Article Type : Research Article
Authors : Younis A Battal Saleh
Keywords : Corporate social responsibility; Economic responsibility; Effectiveness and efficiency; Functional organizational structure; Purchasing and warehouse department
Purpose: This study aims to identify and describe
the economic responsibility of PWD, based on the concepts of effectiveness and
efficiency.
Method: To determine and describe the economic
responsibilities of the departments that make up the FOS in any corporation,
the concepts of effectiveness and efficiency in accomplishing the tasks
assigned to those departments were chosen, taking into account the criteria for
evaluating the level of quality of effectiveness and efficiency.
Result: Through the concepts of effectiveness and efficiency in completing tasks, this study was able to determine and describe the economic responsibility for PWD that was chosen to be the subject of this study, as follows: Providing the tangible and intangible needs for other departments included in the corporation’s FOS in a timely manner, with the specified specifications and at the lowest possible cost.
Originality/Value: The idea of this study, which depends on the concepts of effectiveness and efficiency in performing tasks, can be adopted in defining and describing the economic responsibilities of the departments included in the FOS of any for-profit corporation. The economic responsibility of the departments lies in the extent of their commitment to the standards of effectiveness and efficiency in the performance of the tasks assigned to them. This study is an enrichment of the thought of CSR and it will be considered the starting point for many studies and research in this field.
Every corporation has
goals that it strives to achieve. These goals can only be achieved through the
combined efforts of all the departments included in the FOS of that
corporation. Each department has its own allocations of economic resources such
as money, fixed assets and human resources, which must be managed effectively
and efficiently to achieve the objectives of the corporation within the limits
of the powers granted to carry out the tasks assigned to it. Commitment or
non-commitment of these departments to their social responsibilities (economic,
legal, ethical and philanthropic), its positive or negative effects will appear
in the final result when reporting on the social responsibility of the
corporation as a whole. In the CSR evaluation reports that are addressed to
stakeholders, it will be mentioned that the corporation is or is not committed
to its social responsibility and not the department or departments in that
corporation are committed or not. CSR reports are issued in the name of the
corporation, not its departments. Depending on the concept of responsibility
and accountability in the business world, social responsibilities must be
defined for all corporation departments. In practice, stakeholders such as
society, investors, customers, suppliers, government, protection organizations,
etc. are often not interested in the results of the evaluation of social
performance of the departments that make up the FOS of the corporation being
evaluated. They look at the social performance of the corporation as a whole.
They don't care about the details. Strictly speaking, they do not pay any
attention to evaluating the social performance of departments. They form their
general idea of the corporation's commitment to its social responsibility
through what is published of reports and news in the means of communication
about the performance of that corporation. Attention to detail is the
responsibility of the corporation's management. Evaluating the social
responsibilities of the departments is within the competence of the
corporation's management. For example, to evaluate the extent to which a
corporation is committed to its economic responsibility, they will focus on the
achieved profit figure, which represents the extent of the corporation's
commitment as a single unit to this responsibility without evaluating the
extent to which the departments- that make up the FOS of this corporation, are
committed to their economic responsibility. Attention to details is the
responsibility of the corporation's management. The profit figure that appears
in the financial statements of any corporation, several departments contribute
to achieving it in different ways and methods. The profit figure in the thought
of CSR is an indication of the extent to which corporation is committed or not
committed to its economic responsibility. This number, whether large or small,
does not reflect the quality of the company's commitment to its economic
responsibility. The economic responsibility of companies, as described by
scholars, means maximizing profit. Through profits, corporations can survive in
the environment in which they operate and fulfil their other responsibilities
such as legal, ethical and philanthropic. The profit figure that appears in the
balance sheet is to evaluate the economic responsibility of the corporation as
a whole. This number does not come out of nowhere, but is produced through the
concerted efforts of all the departments included in the corporation's FOS.
Each department in the corporation has a specific role in the process of making
a profit. This role may be direct or indirect. The economic performance of the
departments included in the FOS of the corporation contributes to the
enhancement or deterioration of the profit figure for that corporation.
Accordingly, and in light of the concept of responsibility and accountability,
the economic responsibilities of those departments included in the FOS of those
for-profit corporations must be defined and described in accordance with their
basic tasks and functions. The evaluation of the economic responsibilities of
the company's departments is for the purpose of determining the extent to which
they contribute to maximizing the profit of the company as a whole.
