PRINCIPLES AND PRACTICES OF MANAGEMENT

UNIT 4 RESOURCE MANAGEMENT

Objectives

After going through this unit, you will be able to:

• Describe about basic concept of resources required in an industry.

• Identify different resources required.
• Demonstrate how resources are put to use to obtain better quality product in the
organization.

Structure

4.1 Introduction

4.2 Management of Resources

4.3 Information as a resource

4.4 Characteristics of information

4.5 Information in a business industry

4.6 Human being as a resource

4.7 Finance as a resource

4.8 Managing financial resources in the organization

4.9 Time as a resource

4.10 Managing time for productive business

4.11 Material as a resource

4.12 Inventory management

4.13 Keywords

4.14 Summary

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4.1 INTRODUCTION

Resources are materials and components that can be used and found within the environment.
Air, water, sunlight, mineral materials, marine resources are some of the natural resources,
those used for producing energy, food, shelter etc. While we find scarcity of some of these
resources and these may get depleted if not used properly. These natural resources are
obtained to satisfy human needs.

The natural resources are used as the raw material for the industry or a business. Resources is a
source which is processed to obtained best results i.e. product, that can be used to bring
comfort for the human beings. These resources satisfy the needs of a living organism. Allocation
of these resource is, the scheduling of activities and the sources required by those activities by
considering resource availability. For this strategic planning is necessary.

The business [Link] defines resources as -

“An economic or productive factor required to accomplish an activity, or as means to undertake

an enterprise and achieve desired outcome. Three most basic resources are land, labor, and
capital; other resources include energy, entrepreneurship, information, expertise, management,
and time.”

Finance

Time
Material
Management

Production
Process

human
Intellectual Information
resource

Fig 4.1

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4.2 MANAGEMENT OF RESOURCES

These resources need to be managed effectively and efficiently for better use. Resource
management is a process of using a company’s resources in the most efficient way possible.
These resources may be tangible or intangible resources. Goods, machinery, finance or human
resource such as employees and workers are tangible resources. Information is intangible
resource, but total productivity affects the amount of information a company possess. Large
organizations usually have a defined corporate resource management process which keeps track
on exact allocation of resources. Resource management technique is used to smoothing the
stock of resources on hand, reducing both excess inventories and shortage. Presently demanded
resource and forecasting the demand into the future need to be considered for resource
configurations. The goal of resource management is to achieve 100% utilization to obtain
qualitative products. Resource development activity is included in resource management. The
basic principle of this is to invest in resources as stored capabilities and adequate distribution as
per the demand.

Table 4.1

People Directs and monitor’s the activities

Finance Use monetary resource to obtain profit and sales target

Material Maximum utilization for better production and minimum wastage

Information To cope up with the future changes.

Machinery Appropriate and updated equipment to get quality product

Time Ensures better quality and maximum productivity

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Activity 1

Find out resources that your parents need to manage a family every month. Sources from
where they obtain it. Quantity of resources they required. How those are utilized so that all
family members needs are satisfied.

4.3 INFORMATION AS A RESOURCE

Collected data is converted and put for the use is termed as information. Information is nothing
but a thing gathered from different sources. Information is an intangible virtual concept.
Information is, which is transmitted by the act or process of communication, it may be a
message, signal, stimulus etc. This process of act assumes a response at the receiving end and is
communicated through formal or informal way. Data may be facts or figures that are processed
for information. Information is a random collection of data that is used by someone to achieve
the decided objective. Information is a random collection of data that is used by someone to
achieve the decided objective. This era is called as an information era and information society.
Due to the technological and communication development we are experiencing change in the
society.
According to ALA, World Encyclopedia of Library and Information Service
“Information is a property of data resulting from or produced by a process that produced the
data.”

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4.4 CHARACTERISTICS OF INFORMATION

1. Information is a form of processed data.

2. Information communicated brings changes to the recipient.
3. Information reduces uncertainty.
4. Information increases reliability and accuracy.
5. Information is a basis for growth and expansion.
6. Information is a source of invention and research.

4.5 INFORMATION IN A BUSINESS INDUSTRY

Establishment, growth, expansion and development of any business industry is possible with the
amount of information it receives. Information about new technologies, skill acquired by
knowledge workers, increased competition does affect changes in the nature of business. Here a
manager of any levels monitors, acquires, processes and distributes that information to the
respective employee for process. In this competitive situation, he constantly keeps a watch on
general happenings surrounded him. He grabs necessary and relevant information that will
affect changes to his business. This collected information is passed to relevant authorities for
further discussion.

