Question

How can manufacturing and design departments make process decisions independently of the sales department's pricing the product and still have profits maximized?

Answer 1

The manufacturing and design departments make process decisions independently of the sales department's pricing the product and still have profits maximized in the following ways:

a) Standardization: The manufacturing department should follow standardized processes while manufacturing the product. It has several advantages associated with it such as low production cost, increased productivity, easy replacement and repair, reduced training time and cost, improved quality control, etc. All this will contribute towards profit maximization.

b) Quality Management: Manufacturing and design departments aims to address quality management by emphasizing value and technological breakthrough in business processes. Quality standards and quality implementation should be based on customers’ expectations. High quality products are always preferred by consumers & they intend to buy such products, so this will help to maximize profits.

c) Process & capacity design: Manufacturing and design departments aims at optimizing resource utilization and standards implementation for effective and efficient production processes. Measures should be adopted to maximise productivity and minimize costs which will automatically boost profits.

d) Design of goods & services: Manufacturing and design departments strategically maximize productivity within the operational limits based on product design. The aim is to fulfil the customer expectations by designing such goods that fulfil their needs & wants. Differentiated and innovative products should be produced in order to compete in the markets. Innovative product design helps to achieve competitive advantage & hence maximize profits.

e) Location strategy: A location is more desirable if it entails high productivity and lower costs of supplying the finished goods to the product markets. Lower transportation costs will help to increase the profits of the firm.

f) Layout design & strategy: Layout design and strategy include operational considerations like assembly lines and corresponding movement of materials, intermediary products, and finished products. Many of the benefits of a product layout relate to the ability to divide required work into a series of elemental tasks that can be performed quickly and routinely by low-skilled workers or specialized equipment. This will help to increase the productivity & reducing unnnecessary costs & thereby increase profits.

Thus, process decisions taken by manufacturing and design departments can help a firm to maximize its profits. Pricing of the product by sales department is not the only factor that maximizes the firm's profits. There are various other factors that help a firm to maximize its profits.