The engineering business cycle

Introduction

The purpose of business is to make profit. To get profits, there is need for a business to be well organised so that processes flow smoothly and this increase efficiency of systems.
An organisation should design procedures which should be followed in the process flow. The business system should follow a cycle.

The business cycle

An engineering firm consists of different departments specialised with particular tasks in order for the business to flow. In an engineering firm, the cycle may follow the following pattern:

i. Design and/or specify the product in detail — in this there is production of blue print as well as bill of materials. The drawings are produced which are to be followed in the production process. The design office produces assembly and component drawings

ii. Obtain orders for the product — production of the drawings and material schedule enables a firm to attach a price to the product. With a competitive price tag, a firm can then obtain orders for the product through the sales and marketing department

iii. Purchase the materials needed — the material schedule is used by the procurement department to buy all the materials needed to complete the job including the consumables

iv. Make the product — with all materials acquired , the production department makes the product

v. Test the product — the production department, after making the product then tests the product.

Through the quality control personnel, due care and diligence is taken to ensure that the product is quality tested.

vi. Deliver the product — the finished and tested product is then delivered through despatch to the client.

The client may collect with own transport or the engineering firm may deliver for the client depending with the nature of agreement

vii. Invoice the customer for payment — the finance department then invoices the client to receive payment for the product or service rendered. In some cases , a deposit is required to facilitate a smooth flow of the job

viii. Receive payment — the client then makes the payment through the available channels e.g. bank transfers, cash payments, POS payments etc.

ix. Pay for materials and any services used — if materials had been acquired on credit, they are paid for as well as any services that could have been outsourced

x. Pay wages — the wages are then paid. A motivated workforce is more productive and produces high quality products

Management functions

For this business cycle to flow successfully, management has a big input in this. Some of the functions of management in this cycle include :

Supervising — overseeing the activities

Planning — production scheduling and managing priorities in line with lead times

Managing and controlling — ensuring things are being done as required and timeously

Forecasting — management makes predictions based on market forces and seasons to determine products that are profitable at a particular time and in a particular season

Facilitating — management facilitates the flow of the cycle through activities such as procurement of materials, recruitment of labour etc.

Organisation and coordinating – management coordinates activities of different departments to ensure the flow of the cycle

Common activities in product design and sales support

A design’s effectiveness is determined by the end user. The end user/client usually gives feedback through the product support team. The product support also then gives feedback to the product design department who then can make adjustments to the product’s design based on the feedback. Some of the activities of the product design and sales support teams are:

Research and development

Product design

New product development

Projects engineering

Field services

Customer service

Sales Engineering

Importance of departmentalisation/specialisation in production

In a production firm, there is need for employees to be categorised into departments to encourage specialisation. One should not be allowed to be a Jack of all trades. Specialisation can be done based on the qualifications and skills of the employees. Departmentalisation/specialisation has various advantages eg

a) An industry can easily match workers aptitude with a specific task

b) Repeating the same tasks makes workers to become more skilled and efficient and can become expert in one area of activity

c) Saves time as no time is wasted in changing from one to another

d) Fuels business growth as organisation can now accommodate more orders

e) As companies grow in size, the amount of knowledge, data and communications required increase to a point where it is more efficient and safe to have people specialise in one area of knowledge and activity

f) Concentration of competency, hence a better corporate sense of identity and purpose

g) Location of all the facilities and people needed for production and support of a product or project together as near as possible to ensure production flow

h) Decision making is fast since it can be done at departmental /section level

(This article is an extract from a yet to be published book by the columnist)
Innocent Chatikobo is an engineer by profession with AtroServe Engineering Zimbabwe. He has extensive knowledge and experience in structural engineering and construction. For your comments, views, questions and feedback he can be contacted on the following platforms. Cell: +263 777 950 224; +263 712 376 037; +263 782 502 732; Email: eng.chatyk@gmail.com ; Like the Facebook page: AtroServe Engineering Zimbabwe; Follow the Whatsapp Channel: AtroServe Engineering Zimbabwe-ebusinesswekly