When evaluating CSR, the
result of the evaluation- whether it is a failure or a distinction, is
attributed to the corporation as a whole, while the evaluation through which
the report is issued is a result of evaluating the social performance of all
the departments included in the FOS of that corporation. This means that all
the departments included in the corporation's FOS have social responsibilities.
Making a judgment about the extent to which the corporation as a whole is
committed to its social responsibility will depend on the extent to which its
departments are committed to their social responsibility. Also, the quality of
the company's commitment to its social responsibility will depend on the
quality of its departments' commitment to their social responsibility. Based on
the fact that each department included in the FOS of any corporation has a
special task that differs from the tasks of other departments, it will be
necessary to determine and describe the social responsibilities of the
departments. With regard to determining and describing the social
responsibilities of the departments included in the FOS of the corporation, it
can be said that, the philanthropic, ethical and legal responsibilities of the
departments are clear and there is no problem with them. The meanings of these
responsibilities for departments are not different from their meanings for the
corporation as a whole. As for the economic responsibility, it is not specified
for the departments. The economic responsibility of the corporation as a whole
means profit maximization. As for the departments, this responsibility needs to
be defined and described accurately according to logical criteria that must
correspond to the nature of the various tasks of those departments. The thought
of CSR did not specify the nature of the economic responsibility entrusted to
the departments included in the corporation's FOS. This problem is considered
one of the failures of the thought of CSR, which this study tries to solve. The
results of the evaluation of the social responsibility of any corporation are a
summary of the commitment and non-commitment of its senior management and
executive departments to their own social responsibilities. The commitment or
non-commitment of the corporation to its social responsibility is in fact the
commitment or non-commitment of one or some or all of the departments included
in the FOS of that corporation to its \their social responsibilities entrusted
to it \ them under its statute. In a more precise sense, the evaluation of CSR
is in fact an evaluation that includes all the departments listed in the
corporation's FOS, but the final evaluation result is attributed to the
corporation as a whole. For example, assuming that, the human resources
department in the General Electricity Company of Libya is not committed to its
social responsibility towards workers in the field of training on safety and
security precautions. This failure ?non-compliance? will be attributed to the
corporation as a whole, and not to the human resources department.
The content of the social
responsibilities (economic, legal, ethical and philanthropic) of the
departments included in the FOS of the corporation is the same as the content
of the CSR except for the economic responsibility whose meaning is different
for the departments. The economic responsibility of the departments means the
effective and efficient completion of tasks and functions in order to
contribute to maximizing the profit of the corporation. The economic
responsibility of the departments? be effective and efficient when completing
work tasks ?; The legal responsibility of the departments? obey the laws and Regulations.?;
The ethical responsibility of the departments? be ethical when completing work
tasks.?; The philanthropic responsibility of the departments? be committed to
the corporation's philanthropic policies and strategies .?
Since the idea of CSR
came into existence until the present time, all the literary writings about
this thought were and are still talking about the social responsibilities of
the corporation as a whole without reference to the social responsibilities
related to the departments included in the FOS of the corporation. Based on the
following fact, the commitment or non- commitment of the corporation's
departments to their social responsibilities will have a positive or negative
impact on the evaluation of social responsibility performance of the
corporation as a whole, it will be necessary to define and describe the social
responsibilities of the corporation’s departments, especially with regard to
the economic responsibilities of the departments that are considered unclear.
As for legal, ethical and philanthropic responsibilities, they are clear. All
departments whether senior management or executive departments contribute to
enhancing or deteriorating the social responsibility of the corporation as a whole.
