In connection with market relations, the problems of resource saving are transferred directly to the enterprises, the efficiency of which is determined by economic feasibility. The attitude to resources is the most important criterion of restructuring in the economy. Rational use of raw materials and materials is necessary to reduce the volume of procurement industries. Ways of rational use and economy of raw materials resources are very diverse – organizational, technological, constructive directions, based on the optimal structure of materials and assortment of products, the use of waste, etc.
Low material intensity of products is a consequence of a successful technology or design and the correct consideration of social, functional, ergonomic requirements.
Material intensity has always been the main issue in the competitiveness of the enterprise, because saving of raw materials and materials allows reducing the cost of production. Material inventories play a major role in production and their efficient use ensures the enterprise’s profit.
Presently in economy scientific and technical activities on decrease in expenses of material resources for what purpose new power saving technologies are applied, new kinds of the resource-saving equipment are used, low-waste technological processes, new methods of economy and rational use of raw materials and materials are introduced, structure and norms of material consumption are improved.
2. Role of material capacity in the enterprise economics
Material capacity is an indicator of the consumption of materials per natural unit. Measured in physical units, monetary terms or percentage of the cost of materials in the total cost of production, the cost of production.
Indicators of general economic efficiency, including material intensity, characterize the effectiveness of the choice of already realized, past costs. With their help, the expediency of the costs incurred is determined, and the reserves for increasing the efficiency of production are identified.
Material intensity of production is the cost of raw materials, materials and other material resources per unit of output. As is known, the reduction of material intensity allows you to get more finished products from the same material resources, reducing production costs and the cost of the development of raw material industries.
Market economy in its essence is a means to stimulate the growth of labor productivity, the global increase in production efficiency.
For many years the domestic economy was developing on an extensive basis, i.e. it was focused on the involvement of additional material resources into production. With the need to constantly increase the volume of production, the industry faced a shortage of resources. Therefore, a fundamentally new approach to meeting the economy’s needs for material resources was outlined later. The task was set to meet the increase in the need for material resources at the expense of their economy. The problem of resource saving became a national, nationwide problem. A number of major tasks and efficient use of raw materials, materials, fuel and energy resources. The tasks of turning the resource saving into the decisive source of satisfaction of the growing demands of the national economy are being resolved in several main directions, including: elimination of material resources losses at all the links of economy; improvement of output product quality, which entails reduction of material resources consumption during machinery operation, use of resource-saving equipment; development and implementation of low-waste technological processes; improvement of material consumption structure; improvement of material and energy efficiency.
Therefore, improvement of use of materials, raw materials and fuel and energy resources is a complicated problem which solution is predetermined by methodological improvement of the mechanism of rationing consumption of material resources, operability of organization of work on involvement of latent reserves of economy of material resources at various stages of production process.
The normative base in the form of norms of consumption of material resources of various degrees of aggregation is used in the current and future planning of production and material and technical supply, in the development of marketing at various levels of national economy management, in solving problems of automated control systems of the enterprise and industry, planning, financial and statistical calculations.
State of the normative base, scientific validity of consumption rates of material resources, methodological organizational and technical improvement of calculation of consumption rates are simultaneously factors and sources of savings of raw materials, fuel and energy in the production process. In a complex with directions of development of scientific – technical process, perfection of the organization of production, material – technical supply and warehouse economy, rationalization of the system of rationing consumption of material resources is an effective lever of their effective use at production of the end production.
Along with the improvement of work in the rationing system of consumption of material resources gets relevance of assessing the actual use of their use in production. Real indicators are needed, by comparing which it is possible to determine the amount of savings or overspending of certain types of material resources.
The production process, i.e. the creation of material goods necessary for the existence and development of society, has two sides – technical and social. The technical side of production is the subject of the study of natural and technical sciences. The social side of production, production and economic relations of people are studied by economic theory. Its subject matter includes cognition of objective economic laws regulating the production, exchange, distribution and consumption of material goods in various social formations.
