Rural ICT Development And National Level Implications

At the national level, a strong commitment to rural development policies is needed. To eliminate rural poverty and to obtain increased agricultural production, such steps as aspects of land reform may be introduced. This may even need a major political change. Government objectives should poor, low-income farmers and peasants. There should be coordination between national plans and rural and agricultural development programs projects under way in developing countries at present, very few of these developing nations have a well planned, well operated, articulate, systematic and efficient rural development program-me.

Often, in many developing countries, the relationships between input and output and also between the prices of agricultural products and prices in the other sectors of the economy are such that economic growth is not stimulated in the rural areas. Frequently, manufacturing and processing industries are favored at the expense of agriculture. Thus raising costs of inputs such as fertilizers, etc and making the adoption of new technology and new ideas by farmers risky or unrewarding. Also when cheap food is provided to urban areas with a subsidy to farmers, often large numbers of small farmer do not benefit by such subsides. It is, in the long run, less costly and more beneficial to have a minimum guaranteed price for farm products than to have subsides

In most developing countries, fiscal policies have shown considerable inconsistency in their approach to rural development. For example, when a large portion of public expenditure is used in favor of urban dwellers while in rural areas, only the few well-to-do benefit from many of the social and other services provided. Indirect taxation puts taxes on goods and services so that rural poor people pay a greater percentage of their income in taxes than the rich.

Cost recovery of publicly financed investments such as main highways, bridges, etc .., should be imposed in order to provide revenue for rural development and for the rural poor who are unable to pay any imposed progressive taxes. Absence of an imposed progressive tax on national investments or services will severely limit future undertaking by the government in rural areas, even though the economic and social returns may be high.

For rural development to be effective in developing countries, land reform can act as an essential element (see chapter 4). The income of peasants and subsistence farmers in many parts of the world depends on the extent to which they control the land and its output. Land reform is needed, especially in areas of difficult tenancy producers and also before government expenditure on farm inputs and other projects intended for the benefit of small farmers, rural workers and rural people, can be effectively undertaken. Land reform carried out without proper planning and provision of some physical and social infrastructure is doomed of fail.

In a developing country a rural development project may be composed of several programs with different objectives covering agricultural industrial and social services. Several sectors provide a whole range of facilities and services such as clinics, health centers, credit cooperatives feeder roads and water supply systems. Many of these services may best be located in small, rural towns serving the surrounding rural areas and villages. Small capacity service units may be located in the village and those with larger capacity in the towns. As rural development progresses and more workers migrate to towns, the regional planning of rural and urban areas has to be coordinated and given greater supervision. Before regional rural development policies are formulated careful study of human, physical and natural resources available to each region, in particular the less fortunate areas should be made. The growth potential and resource endowment of each area must be appraised to establish the procedures for finance and investment policy

In many developing countries 60 to 80 percent of small farmers have limited or no access to institutional credit. A high percentage of credit in these countries is short term. In rural areas, the use of credit for increased economic production will benefit rural people, provided the following conditions are observed

  1. New technology, innovations and improvements which show definite and clear economic grain for rural households or for the borrower should be adopted.
  2. Farmers should be using production credit, and also have access  to necessary training and skills to m make effective use of innovations and credit
  3. Existence of good delivery systems which provide the ready and timely inputs required farm produces and the market outlets for them.
  4. For small farmer, a comprehensive package program which increases the productivity and easy sale of farm product should be arranged.
  5. To replace to supplement credit from traditional sources that charge high interest rates, to overcome in elasticities in the supply of credit, to alleviate the seasonal financial problems of rural households, to encourage small farmers to raise their output, more and more institutional credit is required by farmers and rural people
  6. Land reform once implemented and pursued wisely, sharply

increases the demand for credit from former peasants and tenants

For most rural development program to be viable, the following points on the introduction and flow of technological ideas should be considered

a.   Continuous flow of field-tested easy to apply and proven technological information relevant to small holders small producers and to farm production, should be available at all times. This information must be revised and updated as more economical efficient, newer techniques and developed and implemented

b.   Without new technological improvement rural poor people cannot substantially increase their earnings as a result of the investment made by governments.

c.   For specific geographical areas with limitations on higher production, such as high and rolling country, mountain regions arid zones and hot and humid forests where population is spares and scattered etc, special techniques and technologies should be evolved.

d.   Technological factors important to small farmers and rural enterprises should be given special attention. Research priority should be given to matters such as easy pest and disease control methods, the use of high yielding varieties or poor man’s crops such as millets sorghum, cassava, yam, pulses and upland rice

e.   Applied research adaptation of innovations at the village level, well-planned extension service all are highly essential. Many failures of rural development projects in the past have been attributed to inadequacies in research, adoption of new ideas extension work, reliable evaluation methods and continuity

f.    The peasant on subsistence agriculture, the low- income small rural operator and landless rural poor people require as compressive an approach as the farmers in order to improve their production and other aspects of their lives.

