Production potential is Definition of the concept, methods of development, features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In a time of ever-changing market conditions and competition, companies face the challenge of not only increasing industry market share, but also maintaining it. Production potential is one of the key resources that can provide an advantage in a competitive environment.

In this article, we will discuss what productive potential is, what it consists of, how it is evaluated, how it relates to national security and competitiveness.

Semantic content

The term "potential" in translation from the Latin word potentia means power or opportunity. This definition has a double meaning. In the first case, the potential is understood as a physical property, that is, a characteristic that determines the magnitude of the body's energy reserve. In the second case, the category is perceived in a figurative sense, denoting the level of hidden capabilities (power).

Production potential is a system of relationships formed in the economic environment of economic entities onmicro and macro levels. It is necessary to achieve the most efficient production result obtained with the maximum use of production resources with the existing level of technology and technology and progressive methods of organizing production.

Introduction of the concept

A large number of factors affect the degree of use of production potential. Through a detailed assessment of all the criteria that form it, it is possible to determine the direction vector that can provide the most effective management. However, first you should find out how it all began.

The definition of "production potential" appeared many times in printed publications before 1991. Under the planned economy of the country, this criterion was used to calculate plans for production capacity and production facilities. After the transition to a market economy, its presence was forgotten for some time.

Today, the category of "productive potential" has again become important. This is due to the need to justify the expediency of the taxation system and the formation of a rental payment scheme.

Introduction to the economy

Economists (A. Arzyamov and A. Berlin) in practice apply a compromise definition of the production and economic potential of the organization. They combine production and marketing (market) components. The production and economic potential of an organization is understood as the ability to produce and sell products more efficiently than competitors.

In a broad sensethe concept under consideration includes the resources used in production work, and the possibilities of their application. In other words, it is the overall ability of an organization to produce goods in a given period of time.

In a narrow sense, the category under consideration is characterized by the total number of goods produced for a specific period of time.

Activity Levels

Production potential is a set of economic relationships that directly affect production capacity and efficiency. It is implemented at several levels of government:

• sole subject of the economy (company, institution, enterprise);
• industries (forestry, oil, chemical);
• subject of the Russian Federation or other territorial system;
• whole state (national economy).

Production potential differs from one enterprise to another, depending on the set of criteria taken, the level of the hierarchy. You can compare them by choosing a common method of analysis and evaluation.

Quality Seal

Production potential is a complex of material, production, labor resources of the organization used to achieve the goals in the production business. Its level is assessed using the following criteria:

• material consumption;
• company capitalization (market value);
• volume of goods sold for a given period;
• production value (labor productivity);
• value of working capital;
• share of superior quality products in total production program;
• availability of a full portfolio of applications for the sale of goods.

The real use of productive capacity can be calculated. To do this, summarize the costs of land, labor, material and technical resources. The greatest production efficiency is achieved with the simultaneous improvement of production and management. It is also formed due to the most effective interaction of employees with technical equipment. As a result, there are three areas of production improvements - labor, production, management.

Parties

Production potential is a special part of the enterprise, which is characterized by the following aspects:

1. The subjective side is the ability of the company's employees and the whole subdivision to follow the sequence of the production process, to achieve the set goals with the existing level of technology, to produce a large number of services or material benefits, subject to the effective use of existing reserves.
2. The objective side is characterized by a system of natural, material (non-material), labor resources, for certain reasons used (not used) in production and having a real opportunity to take part in the company's production processes.

The key link of the enterprise is the production potential, the main goalwhich is the transformation of the initial means of production into finished products. This is done through the manufacturing process.

Management

If the management of production potential is carried out separately from the general functions of managing the company, questions arise regarding the structural development of the company and the possibility of realizing the existing potential. The solution of some blocks of functions in the context of working subsystems will not provide such a high result that can be achieved with the right combination of organizational components.

Reducing the negative impact of these shortcomings is possible through the formation of a common mechanism for managing production potential, which will ensure the creation and use of the latter. This mechanism is a set of links between which the relationship is established with each other, therefore they provide the greatest efficiency from the application of the company's production potential.

Analysis

The company always strives to achieve significant savings on production facilities through the use of new devices, modern technologies, new methods of production management. Interchangeability of all types of components of the potential cannot be achieved in any way, this can only be done within the framework of any component.

Studying methods for assessing production potential made it possible to establish its key types:

1. The qualitative method is characterized by the evaluation of system components, oftenconducted in the form of questionnaires and interviews. The advantage of the method is that it works for non-quantifiable criteria. It also allows you to take into account the impact of individual qualitative criteria. The disadvantage of the method is that the reliability of the analysis is directly determined by the competence of specialists, and the final value is subjective.
2. The quantitative method allows you to find the amount of money spent on production. The advantage of this type of assessment is determined by the fact that it gives a quantitative idea of the object under study, it becomes possible to find the influence of each link in the structure of the production potential (there is a share of any element). The disadvantage of using the method is the inability to take into account the qualitative fluctuations of the system.

Universal technique

Today, there is no universal methodology for assessing the production potential, which takes into account both quantitative and qualitative values. Why? Let's take an example. Knowing the number of employees of the production department, without establishing their level of specialization, it is impossible to identify labor productivity and the level of potential development of the entire production. Thus, we get that there are many factors, besides, they have different proportionality, and it is difficult to make a correlation between them.

Prospects

Development of production potential, in addition to the high-quality and efficient use of production resources, alsooccurs due to external and internal cost savings.

In the difficult conditions of the country's economy, external savings are a significant criterion for the formation of production, since the profit received from locating production in a certain territory can significantly cover the cost savings that occur in places where resources are extracted or near the sales market.

On the ground

The production potential of the region is a complex of potential production infrastructures located on the territory of this subject, ensuring the production of material goods to meet the needs of society.

Within this concept, one can distinguish the potential of agriculture, industry, construction, that is, the potentials of industries related to the production area.

Specifics

The instability of the economic and financial situation in the country, characterized by fluctuations in inflation, an increase in interest rates on loans and taxes, may adversely affect sales volumes, the time of formation of "leaving" from "incoming" funds, which will inevitably lead to trouble. These issues could reduce output and lead to debt defaults.

For the most part, the production potential of an organization is determined by the state of the macroeconomic situation in the country, the subsystem of the economy and the microsystem itself. Thus, its effective application turns out to be decisive for the productive work of a manufacturing company.

The effect of the chosen strategy for the development of the enterprise largely depends on the use of production potential. This is confirmed by the scientific works of many authors dealing with the issues of its evaluation and application.

The future of the country

Scientific discoveries and research and production potential (STP) of enterprises are becoming factors that determine the sustainable development and strengthening of the national security of each state. In addition, they increase the competitiveness of the state in the international arena.

In modern conditions, to ensure economic growth, state stimulation of the development of scientific and technological progress is of great importance. Research and production potential is formed under the influence of innovative factors. This includes qualification conditions for scientific and engineering personnel, development of regulatory protections for intelligent systems, investment in research and development. STP comes with a lot of risk.

For most companies, competitive success is directly related to the state's government science and technology strategy. The world's 700 most successful businesses include 76 companies from Japan, 218 from the US and 218 from Europe.

New technologies

The production and technical potential of the company is potentially the maximum production (quality + volume) of finished goods (services) in the conditions of effective use of production mechanisms and the means existing in the company.

In the context of the definition, the expression "potentially maximum" means thatcertain requirements are met: products are produced with the existing level of technology and equipment, with the appropriate use of technology, with modern forms of organizational production and management, with the presence of an effectively developed and implemented system of motivation for production workers.