Information could be collected through N number of sources like during the conversation with
friends or relatives, while observing and listening to news channels, during the community
festivals etc. Information is passes orally through person to person i.e. during face to face
conversation or through various communication medias. Print medias like newspaper, books
published thesis or dissertation, patents, journals etc. all support for dissemination of
information. Continuous input flow of information is also essential from other resources.
Information is treated as a commodity that incorporates exchange of information among
people. Information needs to undergo process that it needs to go through various steps of
creation, processing, storage, distribution and use. Information is an intangible asset and it is
regarded as a basic resource for national development. Information not just embedded within a
social structure but creates that structure itself. Information is treated as one national resource
like mineral resources, electricity, oil, human resource, finance etc. for national development.

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IBM a computer designing organization believes, that information is like an inexhaustible and
renewable source of energy. Information could be expensive to be produced. Information is a
resource, if that put to use it adds values to the product. McGowan a senior scientist said that
information by processing data and with telecommunication systems will increase productivity
on the plant floor and in the office. Telecommunication facilities like internet has created global
village to pass on information within a few minutes.

Activity 2

Find out for any information that has changed your routine recently.

Does this number of corruptions does affect political environment in the country. Your
reaction on Anna Hazare’s fast unto death movement over Lokpal Bill.

4.6 HUMAN BEINGS AS A RESOURCE

People is greatest resource of any business organization, it is a key to success in business.

Therefore it is necessary to attract, develop and retain talented, ambitious people so that we
have the resources we need to help our clients and grow our business. Employees are crucial to
the success of the business and therefore fulfill their potential needs is also important. It is

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necessary to ensure that managers and other workers have the right training and knowledge.
The updated skills empower them to make decisions and respond quickly to clients’ needs and
business issues. Innovative climate also encourages for self-development.

In business, it is essential to attract the right people to take up challenges and varied carriers. It
is possible by providing strong financial compensations, stable and inspiring working place,
rewarding performance, training and welfare facilities. Senior people are responsible for overall
direction and performance of the group. Generally HR policies are designed on the basis of
International human rights & employment legislation, International Labour organization
standards etc. Employees appointed need to be retained in the organization for stability and
prosperity. Training facilities to the employees ensures that they deliver right skills to offer
quality services. Training is provided through specific job related skills, personal development
and for professional development. To encourage employees to cope up with this diverse
workforce, now a days many business houses adopts family friendly approach. They offer
flexible working arrangements like home working, job sharing, term-time working, flexi time or
part time hours. Some companies now a days offer sharing saving and ownership schemes to
their employees. Guaranteed service continuity for customers is possible when appropriate
human resource is channelized through efficient and a stable leadership.

The complete HR structure approaches people development that encourages and motivates
high performance. With this proper co-ordination and integration among employees is also
necessary. This is possible through ‘open door’ policy and formal or informal communication
channels. Here every employee gets an opportunity to communicate their views.

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Activity 3

Prepare a chart how every member in the family contributes at their best capacity, so that every
member can prove better performance in their respective field. Write down how your parents
and other family members have supported you when you are facing stressed situation,
particularly in the exam period.

4.7 FINANCE AS A RESOURCE

Any business owner need to keep a track on this resource, as it is a blood line area of any
business. A small mistake and minute wrong decision may prove to be costly and may lead to
heavy losses. Financial resources mean the money that is available for a person or organization
to spend. For better financial resources the business owners need to find the best local credit
agencies those can provide financial support through loans. Financial resources could be raised
through internal as well external sources. Internal sources like personal sources, share capital,
own savings, and external factors like banks, credits agencies, government agencies, debt
factoring, by outsourcings the activities, hiring purchases on credit, leasing the equipment or
machinery, retaining profit, venture capital etc. The type of finance chosen depends on the

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nature of the business. Large organizations are able to use a wider variety of finance sources
than are smaller ones. Savings are an obvious way of putting money into a business. Where as,
in large organizations or businesses mainly external sources are used.

Table 4.2

Personal source To start a business and to make a dream true.