If the talk is devoted to economic responsibility, all departments in any
corporation can contribute directly or indirectly to the enhancement or
deterioration of the economic performance of that corporation through their
obligation or non-commitment to their economic responsibility. Accordingly, the
economic responsibilities of these departments should be determined, with an
indication of how those responsibilities affect the economic responsibility of
the corporation as a whole. The economic responsibility of the corporation as a
whole is profit maximization. As for the departments included in the
corporation’s FOS, it means contributing to profit maximization by performing
their functional tasks effectively and efficiently. Corporate economic responsibility
is a specific and clear responsibility that means profit maximization. As for
the corporation's departments, the economic responsibilities are not clear, but
they can be determined. They may mean contributing to maximizing the
corporation's profit through the effective and efficient completion of the
tasks assigned to them. To judge the quality of this contribution, it must be
evaluated and measured with reasonable standards. For every administrative job,
there are criteria to measure the level of effectiveness and efficiency of its
performance to the fullest. To adopt the concept of responsibility and
accountability in the thought of CSR, it will be useful to define and describe
the social responsibilities of the departments included in the FOS of the
corporation. Evaluating the social responsibility of the corporation as a whole
without considering the performance of departments as independent units is a
violation of the concept of responsibility and accountability, especially with
regard to economic responsibility. Each department contributes a certain amount
to enhancing the economic performance of the corporation as a whole. This
contribution will be obliterated if the evaluation of the economic
responsibilities of the departments included in the FOS of the corporation is
neglected. Commitment or non-commitment of corporations to their social
responsibilities is the result of the commitment or non-commitment of its
associated or subordinate departments. Evaluating the social responsibility of
any corporation and issuing the final judgment about it is the outcome of the
successes and failures resulting from the commitment or non-commitment of its
departments and sections to its social responsibilities. Commitment or
non-compliance with social responsibilities by the departments and sections in
any corporation will be reflected positively or negatively in the evaluation of
the social responsibility of the corporation as a whole. For this reason, the
social responsibilities of all departments and sections included in the
corporation's FOS must be determined. Evaluating the economic performance to
judge the extent of the corporation’s commitment to its economic responsibility
focuses mainly on the profit number achieved during the financial period subject
of the evaluation, without evaluating the contribution of the departments
listed in the FOS of that corporation, while the increase or decrease of this
number depends on the extent to which the corporation’s departments are
committed to their economic responsibilities. They are departments that have
their powers and economic capabilities to accomplish the tasks entrusted to
them to contribute to achieving the corporation's goal related to profit
maximization, whose performance must be evaluated according to the principle of
responsibility and accountability. The lack of commitment of any department to
its economic responsibility may be hidden by the success of another department,
if the economic responsibility of the corporation as a whole is evaluated without
looking at the contribution of its departments included in its FOS. The
researcher presented the following argument, which is that, making a profit is
not a sufficient indicator of the corporation's commitment to its economic
responsibility. The profit figure appearing in the financial statements
indicates that there is a commitment by the corporation to its economic
responsibility, but it does not reflect the level of quality of that commitment?.
Whether the commitment is weak /or is good/ or is excellent.? For this reason,
the researcher suggested the necessity of evaluating the economic
responsibilities of the departments that make up the organizational structure
of the corporation and that contribute to achieving that profit. Unfortunately,
the idea of CSR did not provide a clear approach through which to describe the
economic responsibilities of the departments included in the FOS of any
institution. The nature of the economic responsibilities of the departments
included in the FOS of any corporation varies from one department to another
due to the different nature of their work and the tasks assigned to them. The
difference in the nature of economic responsibility results in a difference in
the criteria for measuring the quality of effectiveness and efficiency of
performance. For example, the nature of the economic responsibility and the
criteria for measuring the quality of effectiveness and efficiency of
performance of marketing department is different from the nature of the
economic responsibility and the criteria for measuring the quality of
effectiveness and efficiency of performance of production department, and so
on. Also, there are economic responsibilities that are clear in some
departments- and have a clear impact on economic performance of the corporation
as a whole, and are not clear in other departments, but it can be fulfilled in
a different way. For example, the economic responsibility of the PWD in any
corporation is a clear responsibility, as it is focused on providing goods and
services to other departments in a timely manner, with the required
specifications, and at the lowest cost. While the economic responsibility of
the legal department in that corporation is not clear, but it can be identified
and described as follows: Preserving fixed assets such as cars and furniture
from damage, ?good use of economic resources?; Optimal utilization of human
resources working in that department; as well as economic rationality regarding
spending from financial allocations to meet the petty expenses of that
department, and so on. In fact, all the departments included in the FOS of the
corporation must abide by their economic responsibilities regarding the
preservation of the economic resources allocated to them in addition to their other
economic responsibilities. The commitment of any corporation to its economic
responsibility is the commitment of its departments to their economic
responsibilities (contribution to maximizing the profit figure for the
corporation as a whole) by performing their job duties effectively and
efficiently. As job duties differ from one department to another, the criteria
for measuring effectiveness and efficiency for those departments will vary. As
a first experience in the field of defining and describing the economic responsibilities
of the departments included in the FOSs of corporations, this study is devoted
to determining and describing the economic responsibility of the PWD as one of
the departments affecting the economic performance of corporations. The quality
level of the company's commitment to its economic responsibility may be
negatively or positively affected by the performance of this department.
Problem:
The economic responsibility of any for-profit corporation means profit
maximization. As for the departments included in the FOS of that corporation,
it means contributing to profit maximization by performing the tasks assigned
to them effectively and efficiently. The PWD is considered one of the important
departments in the for-profit corporation, as it may contribute to the
enhancement or deterioration of the economic performance of that corporation.
By relying on the concepts of effectiveness and efficiency in defining and
describing the economic responsibilities of the departments included in the
corporation's FOS, how can the economic responsibility of the PWD be defined
and described, and what are the necessary criteria by which the effectiveness
and efficiency of the performance of this department can be evaluated? This is
what can be considered the problem of this study.
PWD: Plays an important role in enhancing or deteriorating the economic
performance of the corporation as a whole. Proceeding from the following fact,
which is that the economic performance of any corporation as a whole is a
reflection of the negative and positive economic performance of all the
departments included in the FOS, so the economic responsibility of this
department must be determined. The economic responsibility of any
administration included in the FOS of any for-profit corporation is to
accomplish tasks effectively and efficiently. Based on this fact, how can the
economic responsibility of PWD be defined and described by relying on the
concepts of effectiveness and efficiency and what are the criteria for
evaluating the quality of effectiveness and efficiency in the performance of
this department's tasks?
Evaluating the social performance or social
responsibility of the departments included in the FOS of any corporation in a
separate and independent manner will contribute to determining which
departments whose social performance contributed to the enhancement or
deterioration of the social performance of that corporation as a whole. To this
end, the social responsibilities of the departments within any corporation must
be defined and described in a manner consistent with the functions of those
departments. In order to show how to achieve this goal, this initiative came as
a literary contribution to enrich the thought of CSR, and to open the way for
thinkers and writers in this field. This initiative -as a proactive step, is
devoted to identifying and describing the economic responsibility of the
departments - as one of the types of CSR, relying on the concepts of
effectiveness and efficiency as logical concepts that are closely and directly
related to the economic performance of any corporation. In this study, the PWD
was chosen to determine its economic responsibility to be a role model for the
rest of the other departments. Accordingly, this study aims to show how to
define and describe the economic responsibility of the PWD in any corporation
based on the concepts of effectiveness and efficiency in the performance of
administrative tasks as a general logical approach through which the economic
responsibilities of the rest of the other departments in that corporation can
be determined. In short, this study aims at the necessity of adopting the
concepts of effectiveness and efficiency in the performance of jobs and tasks -
as a logical approach, when defining and describing the economic
responsibilities of the departments that make up the FOS of any corporation.
This logical approach is the path through which the economic performance of
those departments should be evaluated. This study aims to determine and describe
the economic responsibility of PWD by relying on the concepts of effectiveness
and efficiency.
The importance of this
study lies in its idea. Where the economic responsibilities of the departments
included in the FOS of any corporation can be determined by describing the
criteria of effectiveness and efficiency in performing the functions assigned
to those departments. The profit figure appearing in the financial statements
does not reflect the quality of the company's commitment to its economic
responsibility. To evaluate the quality of the company's commitment to its
economic responsibility, it is necessary to evaluate the economic performance
of the departments that contributed to making that figure. This means that there
is an economic responsibility that falls on the shoulders of those departments,
which must be defined. These responsibilities can be measured and evaluated
through the criteria of effectiveness and efficiency in performing the tasks
assigned to those departments. The idea of this study can be considered an
enrichment of the thought of CSR.
