Wednesday, August 20, 2014

Production Efficiency

by Antonio C. Antonio
November 25, 2013

Production efficiency occurs when a good and/or a service is produced and/or provided at the lowest cost using cost efficient production methods and technology.  From the purely business standpoint, the primordial reason why people go into business is profits, which is the result of the application of sound management practices (or PODC [planning, organizing, directing and controlling]).  Although the application of sound management practices should be the standard, there are peculiar situations especially in the upland where out-of-the-box practices also work.

In the case of timber production which is a traditional upland business activity, sound management practices will still apply but with an additional purpose and objective which is goodwill.  Doing business in the upland for profits alone will get you nowhere without building goodwill among the upland dwellers.  We should not lose sight of the fact that upland dwellers are the poorest of the poor, are less educated, and are ruled by traditions and customs which may not conform well to modern business practices, have a defensive dislike or distrust for other people especially lowlanders, and have been exploited for so long.  These peculiarities make upland management and governance fairly different.  A workable and applicable CSR (corporate social responsibility) program should be an accompanying plan to the regular harvesting, reforestation and silvi-cultural plans.

Production efficiency also plays a critical role in the profitability of timber production.  Labor, fuel and equipment and road maintenance are the bigger items in the budget.  Equipment availability is also a crucial factor since the predominant weather in tropical rain forest areas (where most timber harvesting activities are found) is rainy.  In fact, like in the Caraga Region, there are only four dry months in a typical year where harvesting activities could be maximized.  Harvesting plans geared towards production efficiency should be made to conform to weather conditions.

The primary objective of production efficiency in the uplands is the maximizing the utilization of harvested forest and timber products.  Maximum utilization will certainly increase profitability which should translate to more benefits to a greater number of people particularly the key stakeholders… the upland dwellers themselves.  The presence of other aims and purposes will not be ideal; equitable distribution of wealth should be the main concern of production efficiency.

Just my little thoughts…

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