Technical Product Policy Improvements in Machine-Building Enterprise

Author Name(s): Anton N. Karamyshev
Author Email: antonkar2005@yandex.ru

Abstract

Many models for assessing the maturity of the process management system of an enterprise (in particular, “CMMI”; “classification of the states of the process management system in industrial enterprises” proposed by A. Karamyshev, I.I. Makhmutov, S.A. Sych, a five-level maturity model “BI”, etc.) the highest level is called the pursuit of excellence. At this level, there is a continuous improvement of all subsystems of the enterprise and increase its overall competitiveness. However, quantitative methods that implement the pursuit of excellence have not been proposed. Currently, the implementation of the highest level of maturity of process management is, in many ways, a non-systemic process. Authors and researchers that deal with the enterprise management systems based on business processes understand pursuit of excellence as the optimization of almost any activity. In this regard, the task of systematically determining the most significant and giving maximum economic effect points of application of effort is relevant. This article proposes a model of permanent improvement of the product policy of a large machine-building enterprise, which allows determining products with low profitability, to plan measures to increase the specific and total profit, taking into account the share of overhead costs of the enterprise attributable to the cost of each type of manufactured products.

Introduction

The task of forming a production plan that maximizes the total profit from the sale of marketable products is relevant for large industrial enterprises. The basis for making a management decision to include certain products in the production plan are economic indicators (specific profit and profitability of production). Also, a production plan should take into account the following important factors:  The assignment of part of the overhead costs to the cost of low-profitable production. The exclusion of such products from the production plan will lead to a redistribution of these costs to the rest of the manufactured products, which will lead to an increase in unit cost. Under these conditions, it is advisable to exclude low-profitable products from the production plan only if there is the possibility of quick loading of the released production capacities by the production of products with higher profitability.  Overhead costs of an enterprise amount to 15 percent or more in the total costs of an industrial enterprise [1,2]. An important is the task of their reasonable distribution on the products. The most common for industrial enterprises methods for allocating overhead costs to the cost of goods (“boiler” and derivatives derived from it, in which the distribution of overhead costs is carried out in one or several stages) distort the cost of production in terms of overhead due to methodological problems of their justified distribution. This distortion is expressed in an increase in the value of one product and a decrease in the value of another, i.e. one product subsidizes another.

Conclusion

The proposed model is based on the author’s method of calculating the cost of production of a large machine-building enterprise, taking into account the principle of multi-cyclical distribution of the cost of auxiliary business processes.

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