Education of the rural masses and the poor is highly important as apart of a national plan for rural development. There are minimum learning needs in the form of ‘’basic education” which include educational literacy, numeracy, the knowledge and skill required for earning a living, operating a household including family health, childcare, nutrition and sanitation, and civic participation time and costs involved in providing primary school education has promoted many developing countries to turn to information about the most cost effective education for adults. A survey by the world bank (2,57) showed small scale training and education operations, by a wide variety of different agencies were often not integrated into a national development education of the rural masses in developing countries for the effective implementation rural development. Rural education should be considered in terms of the national plan and educational policy and should be based on the following principles:

a. Primary education should be low cost. Reduce waste and be of high quality

b.Use of mass media, simplification of curricula, adaptation of curricula to local needs. Age of entry to school, length of school cycle, adaptation of indigenous learning systems. And size of classes should be studied and implemented in educational policy.

c. Education may be integrated with employment and rural development where students receive effective training in skills, self employment and new opportunities as is the case with a project in Botswana (299) in the Swaneng Hill and Shahe river schools.

  1. The education of rural people at all levels should be functional in serving specific target groups and meeting their specific requirements.
  2. Rural education programs should be planned as part of a total education plan and delivery system. The programmers should also co-ordinate the other activities of the community such as health and credit by using multipurpose centers. Examples of multipurpose centers are the rural training centers and community education centers in Tanzania.
  3. Rural education projects literacy programs etc. should be integrated with other development activities, and whenever possible should provide appropriate inputs and services. Such integration and linkage can be seen in the Comilla project in Bangladash (209a) and the program on agricultural credit and cooperatives in Afghanistan (PACCA).
  4. Basic education and training of rural people should be flexible in terms of costs and management, and in using existing facilities and resources so that continued effective implementation of programs can be maintained.

~~ These are the notes from my Rural Development class @ UoM ~~

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Dynamics GP – Production Cycle Applications

Production control, inventory control, inventory control, cost accounting are typical functions in the production cycle of manufacturing firms.  Few if any production-cycle activities exist as separate functions in non manufacturing firms, but to same existent moat organization hold some inventories and manage some type of production control are relevant to most organizations. This section discusses accounting applications systems found in an organization’s production cycles.  The central feature of the illustrated applications is the segregation of duties to achieve organizational independence.

Production Control

Cost accounting system focus on the management of manufacturing inventories: materials, work-in process (WIP), and finished goods. Internal control over inventories and production is based on separation of functions and basic records and documentation, such as production orders, material requisition forms, and labor time cards. Protection of inventories from physical theft involves security and access provisions as well as periodic physical counts and tests against independent records.

File and Reports

Production control involves planning which products to produce and scheduling production to make optimal use of resources. Basic production requirements are provided by the bill of materials and master operations list. Detailed materials specifications for a product are recorded on the bill of materials. The bill of materials lists all required parts and their descriptions in subassembly order. The bill can be used as a ready reference for replacement parts, as an aid in troubleshooting subassemblies, or as a parts list for the end user. By distributing copies of bills to all affected departments, management can ensure uniform access to accurate, up-to-date information at every operation, their sequencing, and their related machine requirements are specified in the master operations list for a product. The bill of materials and the master operation list are used extensively in the production control function. In a standard cost system, the standard material and labor costs might be included on the bill of materials and master operations list.

Determining what products to manufacture requires an integration of the demand for a product, the product requirements, and the production resources available to the firm. Resources available for production are communicated to the production control function through inventory status reports and factor availability reports. A few material status report details the material resource in inventory that are available for production. A factory availability report communicates the availability of labor and machine resources. Demand requirements for a product depend on whether it is custom-manufactured per customer order or routinely manufactured for inventory. If the product is manufactured for inventory, production requirements depend on a sales forecast, which may be sent to production control from the sales or marketing department. Sales forecast must be related to the amount of a product held in inventory. This information is provided in a finished goods status report, which lists the quantities of products plan lists.

Transaction Flows

The production order serves as authorization for the production departments to make certain products. Materials requisitions are issued for each production order to authorize the inventory department to release materials to the production department. The items and quantities shown on a materials requisition are determined from the specifications in the product’s bill of materials requisition are determined from the specifications in the products bill of materials. Note the flow of the materials requisition and production order in figure 1 the cost accounting function receives a copy of the production order directly from producer is complete. In similar fashion, cost accounting receives copies of materials requisitions from both the inventory control function and the production departments. This distribution of documents implements an adequate segregation of duties and provides accountability for the production departments.

Labor operations are recorded on job time cards. These cards are posted to production orders and forwarded to the cost accounting department. The periodic reconciliation of time cards to production labor reports is an important internal control function. This function was detailed in the discussion of payroll processing.

Production status reports are periodically sent from the production department to the production control function. A production status report details the work completed on individual production orders as they move through the production process. It is used to monitor the status of open production orders and to revise the departmental production schedules as necessary.

The central document in the foregoing process is the production order. A copy of the production order is sent to the cost accounting function to establish a WIP record for each job.

