of a machine-building enterprise. The main factors based on which different types of industrial production are distinguished are production specialization; volume and repeatability of production; technological equipment and the nature of the technologies used. The type of production also largely determines the spatial organization of the transformation process, the nature of technological processes and the forms of organization of production and labor.

A single type is that production in which the preparation of one or more articles is not repeated or repeated after a certain period.

The program of the enterprise

An enterprise program usually includes a huge nomenclature of products for various purposes, more or less similar in design. Moreover, the production volume of each nomenclature heading is in limited quantities, in most cases single units. The instability in the nomenclature of the manufactured products, their variety and their uniqueness in structural and technological terms require more original dispositive decisions. Reference: Issues with Fixed-price projects

The technological processes for the processing of the parts and the manufacturing of the products are being elaborated and the necessary technological equipment is universal. This, in turn, requires the use of a highly skilled workforce.

The great diversity of technological processes requires a high degree of universalism in their work. Therefore, in this type of production, the human factor as a productive resource becomes paramount.

This is a serial production, in which there is a periodic repetition of the manufactured series of articles.

By series, we mean a small amount of structurally homogeneous products that are produced in a given planning period.

Depending on the particular type of industrial production, the number of articles may vary.

Example: For companies in Agile software development activities, the number of articles in a series may, for example, be the number of releases of a software product.

Depending on the size of the series, we distinguish:

  • retail as standard;
  • medium standard;
  • large-scale production.

In large-scale production, specialized equipment prevails.

The production program of a large number of products

A major feature of batch production is the presence in the production program of a relatively large number of structurally homogeneous products. Along with them in the enterprise can be produced by other products, which differ in both design and production technology.

A second major feature of batch production is the repetitiveness of product manufacturing, which allows unlike the single production to organize the production of the products rhythmically. The larger volume of production allows unifying the manufactured products and the applied technological processes, to produce standard or normalized details, which in turn will allow their production in large sizes at significantly reduced production costs.

The relatively large size of the manufactured products, the unification, and standardization of the parts and components allows the use of high-performance mechanized and automated technological equipment and specialized technological equipment. This also allows detailed technological processes to be developed and progressive scientific methods used to standardize labor costs.

The organization of labor in mass production

The organization of work in mass production differs with a deeper specialization than that in the single production. Here to each workplace is attached to the execution of several specific details. This allows the worker to have a good command of technological equipment, equipment, and technological operations, to acquire professional habits and skills to achieve high quality in his work.

It is economically feasible to use high-performance automated and automated technological equipment and appropriate equipment.

This is a mass production, where for a relatively long period the same products are manufactured without any significant change in the technological process.

Mass production, for example, is a major part of the sub-sectors of the food, cement, chemical, and other industries.

Mass production characteristics

The most important feature of mass production is the limited nomenclature of manufactured articles. Most often, mass-produced industrial enterprises include one or two or three articles in their nomenclature. The limited number of manufactured articles and the huge volume of their products make it economically feasible to unify the products, parts, and components with a high degree of interchangeability of the elements.

Unlike mass production, the mass change of manufactured products is very rare and is usually associated with the reconstruction and modernization of the entire enterprise.

The large volume of production allows us to develop high-performance technological processes and to use specialized and especially automated technological equipment.

In mass production, it is mandatory to apply the calculation-analytical methods of technological normalization of the consumption of production resources.

High-performance technological know-how

High-performance technological know-how, the use of specialized automation equipment necessarily requires a high level of original dispositive solutions. Also, highly qualified engineering and management personnel on the one hand and highly skilled automatic equipment adjusters on the other are required.

In an industrial enterprise or even its structural subdivision, different types of products with a different character of production processes can occur simultaneously.

The current stage in the development of industry

The current stage in the development of industry and the high degree of satisfaction of needs in industrialized countries pose many problems to the choice of product type. Again, the focus is on single and small batch production, but at a much higher technological level and flexibility of the solution. This, in turn, places new, even higher demands on the management of modern industrial production, on the quality of original and derivative dispositive decisions.

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