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which we can do on particular machine. The sample form for machine planning is
shown as below
Production Planning Planning for date _______ to date
_________
Prepared by _______ Approved by __________
First Shift / Second Shift
Technical Duration of Work Machine Description Time Promised
Details Machine Order No. of Work to Customer
Use No.
Sign of Supervisor Sign of Worker
Figure 5 Production Planning
6. Issue of Tools
This form can be used for issuing of work tools. It will help supervisor to identify
record of usage of tools. He would be able to locate tool if the same tool is required for
other work at different place. It also guides him to have maintenance of over utilized
tool. Format of issue of tools is as shown below,
Format for Permanent / Temporary Issue of Tools
Name:___________________________________ No.:_________________
Tools Issued Returned
Sign of Supervisor Sign of Worker
Figure 6 Issue of Tool Format
2.4 Budgeting for materials and manpower.
2.4.1 Introduction to Budget
The budget is the plan which intends to figure out expected operations revenue and
expenses of an organization for a future time period. In other words, for a business
entity budgeting is the process of preparing detailed statement of financial results
that are projected for a certain period of time. Budgeting is to estimate the future
while taking the management inputs considering internal and external factors of the
organization.
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In every organization, finance department plays a key role in preparation of budget
in consultation with higher management. Budget is a document, which is referred
for the health check of the organization during the budgeted period.
Budget is prepared to carry out various functions like planning activities,
controlling activities, developing projects, testing and implementing programs etc.
There are various such functions for which an entity prepare budget. Budgeting can
increase the chances of making profits within the given environment and help
decision making process of management.
The approach towards budget depends on the organizations phase. A new startup
will have incremental budgeting or a Zero-Base budgeting whereas a mature
company may have Kaizen Budgeting or Base Budgeting.
Types of budget
Figure 7 Types of Budgets
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2.4.2 Material Budget
This involves storing of materials, issue of materials to various departments.
Material budgeting refers to the procedure of preparing material or purchase budget
in terms of quantity and money value of materials to be procured in a specified time
period.
Material budget helps in estimating the material prices over a period of time. It also
analyses the material requirement.
Material budgeting ensures low risk of inventory planning, highest purchase lead
time, low transportation costs and better vendor relations.
A material budget shows the quantity of each type of raw material required by
months or quarters to produce goods.
Generally, Material resource planning (MRP) and Just in Time (JIT) methods can
also be used for preparing material budget.
The Materials Budget forecasts the level of purchases required on basis of materials
required for production and inventory levels.
Material to be purchased can be determined using following formula,
Materials Purchased = Materials Required + Ending Inventory – Beginning
Inventory
Format of Material Budget
Materials Required for Production 3500
Desired Ending Inventory 500
Total Material 4000
Less Beginning inventory 600
Total material required (A) 3400
Cost per unit (B) Rs. 10
Total cost of material purchased = A x B Rs. 34000
Table 1
Basic concepts of Materials Budgeting
Following are the basic concept of Material Budgeting:
Direct Materials Budget: Proper material budgeting is of utmost importance, even
when it comes to budgeting direct materials, which add up to the production cost of
an organization. Correct budgeting can lead to better projections of direct material
requirement. Here, direct materials mean the supplies needed for manufacturing
goods, i.e. raw materials, stores, stock and productive materials
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Material Consumption Budget: This is required after determining the production
requirement. The material consumption budget is based on the volume of
production. Material consumption per unit of output aids in preparing material
consumption budget for various kinds of materials to be used by the output.
Material Purchase Budget: This is required by both manufacturing and
merchandising companies. For instance, manufacturing companies measures the
quantity of materials to be purchased through production volume and inventory
requirement. This along with the value of materials for the period budgeted and the
materials inventory needed for sustenance. This is determined by considering the
consumption for budgeted production volumes and opening and closing inventory
requirement.
Factors affecting Materials Budget
Below are the some of the factors that affect material budgeting:
Production Budget should be considered the foremost factor in preparing such budget.
Material cost is also equally important. purchasing the material only when its prices
are lowest is considered.
There are certain materials that are prone to seasonal fluctuations. And therefore, it is
recommended to procure them only when they are readily available in the market.
The store position and the stock of existing material are also key considerations. If
your business does not have ample space, you should not be buying the stock in
advance.
Management policy, rules and regulations on JIT (Just-In-Time) inventory, inventory
level fixation and EOQ (Equal Order Quantity) are also major influencers to materials
budgeting.