Method ? an innovative approach to determining
the economic responsibilities of the departments included in the corporation's
FOS?. This study adopted the concepts of effectiveness and efficiency in
performing functional tasks as an approach to identify and describe the
economic responsibilities of the departments included in the FOS of any
for-profit corporation. Since the functions of the departments in any corporation
are different, the criteria for measuring and evaluating the quality of
effectiveness and efficiency in the performance of functions will differ from
one department to another. Each administrative job has logical criteria to
measure the quality of effectiveness and efficiency of its performance -
through which the effectiveness and efficiency of the department in performing
its job duties can be evaluated. For the PWD, the evaluation of effectiveness
is measured by comparing the quantities purchased\ purchased services with the
quantities required\ the required services. As for efficiency, it can be
measured by time, specifications and cost (in a timely manner, with the
specified specifications and at the lowest possible cost).
Corporate
social responsibility
The researcher defines
CSR in line with the content of this study as follows: CSR is to achieve the
desired economic goals effectively and efficiently to enhance the corporation’s
economy and achieve the well-being of the community in which it operates
through a package of tasks, duties, activities and initiatives that must be
performed by the departments included in the corporation’s FOS, in harmony with
the applicable laws, codes of ethics and professional code of conduct. The desired
economic goal that must be achieved effectively and efficiently is a clear
reference to profit maximization. Profit maximization and corporate economic
responsibility are two sides of the same coin. Maximizing profit - as a desired
goal, is achieved only through the effective and efficient performance of the
departments included in the corporation's FOS. Effectiveness and efficiency are
requirements that must be adhered to by the corporation's departments. From
this point of view, it is necessary to define and describe the economic
responsibility of all the corporation's departments, based on the concepts of
effectiveness and efficiency in performing the functions. The FOS in any
corporation is the organization through which the corporation can achieve its
desired goals. The FOS of any corporation is a group of departments that each
have a special function, through which they contribute to achieving the goals
of the corporation as a whole. In practice and in the presence of FOSs in
corporations, it is not possible to judge the extent to which any corporation
is committed to its social responsibility towards stakeholders in a correct
manner unless the social performance of the departments that make up the FOS of
that corporation -subject of the evaluation, is evaluated.
Economic
responsibility
The researcher divides
the corporate economic responsibility according to their impact into:
Corporate
economic responsibility at the level of the corporation's economy
Economic Responsibilities: Be profitable, maximize revenues and minimize
expenses. Economic responsibilities relate to business?s provision of
merchandise and services in community. Earnings result from this activity and
are necessary for any other responsibilities to be carried out. It is assumed
that corporations will be as profitable as possible, maintain a powerful
competitive position and maintain a high level of operating efficiency. It is
well known that many developing countries suffer from a shortage of foreign
direct investment, as well as from high unemployment level and widespread
poverty. It is no surprise, therefore, that the economic contribution of
companies in developing countries is highly prized, by governments and
communities, alike [1,2].
Corporate
economic responsibility at the level of the country's economy as a whole
This concept should be
strengthened and adopted in developing and poor countries, which particularly
states the following: ? when seeking to maximize profits, corporations must not
harm the national economy of the state, even if the laws do not criminalize
this.? Corporations should contribute to strengthening the national economy of
the state, ?strengthening the state's national wealth." Corporations are
one of the main components of any country's economy, and they can influence it,
either positively or negatively. We may applaud the profitable corporation? the
company that made the highest profit, ? and at the same time we may regret the
negative effects that this corporation has left at the level of the country's
economy as a whole. For example, hiring foreign workers and ignoring national
workers. This behaviour or action contributes to increasing unemployment rates
in society and also contributes to the exit of hard currency outside the
borders of the state. Another example, reducing sales prices in order to sell a
larger quantity of products may contribute to pushing another competitor out of
the market. Corporate economic responsibility can be viewed from two angles:
maximizing the company's profit and strengthening the national economy of the
state [3-5]. The Economic Responsibilities of the Departments "Be
Effective and Efficient When Completing Work Tasks." The economic
responsibility of the corporation as a whole is profit maximization, which is
measured by the profit figure. As for the departments included in the
corporation’s FOS, it means contributing to profit maximization. This
contribution can be measured and determined according to the concepts of
effectiveness and efficiency in performing the functions assigned those
departments.