Cost Accounting

The cost accounting department is responsible for maintaining a file of WIP cost records. New records are added to this file upon receipt of new production orders. Initiated by production control, materials costs are posted to this file from copies of materials requisition. Direct labor costs are posted from job time tickets. Overhead costs are often applied on the basis of direct labor hours or direct labor costs and, therefore, are posted at the same time as labor costs. Cost accounting initiates a journal voucher reflecting each batch of job time tickets posted that contains a debit to WIP and credits to payroll and manufacturing overhead. This journal voucher is transmitted and posted to the general ledger.

As production orders are completed and goods are transferred to inventory, several documents must be update. Productions control the production order from its file of open production orders. Cost accounting closes the related WIP record , summarizes this activity, and communicates a completed production cost summary to various managers. The finished goods inventory records are updated to reflect the availability of the product.

Control of production efficiency requires comparisons of actual production with scheduled production and an analysis of related variances. Production control also requires a comparison and analysis of other factors, including budgeted cost versus actual cost for individual production order and /or departments, and facility usage versus facility availability by department. The control of inventory loss and the maintenance of optimal inventory levels are also important to overall production control.

Inventory Control 

The control of inventories is accomplished through a series of inventory records and reports that provide such information as inventory use, inventory balances, and minimum and maximum levels of stock. Recorder points and procedures are established. A reorder point is the level of inventory at which it is desirable to order or produce additional items to avoid an out-or-stock condition. The development of reorder points requires an analysis of product demand, ordering or production lead time, inventory holding costs, and the costs associated with an out-of-stock condition such as lost sales or inefficient use of production facilities.

Because inventory control aims at minimizing total inventory cost, an important decision to be made is the size of each purchase order quantity, that is, the most economic order quantity (EOQ). The reorder quantity must balance two system costs- total carrying costs and total ordering costs. A formula for calculating the EOQ is

where

EOQ = economic order quantity (units)

R= requirements for the item this period (units)

S= purchasing cost per order

P= unit cost

I = inventory carrying cost per period, expressed as a percentage of the period inventory value

Once the EOQ has been calculated, the timing of the order must be decided; that is, the reorder point must be determined.  If the order lead time and the inventory usage rate are known, determining the reorder point is straightforward. Lead time is the time between placing an order and the receipt of the goods.  The inventory usage rate is the quantity of the goods used over a period of time.  The reorder point should be where the inventory level reaches the number of units that would be consumed during the lead time.  In a formula:

Reorder point = lead time x average inventory usage rate

Perpetual inventory records are the best source of the inventory information necessary to calculate the EOQ.  The units in the beginning inventory, on order, receipts, issues, and balance on hand, should be included in these records.  Appropriate control over inventories requires periodic verification of items on hand.  This can be done on a rotating basis when perpetual inventory records exist, or it can be done with a periodic physical count.

An important part of inventory control is the evaluation of inventory turnover to determine the age, condition, and status of stock. Special controls should be established to write down obsolete and slow-moving inventory items and to compare the balance to an appropriately established inventory level. A stock status report showing detailed use by period is especially helpful in maintaining the inventory at a proper level and controlling slow-moving items.

Control over inventory includes methods of storing and handling. Items need to be classified and properly identified so that they can be located appropriately and so that proper verification and reporting are possible.  The storage and handling of items must provide security against embezzlement, protection against damage or spoilage, avoidance of obsolescence, and assurance of proper control.

Inventory is a substantial investment.  An inventory control system should provide status reports on each active product so that the company can reasonably meet customer demands.  Because of the large number of inventory items and the variety of transactions affecting them, it is difficult to keep inventory and production information up-to-date with manual systems.  A computerized inventory control system can result in a substantial reduction in inventory investment.  These savings include a reduction in inventory without a corresponding decrease in service, determination of economic order quantities and order points, establishment of adequate safety stocks, and forecasts of future demand based on current and past information.  Usage records, turnover and obsolescence analyses, reorder cult to generate in purely manual systems.

Just-in time (JIT) Production

Just-in time (JIT) production is a term used to describe a production system in which parts are produced only as they are required in subsequent operations. JIT systems differ from conventional productions systems in the inventories of Work In process, raw materials, and finished goods are minimized or totally eliminated. The raw materials inventory, work –in process inventory, and finished goods inventory are shown within dash-line boxes to indicate that they are eliminated to the extent possible in JIT production.  The terms minimum inventory production system (MIPS), material as needed (MAN), and zero inventory productions system (ZIPS) also describe this concept of minimizing inventories.

Inventories serve as a buffer between different operations.  Inventories are eliminated by carefully analyzing operations to yield a constant production rate that will balance input and output at the various stages of production. JIT production also emphasizes quality control.  Because inventories are minimized, defective production has to be corrected immediately if the constant flow of production is to be sustained.  Vendors guarantee timely delivery of defect-free parts that may be placed immediately into production rather than first being placed into raw materials inventory. 

The financial benefits of JIT production system is primarily from the overall reduction in inventory levels.  This reduces a firm’s total investment in inventories. Costs such as handling and storing materials, obsolescence, storage space, and financing charges on total inventory cost are reduced, perhaps significantly.  Other benefits include possible lower labor costs as operations are redesigned for constant-flow production, quantity discounts from vendors who in return receive long-term contracts, and increased emphasis on quality production and the corresponding reduction in the cost of waste and spoilage.

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