Resource allocation is a process and strategy involving a company deciding where scarce resources should be used in the production of goods or services. A resource can be considered any factor of production, which is something used to produce goods or services. Resources include such things as labor, real estate, machinery, tools and equipment, technology, and natural resources, as well as financial resources, such as money.
How to Allocate Resources?
Successful strategic management involves ensuring that all company resources perform effectively. By learning how to manage competing priorities, successful business professionals enable employees to balance job tasks, schedule work efficiently and ensure that work flows smoothly from one process to the next. Today’s dynamic, global environment poses challenges for company executives and project managers. By establishing a comprehensive strategic plan for allocating workers and supplies, you avoid costly mistakes that lead to overruns and delays.
- Coordinate project and operational effectively by establishing a comprehensive program management strategy. Evaluate project proposals on a monthly or quarterly basis to decide which ones gets sponsorship. Consolidate multiple similar efforts under one program leader; this tends to enable the use of key resources more effectively and allow you to make critical deadlines.
- Employ software tools, such project management software such as Microsoft Project, dotProject.net or Basecamp, to identify project tasks, allocate resources effectively, avoid overallocation and prevent employee burnout. Approve budgets, finish dates and the amount of flexibility in the deadlines if you are a company executive to help project managers make decisions aligned with the company’s strategic goals.
- Delay tasks until staff have time available to work on them or split up tasks and hire additional workers to prevent staff from working more than 40 hours in a typical week and becoming burned out.
- Outsource routine tasks to companies that specialize in a particular function, such as payroll processing, customer service or technical support.
- Train employees so they have the required skills and job tasks get completed on time to ensure timely delivery of products and services. Train less experienced workers to complete job tasks if you experience unexpected demand or attrition. Obtain specialized training from authorized providers to ensure that your company runs a safe workplace that complies with local, state and federal regulations.
- Manage suppliers by analyzing work flow of resource materials from one process to the next. Gather input from experts before considering alternative solutions to backlogs. Take prompt action to rectify problems if a supplier provides poor quality materials or delivers them late. Require that the supplier improves the quality of raw materials and provides them on time.
Method of Resource Allocation
In an economist’s perfect world, which doesn’t exist, of course, resources are optimally allocated when they are used to produce goods and services that match consumers’ needs and wants at the lowest possible cost of production. Efficiency of production means fewer resources are expended in producing goods and services, which allows resources to be used for other economic activities, such as further production, savings, and investment. This basically boils down to creating what customers want as cheaply and efficiently as possible.