In various spheres and branches of production the action of economic laws has its own specific features. These features and specifics of action are studied by branch or specific economic sciences. The most important feature in the study of the problems of material capacity is the fact that the subject of study is at the junction of technical and economic disciplines. Economic disciplines, for example, provide a methodology for studying the economic nature of norms, their action. As economic levers in the process of production, methods of development and formation of norms in the process of planning at various levels of management of national economy, the role of norms in resource saving, methods of saving and rational use of raw materials, materials, fuel and energy resources.
The most important trend in the development of modern industrial production is the reduction of the mass of applied live labor in relation to the mass of the driven it in the movement of forgiven labor. Especially significantly increase their share of the cost of the objects of labor.
The transition to intensive methods of farming requires scientific rationing consumption of material resources. Objective calculation base is scientifically sound standards and calculated on the basis of their standards costs of resources.
Standards, therefore, is an important condition for the rational use of resources, an instrument of effective impact on the economy of raw materials, supplies, fuel and energy.
The basic and principle of scientific rationing of material resources is the progressiveness of standards, which are an important condition for continuous reduction of socially necessary costs of production.
Progressive norms act as one of conditions of rational consumption of means of production by branches and spheres of national economy, actively influence rates and dynamics of social reproduction, formed optimal nationally – economic proportions.
Implementation of progressive norms of consumption of material resources provides a reduction in consumption of raw materials per unit of output, as well as reducing its cost. Rationing – a process of establishing a measure of production consumption of material resources and it assumes a deep knowledge of the economic nature, role and importance of different types of standards and regulations in planning production and its material – technical support. Rationing of the use of material resources includes the development of norms of their consumption in production at the output of products, adjustments to existing standards, approval and delivery of norms for production sections.
The organizing role of scientifically substantiated progressive norms is manifested. Norms and norms, which are constantly in dynamics, are necessary to determine proportionality in conditions of changes in the structure of needs.
Norms and standards act, on the one hand, as a regulator in assessing the quality of means of production for the implementation of optimal national economic proportionality, and on the other hand – as a baseline for solving problems of the most complete satisfaction of public needs at the lowest labor costs.
2.1.Material intensity measurement indicators
To determine the most important directions of increasing the economic efficiency of social production, criteria and indicators of efficiency have been formed.
The most important indicators of economic efficiency of social production are labor intensity, material intensity, capital intensity and stock intensity.
Material intensity of social product is calculated as the ratio of the cost of raw materials, materials, fuel, energy and other objects of labor to the gross social product. Material intensity of production of a branch, association or enterprise is determined as the ratio of material inputs to the total volume of output:
Where m is the level of material intensity.
M – total volume of material costs for the production of products in value terms.
Q – total volume of production output.
Overall cost-effectiveness is calculated for the entire national economy, individual industries, enterprises, individual means of new techniques and organization of production.
To determine the overall efficiency are used indices of two kinds – generalizing, which together take into account the level of use of production costs and resources, and private, which take into account the level of use of individual types of costs and resources – fixed assets, materials, live labor, etc. Both promising and private indicators of overall efficiency can be used in any part of social production. However, the nature of indicators will be different depending on the object for which efficiency is calculated.
Reduction of material intensity of production is effective for the national economy of the country. Only in industry, for example, a 1% decrease in the material intensity of production allows for savings on a large scale. This is especially important because almost 3/5 of the cost of production in industry is for raw materials, basic and auxiliary materials, fuel and energy.
Material costs in all sectors of the economy (except mining) occupy the main share in the cost of production. They include raw materials, and basic materials, purchased semi-finished products, components, auxiliary materials, fuel, energy, tare, packaging materials, tools, custom parts, etc.
Cost reduction and optimization are one of the main directions of improving the economic activity of each enterprise that determine its competitiveness, reliability and financial stability. Consequently, the general and initial characteristic of material resources in the production inventory is the material intensity indicator of production.
Material intensity, as mentioned above, is the cost of raw materials, materials and other material resources per unit of production.
Material intensity of the product can be absolute, structural and specific.
Absolute material intensity shows the rate of consumption of materials Np per product, m/m3, its net mass Qr, m, and the degree of use of materials, characterized by the utilization factor
In the general case, the total absolute material consumption of the product.
