What is utilization? Definition and example
Utilization is the action of using something, i.e., making practical and effective use of it. Put simply; the term refers to the use of something or the process of using it effectively. In business, utilization may also refer to the percentage of available time that a machine, device, or employee is actively is working. We can also use the term for a fraction of the available time that a system is operating.
Rather than available time, we can also use the term when looking at available resources. In other words, out of all the machines of one kind that there are, the percentage that are currently in use.
The Cambridge Dictionary has the following two definitions of the term:
“1. The amount of something available, produced, etc. compared with the total amount that exists or that could be produced. 2. The process of using something effectively.”
Utilization in healthcare
In healthcare, the term refers to the extent to which a given group uses a particular service.
The figure always refers to a specific period. In healthcare, we typically express utilization as the number of services 100 or 1,000 people use per year.
However, some people express the ratios differently.
Utilization management is a set of techniques that healthcare purchasers use. According to Medical-Dictionary.the FreeDictionary.com, healthcare purchasers use the techniques to..:
“..manage the cost of healthcare before its provision by influencing patient-care decision making through case-by-case assessments of the appropriateness of care based on accepted dental practices.”
Etymology of utilization
Etymology is the study of where words come from, i.e., their origin. It also looks at how their structures and meanings have evolved.
The word ‘utilization’ is the noun of the verb ‘utilize.’ The verb and the noun first appeared in the English language in 1794 and 1847 respectively.
The English verb ‘utilize’ came from the French word ‘utilizer,’ which came from the Italian word ‘utillizzare’ and ‘utile,’ which means ‘usable.’
The Italian word came from the Latin word ‘utilis,’ meaning ‘usable.’ ‘Utilis’ came from the Latin word ‘uti,’ meaning ‘make use of, profit by, take advantage of.’
Utilization in engineering
In engineering, the term refers to the period in a device’s life when its quality is realized in practical use. In other words, when people use it, maintain it, repair it, etc.
Subsequently, in engineering, the term may have two meanings:
- For simple things: a process of making use of equipment, a device, or a system.
- For complex things: a stage in a product’s lifecycle.
Corrosionpedia has the following definition of the term:
“Utilization is the primary technique wherein success and performance efficiency are determined. This is especially in the case with tools and equipment.”
In Accounting
Utilization, in accounting, measures how efficiently a company uses its assets to generate revenue. In other words, how profitably a company is using its assets.
A business with high asset utilization is using its assets effectively to create more income. This is crucial for evaluating operational efficiency and financial health.
Return on investment or ROI is closely linked to utilization.
Video – What is Utilization?
This video, from our sister YouTube Channel – Marketing Business Network – explains what “Utilization” is using easy-to-understand language and examples: