Raw material procurement
One should have a good supply network. This means that he should have a supplier who can provide him with raw material requirement at a right time, place & in a required quantity at minimum amount of time.
Thus it also implies that he should be in a possession of automated machine in the case the raw material
are large & bulky. This help in reducing the time required for the transport & movement of the goods from one place to another.
PRODUCTION PROCESS
In the production process there should not be any time lag from the time of actually receiving the raw materials & the starting of the production process. This means as soon as the materials arrive they should be introduced in the production process. This therefore meant that the company will be following the just in time policy(JIT) which simply means that the requirement of the company will be fulfilled at the time required thus reducing the work in progress & thus increasing the efficiency of the company.
FINISHED GOODS
The goods once produced should be held in the company’s possession as the company capital would be blocked up in these goods. Thus it is essential that the company sell all these finished goods as soon as possible so as to allow the company reacquires its capital employed in the operating cycle.
RECEIPT OF SALES
The receipts of sale of the money from the debtors as soon as possible so as to regain the money along with the profits. This is how the operating cycle operates along with how it can be improved so as to enable the company to regain the money invested in the production of the goods.
One should have a good supply network. This means that he should have a supplier who can provide him with raw material requirement at a right time, place & in a required quantity at minimum amount of time.
Thus it also implies that he should be in a possession of automated machine in the case the raw material
are large & bulky. This help in reducing the time required for the transport & movement of the goods from one place to another.
PRODUCTION PROCESS
In the production process there should not be any time lag from the time of actually receiving the raw materials & the starting of the production process. This means as soon as the materials arrive they should be introduced in the production process. This therefore meant that the company will be following the just in time policy(JIT) which simply means that the requirement of the company will be fulfilled at the time required thus reducing the work in progress & thus increasing the efficiency of the company.
FINISHED GOODS
The goods once produced should be held in the company’s possession as the company capital would be blocked up in these goods. Thus it is essential that the company sell all these finished goods as soon as possible so as to allow the company reacquires its capital employed in the operating cycle.
RECEIPT OF SALES
The receipts of sale of the money from the debtors as soon as possible so as to regain the money along with the profits. This is how the operating cycle operates along with how it can be improved so as to enable the company to regain the money invested in the production of the goods.