Np = Npa + Npb + Npz.e.
where Npa, Npb, Npz.e. – are the consumption rates of, for example, rebar, concrete and embedded parts.
Structural material intensity shows the specific weight of individual material groups in the total material intensity of the products.
On the whole, structural consumption of materials can be written in the form of the equation
R – number of material types;
– share of the corresponding material in the total material intensity.
Specific material intensity is the structural material intensity reduced to the physical unit of the construction of a certain type (m, m2, m3, etc.).
Thus, the material intensity is measured in physical units, in monetary terms or in percent, which is the cost of materials in the total cost of production, in the cost of production.
It is possible to determine the material intensity by dividing the cost of material inputs by the cost of the product produced with their help.
Indicators of general economic efficiency, including indicators of the use of production funds, to which belongs the material intensity indicator, characterize the efficiency of choice, already realized, past costs. With their help, the expediency of the costs incurred is determined, and the reserves for increasing production efficiency are identified. The indicators are also used in managerial and controlling activities.
The system of material capacity indicators of production is closely connected with the system of material resources consumption rates, as the main source of analysis of material capacity along with reports on the actual consumption of materials of a particular period are norms of their consumption.
All indicators of material capacity are closely interrelated and are used to analyze the consumption of material resources at various stages of the production process and planning level, to identify losses of material resources and reserves to reduce their consumption.
2.2 The importance of reducing the material capacity
The importance of reducing the material intensity of production should be considered at the macro- and microlevels. The national economic importance of reduction of material intensity of production, first of all, consists that without the decision of this problem transformation of Russia into the strong industrially developed state and maintenance of worthy life for its citizens is hardly possible.
The state needs to pursue a targeted policy of resource conservation, as it is done in many developed countries of the world. The essence of this policy is that the state develops a national program for resource conservation and a mechanism for its implementation. In order to implement the program, the government uses the scientific and technical, structural, fiscal, financial, credit and other policies.
The state is acting on all subjects of the economy, encouraging them to solve the problem of reducing the material intensity of production.
The reduction of the material intensity of products at the national economy level allows:
– reduce the material intensity of national income;
– to transfer the economy from the extensive to the intensive way of development;
– to substantially reduce capital investment in the development of the extractive industries;
– to expand the export of raw materials and fuel and energy resources if necessary and expedient
– substantially reduce the cost of production;
– reduce the burden on the environment and obtain other environmental and social benefits.
Reducing the material intensity of products will allow the company to:
– substantially improve its financial position by reducing the cost of production and increasing the profits remaining at its disposal;
– to increase production from the same quantity of raw materials
– to compete more successfully with other firms in the sales market, especially by reducing the selling price of its products;
– to reduce the normative value of working capital required for the normal functioning of the enterprise;
– to accumulate sufficient own financial resources for the introduction of new techniques and technology and expanded reproduction;
– significantly reduce the risk of bankruptcy.
The solution of the problem of reducing the material intensity of production has many other positive aspects, including the moral aspect. Rational use of material resources is, in fact, education of the collective in the spirit of careful and prudent attitude to all resources of the enterprise.
The following ways of improving the use of material resources at the enterprise are possible:
– introduction of low-waste and non-waste production technology;
– integrated use of raw materials in the enterprise;
– wide use of artificial and synthetic materials;
– improving the quality of products;
– better preparation of raw materials and supplies for production;
– creation of a perfect regulatory base at the enterprise;
– management of working capital in the enterprise in order to minimize it;
– educating the employees of the enterprise in the spirit of rational use of material resources;
– keeping machinery and technology in good working order and strict compliance with technological processes, etc.
Specific ways of reducing material intensity should be determined on the basis of a thorough analysis and identification of the true causes of the unsatisfactory use of material resources at the enterprise. The most tangible results in solving the problem of reducing the material intensity of production can be obtained on the basis of development and implementation of a long-term program for resource saving at the enterprise.