Accountability
as one of the principles of CSR
According to ethics
activist Geoff Hunt, accountability is the readiness or preparedness to give an
explanation or justification to relevant others (stakeholders) for one’s
judgments, intentions, acts and omissions when appropriately called upon to do
so. It is [also] a readiness to have one’s actions judged by others and, where
appropriate, accept responsibility for errors, misjudgements and negligence and
recognition for competence, conscientiousness, excellence and wisdom. It is a
preparedness to change in the light of improved understanding gained from
others. In fact, ?accountability as a concept is closely related to
responsibility. There can be no accountability- in its true sense, regarding
any issue unless there is a specific and clear responsibility? [6]. In the
business world, stakeholders are not entitled to accountability for performance
until after the assignment of responsibilities, granting powers and allocating
economic resources. The main goal of accountability is not to praise or punish,
but to correct deviations. Accountability is a control process that aims to
obtain explanations and justifications about the actions carried out, or
decisions taken or measures followed that the other party (stakeholders) deems
to contradict what is described and specified. Based on the evaluation of those
explanations and justifications, certain actions and reactions will be taken
against non-compliant officials or departments. Corporate accountability can be
defined as the ability of those affected by a corporation to hold corporations
to account for their operations [7]. Corporate accountability means that the
corporation is responsible for the results of its work and for any deviations
that may occur from its goals and values to stakeholders such as shareholders,
customers, employees, government agencies, etc. Accountability is very
important and necessary to ensure that corporations adhere to their social
responsibility towards all concerned parties and redirect that commitment in
the right direction in case of deviation.
Effectiveness
and efficiency
Effectiveness is the
power to produce the desired result. Efficiency is defined as the ability to do
something or produce something without wasting materials, time, or energy.
Effectiveness and efficiency are terms that have a great meaning in evaluating
and measuring the performance of organizations. The continued presence of
business organizations in the environment in which they operate depends on the
extent to which their goals are effectively and efficiently achieved.
Effectiveness and efficiency are not the same thing, each has a different
meaning .In the business world, in light of the existence of the FOS in business
organizations, and each department has special tasks and functions to achieve
the goals of the organization as a whole. Administrative effectiveness is the
ability of the department to carry out its functions to achieve the desired
results or planned goals for the organization as a whole. Effectiveness means
the extent to which the administration accomplishes its specific tasks
entrusted to it to contribute to achieving the objectives of the organization.
Effectiveness means the achievement of the desired goals, as well as the
accomplishment of the assigned tasks. It can be measured by comparing the
achieved result\performance with the desired result\ performance. For
departments included in the corporation's FOS, it can be measured by the
percentage of completion of the specified tasks. Effectiveness is related to
the ability to achieve the intended goals, not to how those goals are achieved
.While, efficiency refers to how goals are achieved or tasks are accomplished.
In a more precise sense, it refers to the material and immaterial costs
incurred in order to achieve the goals and accomplish the tasks. For
departments included in the corporation's FOS, efficiency means accomplishing
those specific tasks in the right way ? with the least amount of wasted time,
money, and effort or competency in performance [8].? According to, performance
measurement is the process of quantifying the efficiency and effectiveness of
past action. It is the gathering of information about the work effectiveness
and productivity of individuals, groups, and larger Organizational units [9].
It involves systematically collecting and strategically using information, on
an ongoing basis, in an intra- and inter-organizational fashion, and for a
variety of internal and external purposes [10].
The
importance of the FOS in evaluating the CSR
FOS refers to the
structure in which different departments are created on the basis of main
functions accomplished in the organization. Organizational structure
is a way
or method by which organizational activities
are divided, organized
and coordinated. Functional
organizations contain specialized units that report to a single authority,
usually called top management. Every corporation has goals that it strives to
achieve. These goals can only be achieved through a set of various functions,
which differ in nature from one job to another. This diversity of tasks and
functions requires the corporation to create what is known as the FOS, which
usually consists of several departments, each department has its own tasks and
duties that it must undertake in order to contribute to achieving the goals of
the corporation as a whole. In large institutions, in order for these
departments to be able to perform their tasks to the fullest, they must be
given the powers, authorities and economic resources necessary to accomplish
those tasks, with the need to evaluate the results of the work of those
departments to determine the extent of their impact on the performance of the
institution as a whole, and try to correct deviations if any. In the field of
CSR, the FOS is very important, through which the social performance of the
corporation can be accurately evaluated. Each department included in the FOS of
any corporation has a mission and a role in that corporation, which must be
carried out in accordance with the requirements of CSR. Through evaluating the
social performance of the departments (the extent to which the departments
adhere to their social responsibilities: economic, legal, ethical and philanthropic),
it is possible to know the areas of excellence and failure regarding the
commitment of the corporation's departments to their social responsibilities,
and thus correction of deviations. The final result (obligation or
non-compliance) - which is attributed to the corporation as a whole, is the
result of an assessment of the social responsibilities of its departments.
