Technology, Costs, Logistics, Quality, and Stock Management in Business
Technology: is defined as a specific or concrete way to combine factors of production to produce a good or service. Each good or service produced is a productive technology partner. There is a change of technology when factors of production are combined or used differently to produce the same product. Companies allocate a portion of their resources to improve their production technologies. This implies investment in research and development (R&D). R&D comprises creative work undertaken systematically to increase the volume of knowledge (research) and the use of this knowledge to create new applications (development). I+D+i (R&D&I) investment spending is more development over technological innovation. Innovation implies novelty; that is, the product or process is new to the company.
Direct Costs and Indirect Costs: This classification is used when a company manufactures various products and it is not easy to assign direct costs to each product type. Direct costs are those costs directly associated with production that can be specifically assigned to each product because the number of units applied can be easily measured. For example, the amount of raw materials used or the number of labor hours an employee works directly on each product. Indirect costs are those costs that affect the overall production process or that are common to various products and therefore cannot be assigned directly to a product, but have been allocated using criteria. For example, venue hire or administrative and managerial staff pay.
Logistics: Logistics is an integral activity for a company that manages, plans, and controls the flow and storage of materials efficiently and effectively. An integral logistics system is based on the following key elements:
- Total integration of planning and activities of the departments involved.
- A business organization model aimed at satisfying customer needs by integrating them into the product design and creating ties linking the company with customers and suppliers.
- Minimization of production costs.
The integrated logistics system is related to the concept of the value chain since it is based on improving the interface between the different elements of the value of manufactured products.
The Quality of the Company: Quality is the set of features and technical specifications that define product quality. Product quality determines the competitiveness of the company within the market, affects the cost structure of the company, and may even affect the profitability of investments in general. Significant costs of poor quality are important, but so can be the cost of excess quality. Striving for quality in a company means getting the highest quality, but the right quality. Therefore, it is called quality management. Management can be done in different ways:
- Inspection techniques: Ensure you get the expected quality.
- Quality-control processes: Properly design production systems to avoid the emergence of problems.
- Integrated quality management: Participation in all areas of the company product.
- Total quality: Expand the scope of product quality to the quality of the organization in general, i.e., production processes and the various activities of the company, giving importance to the human factor.
Quality certification is provided by an institution known as ISO (International Organization for Standardization), which regulates and determines the conditions to be met by a company’s quality system to be recognized. This adjustment consists of a quality manual that covers the company’s activity and a set of procedures and standards that ensure quality. For this reason, in Spain, there is an official body with similar powers in terms of business quality certification and standardization of procedures and products: AENOR (Spanish Association for Standardization).
Stocks: Concepts and Types: Stocks are all materials that a company has deposited in its stores and are also called inventories. Types of inventories:
- Raw materials: Those intended to be part of the manufactured products through processing or preparation.
- Semi-products: Products manufactured by the company and usually not for sale until they are the subject of further development, incorporation, or transformation.
- Finished products: Products manufactured by the company for final consumption or use as they lead to other companies.
- Goods or trading stocks: Materials purchased by the company and intended for subsequent sale or marketing without transformation.
- Other supplies: Elements including, for example, fuel, spare parts, packaging, containers, and office materials.
- Byproducts (secondary or ancillary to the main manufacturing), waste (obtained at the same time as the products, can be used, sold, or unserviceable), and recyclable materials (reused after production).