Concrete ways of decrease of material capacity should be defined proceeding from the thorough analysis and revealing of the real reasons of unsatisfactory use of material resources at the enterprise. The most tangible results in solving the problem of reducing the material capacity of products can be obtained on the basis of development and implementation of a long-term program of resource saving at the enterprise.
3. Ways to decrease material capacity
1. Increasing efficiency
Not all problems of technical and organizational development of production are finally solved. Huge potential possibilities of increase of volume of production, decrease of material capacity, power intensity of production, increase of labor productivity and capital productivity can be opened by all-round effective use of production reserves.
2.Reconstruction and technical re-equipment of enterprises
The main direction of economic development is concentrated capital investments on the most important objects and first of all on reconstruction and technical re-equipment of the existing enterprises as the quickest and most economical ways of raising the efficiency of social production.
3.Increasing the volume
Complete or partial re-equipment and rearrangement of production with replacement of the obsolete and physically worn-out equipment, mechanization and automation of processes, elimination of disproportions in technological links and auxiliary services with the purpose of increasing production, expanding and updating the range of products, improving their quality, as well as improving other technical and economic indicators are considered the reconstruction of enterprises. In this case, material costs and terms for reconstruction should be less than in the construction of new and expansion of existing enterprises.
Technical re-equipment is a complex of measures for raising the technical level of individual production areas, units, installations to the current requirements on the basis of the introduction of new equipment and technology, mechanization and automation of production processes, modernization and replacement of obsolete, physically worn out equipment with new, more productive; implementing measures for eliminating bottlenecks, improving organization and structure of production to ensure growth in output, improvement of its quality, increased efficiency of production, etc. Development of projects of technological lines and areas reconstruction is a more complicated process than designing of a new production.
The stages of production design considered in this chapter should be preceded by assessment of existing conditions, definition of expediency, volume and nature of reconstruction, selection of the optimal variant by the criterion of the minimum total reduced costs.
5.Designing of reconstruction
It is recommended to carry out reconstruction designing in three stages.
The first stage – the task definition – includes clarification and formulation of the goal of the task, a qualitative analysis of factors and conditions determining the option expediency, definition of qualitative relations between them; selection of an appropriate efficiency criterion (the minimum reduced costs, quality index); formation of a mathematical model including definition of unknowns, setting of restrictions, formation of quantitative dependences, construction of a target function.
The second stage – the task realization – consists of collecting and systematization of the initial information and other necessary data on the reconstructed objects; clarification of the task definition, its mathematical model and initial data; compilation of the task solution program on a computer; debugging of the program on a computer; solution of the mathematical model and task on a computer.
The third stage – realization of the results – contains the analysis of the task solution results and realization of the task solution results in designing.
When designing the reconstruction of enterprises, it is necessary to take into account the requirements of unification, normalization and typification of the production base as much as possible.
Unification involves the use of universally flexible production lines with a minimum amount of equipment, molds and tooling of different types for the production of a maximum variety of structures.
Normalization is the creation of technological lines for the production of prefabricated products that meet current norms, standards and architectural and structural solutions.
Typification consists in the organization of such technological lines, which can be used typical sets of equipment, forms and rigging.
Great attention in development of projects of reconstruction and technical re-equipment of enterprises should be given to the decision of economic schemes of transportation of raw materials and finished products, rational use of territories and the production areas, performance of a number of requirements of labor protection and the environment.
Any commercial organization cannot function without working capital. Their presence is an indispensable attribute of any production process.
The financial condition of an enterprise largely depends on the structure and level of use of current assets.
This level is characterized by such indicators as: material capacity and material output; electricity and energy consumption of products; coefficients of use and expenditures of material resources, etc. The indicators of the use of current assets are: turnover ratio; duration of one turnover and load factor.
Reducing the material intensity of products at the enterprise is of great economic and social importance, as it allows:
– significantly reduce the costs of production and sales of products;
– to increase considerably the profit remaining at the disposal of the enterprise;;
– to increase the competitiveness of products;
– to improve the financial condition of the company.
At the enterprise, the material intensity of products can be reduced by:
– creation of a better design of machines and equipment;
– wide use of artificial and synthetic materials.