2.4.2 Manpower Budget
According to Gorden MacBeath, manpower planning involves two stages. The first
stage is concerned with the detailed “planning of manpower requirements for all types
and levels of employees throughout the period of the plan,” and the second stage is
concerned with “planning of manpower supplies to provide the organization with the
right types of people from all sources to meet the planned requirements.”
Manpower Planning & Budgeting serves as the foundation for managing an
organization‟s Human Resources. It enables organizations to plan strategically to meet
current and future manpower needs, and prevents unnecessary surprises in maintaining
steady-state manpower. The formation of manpower budget is dependent on
production budget.
Manpower planning further assists organizations by ensuring positions is filled by the
right employees with the needed competencies, and appropriate planning is conducted
to align the manpower to meet future organizational goals.
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The more effective the development and execution of the manpower plan, the more the
organization is able to leverage its Human Resources for the accomplishment of its
strategic goals.
The Manpower Plan
The manpower plan defines the number, skills set and timeframe for the Human
Resource requirements. It addresses both the maintenance and growth of the existing
employee numbers. The Manpower Planning will be a strategic function with
objectives and goals in line with the corporate strategic objectives.
Determining Future Manpower Requirements
Future manpower requirements are determined by matching existing Human
Resources against projected volumes and types of work, and developing existing staff
or recruiting new staff to cater to those needs and develop the most effective mix of
core and support staff. To achieve the corporate objectives, all decisions made in
connection with the organization structure development and management is
incorporated into a manpower plan. Ad-hoc recruitment will be required to overcome
unforeseen staff requirements such as, replacements for sudden resignations, new
projects etc. Such ad-hoc recruitment will in turn feed into the manpower plan for
future planning purposes. The ad-hoc recruitment requirements should be approved by
the HR Manager and communicated to the HR Officer as early as possible.
Budgeting for Manpower Requirements
Manpower is an important function that impacts every employee in an organization
and that has a cost. Budget approvals for the manpower plan of each
Department/Project are sought in writing from the Department Head/Project
Manager. All requests for an increase in headcount or related employee costs must
be supported by a business case at the beginning of the calendar year and sent to the
HR Manager so that the costs are included in the budgets for the year.
The budgeting for manpower requirement refers to the funds that HR allocates to all
HR processes enterprise-wide. The HR budget will include funds allocated to
hiring, salaries, benefits, talent management, training, succession planning,
workforce engagement, and employee wellness planning.
HR budgets use financial information, performance results and historical data from
every department. Since the HR budget considers HR activities company-wide, it is
an incredibly complex yet essential document to determining a company‟s future HR
activities. Information in the HR budget includes but isn‟t limited to:
1. Forecasting on number of employees
2. Employee turnover rates
3. Salary data
4. Recruitment budget
5. New benefits programs
6. Training and development
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7. Payroll costs
8. Overtime
9. Incentive compensation
10. Strategic planning (data/consultants)
11. HR databases
The manpower budget is developed from the production budget. It allows the
company to know in advance possible labor requirements based on production
budget.
Effects of ignoring manpower budget are
1. Labour Shortage
2. Hire Workers at Higher Salary
3. Layoff Workers at Awkward times
4. Insecurity, Low morale among workers
How to prepare Manpower Budget?
a. Record projected units to be produced (from Production Budget).
b. Multiply by the Labor Cost per Unit to calculate the Total Labor Cost
Format of Manpower Budget
January February March
Units to be Produced (A) 1000 900 1100
Manpower cost per unit (B) 2 2.5 1.5
Total Cost = (A) x (B) 2000 2250 1650
Table 2
We can appoint number of workers based on number of units produced in particular
month. Suppose if one worker produces average 100 units of job per month and the
demand for one month is 1000 then we will need 10 workers to complete that work. So,
accordance with forecast we can appoint workers at right time at right place. It will also
help supervisor to make job descriptions in regard to completing that particular work.
ORGANIZING AT SUPERVISORY LEVEL
2.5 Organizing the physical resources
Organizing is the function of management which is followed after planning. Once
person have plans, they should organize the necessary resources for accomplish of
desired goals. The organizing become necessary when two or more people work
together to achieve common organizational goals. Organizing is necessary for
systematic and smoother functioning of any organization. Assigning the work and
granting the authority to attain goals are two important elements in organizing at
supervisor level.
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