The
function of PWD
Purchasing and Warehouse
Department (PWD) has a key strategic role in many contemporary business
organizations [12,13]. As firms increasingly rely on suppliers’ inputs and
contributions, the strategic importance of the PWD function as the interface
managing these inputs has also increased. In the current global economy, PWD is
under increased pressure to find additional value generation beyond efficiency
seeking behaviour and to search for effectiveness; for example by bringing in
supplier product or process innovations, ensuring sustainability, and
participating in product innovation activities [14]. The function of the PWD in
any corporation is to provide the tangible and intangible needs and
requirements that the departments included in the FOS of that corporation need
in a timely manner and with the required and specified specifications and at
the lowest possible cost. This function will contribute to adding value to the
corporation if it is performed to the fullest [15].
Criteria
for evaluating the efficiency of the PWD
According to the
Procurement function can hardly be ignored in any manufacturing enterprise. Modern
manufacturing thinking highly associate prudent procurement practices to
profitability of the enterprise. This is because most financial commitments an
organization makes pass through a procurement process. Available literature
indicates that the efficiency and effectiveness of the procurement function is
the least measured in many enterprises despite its contribution to the
profitability of enterprises. Efficiency means providing needs in a way that
contributes to strengthening the economy of the corporation. The efficiency of
the PWD’s performance can be evaluated through three criteria. They are time,
quality and cost .
At the right timing: The PWD must provide all the material and
non-material needs required by the other departments included in the FOS of the
corporation in a timely manner. Providing the needs and requirements at the
wrong time - after the specified time or before the specified time, will result
in undesirable economic losses. Providing the needs and requirements needed by
the requesting departments after and before the specified time has negative
repercussions on the results of the economic activity of the corporation as a whole.
This failure may lead to a decrease in the volume of revenues or an increase in
the volume of costs such as the cost of storage.
With the required specifications: Specifications of needs and requirements
must be consistent with the specifications specified by the requesting
departments so that these departments can perform their functions effectively
and efficiently. In many cases, the violation of the required specifications
contributes to causing undesirable damages that affect the economic performance
of the corporation as a whole. Failure to comply with the required
specifications- or what is known as the required quality level, may result in
wasting materials used in the production of goods or service provision. The
procurement of bad needs and requirements by the PWD results in the production
of bad goods and services that do not satisfy the customers. This failure
affects the reputation of the corporation and thus the loss of customer loyalty
in the environment in which it operates.
At the lowest cost: Efficiency also means accomplishing tasks and achieving goals at the
lowest possible cost. The cost may be material such as money or immaterial such
as effort and time. The PWD must provide the needs of other departments
included in the FOS at the lowest possible cost. Purchasing decisions taken by
the PWD must be characterized by economic rationality. In other words, the
purchase must be in economic quantities. Those quantities at which inventory
costs are at their lowest level. PWD must take into account the following costs
when making purchasing decisions: Out of stock cost; the cost of inventory
obsolescence; the cost of lost opportunity; the storage cost; the costs of
orders; benefiting from discounts such as cash discounts and quantity discounts.
Based on the foregoing, the contribution of the departments included in the FOS
of the corporation to profit maximization can be determined as follows:
Departments contribute to maximizing the corporation's profit by committing to
performing their functions effectively and efficiently. The departments'
commitment to performing their functions effectively and efficiently- in line
with the requirements of CSR, leads to reducing costs and increasing profits,
thus enhancing the competitive advantage of the corporation.
