Next fact we have to attend to is Minimizing wastage of raw materials.
Any material that is used in excess to actual need is a waste and
wastage has some serious disadvantages.
Apart from the fact that wastage shows that careful planning of
production has not been done, it uses up more money, time and energy of the
company, of the worker as well. Minimizing wastage directly increases, in the
end, profitability of the company. Cumulative wastage erodes into the finance
of the company and it does not show administrative efficiency. Somewhere down
the line, a proper supervising mechanism has not been thought of and
implemented. The inventory section possibly has not done the work properly. And
lack of expertise in production process also might lead to some wastage.
Wastage means increase in the energy cost,
the raw materials cost, the laborerís cost in the sense that the money
he receives for the work done dealing with wastage does not come back even in a
very small amount to the company as revenue. Above all, all these unwanted
costs influence the cost of product; the company has to fix the price
accordingly a little more; it means it is inviting a competitive rival to take
advantage of the increased cost and if it is not spotted and corrected at once
or at the earliest, it might mean losing the market share the company has kept
so far; and, it is well-known that getting back the lost consumer is well-nigh
impossible. Consumers do not want to spend more on any product if he can get
the same kind of product at a lower cost from some other source. The business therefore depends on minimizing
the wastage of raw materials very heavily. Ultimately, minimizing wastage of raw
materials becomes the concern of every employee of the company.
The harmful effect of wastage does not end up with the just loss to
the company; it has more serious social dimensions also. Production of raw
materials is said to give rise to greenhouse gas emissions that pollute the
environment. Contamination of
environment is denying the future generations the benefits of good environment. Now, the whole world is keenly concerned with
the climate change. In fact the international shipping industry is straining
their nerves to reduce gas emissions level to promote environmental health.
Having committed to reduce carbon emissions from the transport sectors, so as
to comply with the Paris Agreement to work towards pure environment, Indian
government is taking all necessary steps to put an end to the enormous output
of carbon-di-oxide by the congested road traffic.
It might look
far-fetched to link wastage from a company to the environmental hazards but it
is a fact. See, how the holy Ganges has been polluted by the industries and the
government has to spend enormous money to purify it? See, how the city like
Delhi suffers from unhealthy pollution arising out of transport gas emissions?
If you ask the environmentalists, they will flood you with information
regarding how various industries pollute the atmosphere without any keen moral
sense of social responsibility. There is
much more to it; but for the sake of our present context focusing on business
necessity, it is enough to know that production planning involves minimizing
wastage of raw materials in the interest of the business as well of the