Shareholders Finance to set up and expand a business
Bank Loans to business houses
Creditors To satisfy short term needs
Suppliers Purchases on credit basis or leasing machinery for short term

The Q-Finance dictionary defined financial resources as - “The money that is available for a
person or organization to spend “.

4.8 TO MANAGE FINANCIAL RESOURCE IN THE ORGANIZATION

Business organizations need to find the trusted mentor, who can assist with setting up financial
resources. All organizations need to accurately plan, monitor and control their finances if they
are to be successful. To do this properly, they need employees who have a clear knowledge and
understanding of accounting and finance, alongside a good general business background.
Generally financial consultants, MBA graduates or former enterprises provide support to
manage the financial resources. SCORE, FBSBIndia etc. are some of the sites that help to find the
financial mentor. To manage the financial resources always it is necessary to choose good and
trusted accounts maintainer. The person will handle all the tasks to keep track in financial
matters. Finance software like Tally supports to manage cash flow of any business. Various
other software helps to find out exactly the right solution with detailed questionnaire is
available. Correct heading for each cash inflow or outflow is sorted out from dozens of choices.
Now a days mobile payment system allow faster and easier acceptance of payments in support
of the system called GoPayment. Even we need to understand and measure capital and
operational cost. Operating cost does not require complex depreciation calculations and can
easily adjust from year to year. Planning and budgeting is the biggest resource to manage the
financial resources. In this it analyses the costs for delivering existing services, deleting or

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adding any new services. Figure out cost for each service along with new recruitments, present
payroll or other production cost. Financial resources affect the quality and quantity of services.

Activity 4

Ask your parents how they prepare budget to manage monthly resources required in your
house. Find out resources which need to make a provision for annual expenditure and how
those are managed?

4.9 TIME AS A RESOURCE

Time is a most precious resource. The importance of time management has never been greater
than today. Day and night together i.e. 24 hrs a day and every minute of a day is precious. We
need time to eat, sleep and work to carry out our daily chores. A human body has set up its body
clock according to nature’s time table. We need to spare time for our family members, parents,
friends to understand them. Time is extremely important in our life; it helps us to structure our
daily lives and activities, so that we can live more organized, productive lives. Time management
is a technique that makes your every minute productive. It is said that ‘Time is Money’, but time
is more precious than money. If we lose money we can regain it with hard work, but loss of time
could not be recovered, as time does not wait for anybody. One should not waste his time. The
time flies never returns. We cannot get back the time. Scientist carry out their methods at the
right time, which proves them to be successful in their inventions. The Newton saw an apple
falling down from a tree and then discovered a theory of gravity. Time reminds us to act and act
wisely. Americans now a days are highly time-oriented people, they are giving enormous
importance to work according to the clock. It is one of the American value system. Japan has

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recovered everything what has been destroyed in the second world war with the, as they could
analyze their future in time.

4.10 MANAGING TIME RESOURCE IN THE ORGANIZATION

Time management means techniques and systems for getting things done effectively and
efficiently. There are some time management skills that provide remedial measures to manage
the business. In the business it is said that 20 percent of their product comprises 89 percent of
their sales. Therefore it is necessary to save time in the long run by discovering exactly which
products or services are delivering the business. For this, various techniques like PERT/CPM
(Where work flow is controlled by best time management project with best alternative), Kaizen,
budgeting, delegating authorities and responsibilities are used for quality work. Time can be
saved by preparing a priority list and to do list everyday in the morning. Last minutes
interruptions can make the perfect person forget to do a particular task. A brief but
thoughtfully prepared list will remind you to complete that task. This list helps to set the
reasonable goals. It is a duty of every businessman and people working with him to satisfy
customer’s requirements. But sometimes they may ask such things that are impossible to
deliver. Producing or trying to provide those services would be a wastage of time. In this
situation delegating this matter to proper employee or handling over to other organization is
better. Delegating authorities and responsibilities to subordinates save time and can be utilized
for quality and productive work. Business deadlines make people to manage their activities and
tasks in time. Deadlines are to be discussed with employee which will reduces loss of time and
make arch for new developments. Proper flow of communication avoids the miscommunication
which affects delay in project completion. By spearing little time for oneself and by taking a
break for a few minutes, relaxes his brain. This relaxation and small break improves the
productivity. With this employees work faster and make very few mistakes. By examining set
objectives on a regular basis, people can focus on day to day activities. This constant evaluation
can save time to discover which methods work for you. Some of the business houses outsource
their basic business activities like manufacturing of small parts of machinery or printing a
broacher or hiring labour by a contractor etc. Therefore it is necessary for every businessman
and his employees to keep a track on everyday schedule. Keep in mind that time is valuable and
we must use it wisely to move forward, that improves our quality of our life.