The economic responsibility of the corporation
as a whole is profit maximization, which is measured by the profit figure. As
for the departments included in the corporation’s FOS, it means contributing to
profit maximization. This contribution can be measured and determined according
to the concepts of effectiveness and efficiency in performing the functions
assigned to them. How to Determine and Describe the Economic Responsibilities
of the Corporation's Departments: To determine and describe the economic
responsibilities of the departments included in the FOS of the corporation, the
following must be specified: 1) The function of each department is included in
the corporation's FOS; 2) Determining the function relationship with the
corporation's goal (profit maximization)- whether it is a relationship with
direct or indirect impact; 3) How to measure the effectiveness of performance
or effectiveness of completing job
tasks. It is mostly measured by comparing actual performance with planned
performance; 4) Standards for efficient performance of job duties such as cost,
effort, time, quality, etc. The Content of the Idea: In this theoretical study,
the content of the idea proposed by the researcher to determine the economic
responsibility of any department in any corporation depends on the answer to
the following three questions: What are the functions of the department
included in the FOS of the corporation? How do the functions of that department
affect the economic performance of the corporation as a whole? How can the
functions of that department be performed effectively and efficiently? What are
the standards necessary to measure the quality of effectiveness and efficiency
in performing the tasks of that department? For example, the function of
production department in any industrial enterprise is the production of goods.
Effectiveness is related to department's performance of its specific function,
which is the production of goods. It can be measured by comparing the actual
production with the planned production. As for efficiency, it means, how does
production department perform its function? The criteria can be determined to
judge the efficiency of the production department’s performance by: the percentage
of materials wasted during the production process; the quality of production;
and the appropriate timing of production that supports the marketing department
in performing its function, etc.
The economic responsibility
of the PWD is to provide all the needs and requirements -such as materials,
supplies, equipment, devices, services, etc., needed by the other departments
included in the FOS of the corporation, in a timely manner, with the required
specifications, and at the lowest possible cost.
The
Meaning of the Concept of Effectiveness in the Functions and Tasks of PWD
Effectiveness is the
ability of the PWD to provide the needs and requirements of other departments
included in the corporation's FOS. In other words, it is the department's
ability to accomplish its task, which is to provide the needs and requirements
of other departments to help them perform their functions and obligations.
Regardless of any criteria that were set to measure the efficiency of the PWD
in performing its assigned tasks. Performance effectiveness can be measured by
the percentage of tasks completed during a specified period. As for the
effectiveness of the PWD in performing its tasks, it can be measured by
comparing the needs and requirements required by the departments with the needs
and requirements actually purchased by the PWD during a specific period of
time.
The
Meaning of the Concept of Efficiency in the Functions and Tasks of PWD
Efficiency means the extent to which the PWD
adheres to the criteria established to measure the quality of performance such
as time, specifications and cost.
The idea of CSR
determined the economic responsibility of the company as a whole, which is to
maximize the profit figure, and did not address the identification of the
economic responsibilities of the departments that contribute to achieving that
figure. To address this shortcoming, this study adopted the following logical
argument, which is: The economic responsibility of any for-profit corporation
means profit maximization. As for the departments included in the FOS of that
corporation, it means contributing to profit maximization by performing the
tasks assigned to them effectively and efficiently. To clarify the idea of this
study, the Purchasing and Warehouse Department (PWD) was taken as an example to
show how to determine its economic responsibility based on the concepts of
effectiveness and efficiency. Depending on the concepts of effectiveness and
efficiency, this study was able to identify and describe the economic
responsibility of PWD in any corporation. The economic responsibilities of the
departments included in the FOS of any corporation are the optimal contribution
of those departments in maximizing the profit of the corporation as a whole by
performing their assigned tasks effectively and efficiently. For the PWD, the
effectiveness is represented in performing the task entrusted to it, which is
to provide the needs and requirements needed by other departments included in
the FOS of the corporation. As for efficiency, it is represented in how to
perform this task in a correct economic manner according to the following
criteria: the appropriate time criterion, the required specifications criterion,
the lowest- cost criterion. The economic responsibilities of the departments
included in the FOS of the corporation can be defined and described based on
the concepts of effectiveness and efficiency according to the following
scenario:1) Defining the main job duties that must be performed by these
departments to achieve the corporation’s goal of ?maximizing profit?; 2) The
commitment of the departments included in the corporation's FOS to accomplish
their functional tasks during the financial period can be considered as an indicator
of the effectiveness of the performance of these departments.? the level of
effectiveness can be measured by the percentage of completion of the tasks
assigned to these departments?; 3) As for how the tasks are accomplished, it
reflects the efficiency or inefficiency of those departments in accomplishing
their tasks. This means the need to define standards to describe how tasks are
to be done in the right way. The level of efficiency can be measured by
comparing how the tasks were accomplished with the specific method that is
described in those standards.