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Activity 5

Prepare a daily time schedule to make it productive at the maximum. And even for your
examination.

4.11 MATERIAL AS A RESOURCE

Material is an important resource in any industry to satisfy customer’s requirements with the
finished products,, that need to be processed with raw material. Material used for production
differs upon the type of industry. Fabric is a core material for garments industry; iron and steel
is a core material for machinery manufacturing industry; aluminum is for aeronautic industry;
wood for furniture making; copper wires, fiber for electronic industry; chemicals for paint
making industry; while human intellectual capital would treated as core material for industries
like Information technology, film industry etc.

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Production &
Raw Material Output
operation process

Fig 4.2

Raw material means work in process goods. Completely finished goods are treated as business
assets that are ready or will be ready for sale. Raw Material is a material or substance, used in
the primary production or manufacturing of a good. Raw materials are often natural resources
such as oil, iron and wood. Before being used in the manufacturing process raw materials often
are altered in different processes. Raw materials are often referred to as commodities which
are bought and sold on commodities exchange around the world. Raw materials are so
important to the production process that the success of a country's economy can be determined
by the amount of natural resources the country has within its own borders. The shortage of
material could be imported and finished goods are exported out of the boarders.

4.12 INVENTORY MANAGEMENT

Material in the organization is managed with the technique of inventory control system. It is the
technique of maintaining size of the inventory at the desired level by keeping in mind the future
requirements from organization’s economic view. Inventory system is in when and how to
replenish the material to satisfy the demand need for production. Raw material is a part of
inventory; it monitors and determines the level of stock. Inventory includes raw material, work
in progress, component parts and finished goods. Production operation is the process in which
inputs are raw materials and output is finished goods. To store the raw material in the godown
or anywhere in the company one need to consider factors like, amount of capital available,
space available, loss for perishable products, cost of maintenance, possibility of change in
technology, trend etc., price fluctuations, weather effect etc.

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Material management deals with campus planning and designing for the movement of materials
within the organization. This covers the acquisition of spare parts, raw material etc. and its
quality control, purchasing, shipping, warehousing of the material. The material department is
charged with releasing materials to a supply base, ensuring that the materials are delivered on
time to the company using the correct carrier. In some companies procurement and managing a
supply of it, is responsibility of one department, where as in some of the companies a separate
purchasing department shoulders this responsibility. The major challenge that material
managers face is maintaining a consistent flow of materials for production, incorrect bills,
unreported scrap, shipping errors, production reporting errors etc. Material manager even
needs to keep a check on timely releases to the supply base.

Activity 6

Find out material that your mother needs to manage her kitchen every month.

4.13 KEYWORDS

[Link] - Element of a larger whole, especially part of machinery or vehicle.

2. Inventory – the quantity of goods and materials in hand.

4.14 SUMMARY

Every manager has to manage the resources that are necessary for getting output in the form of
finished product. Finished product does differ as per the type of industry. It could be aircraft,
packed food, attractive packaging material, plastic items, graphic designing, garments, books,
other reading materials, audio/video CD’s and stationary etc. To produce a particular product a
businessman need to organize for number of resources. Human brain is an important resource
that coordinates other resources like finance, material, machinery and other equipment’s, as
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per the information he receives and most important of all is time that is to be considered to
higher productivity.

In large organizations separate departments handle and control the flow of following resources.
Purchasing of raw material and machinery would be responsibility of purchasing or inventory
department. Inventory department handles all demands and supply. To manage the cash flow,
an expert advice is obtained. Now a days in some of the industries they are coming up with
information section or have set up libraries within the business houses, who gather information
related to that particular industry, to monitor technological or political or weather changes that
may affect in future.

With the help of information and communication technologies to manage these resources,
computerized systems like ERP or MRP helps to manage the resources. These systems consist of
various modules that coordinates the activities of different departments. Mainly it is used to
manage inventory department, human resource and payroll systems. Packages like Tally
monitors cash inflow and outflow of the organization.

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