Assignment:
Controlling:
Operations management is a key to enhancing productivity and quality. Control processes and control systems are strategies to implement and improve these factors. Almost all control systems relate to some part of the Shrewhart cycle - Plan, Do, Check, Act. This famous quality cycle requires that managers monitor the results of activities, comparing them to the expectations embodied in the plans, and then acting to reduce variances. Thus, the heart of control systems is information.
This module covers the principles of controlling and the control of production.
After completing this module, you should be able to do the following:
• Recognize the control options available to managers.
• Select types of control and an approach for implementation.
• Assess the effectiveness of controls.
• Identify the use of controls to reach organizational goals.
• Identify issues to be addressed in developing and implementing operating systems.
• Consider the importance of productivity and quality.
• Relate data, information, and knowledge to decision-making.
• Assess strategies for Management Information Systems (MIS).
Readings:
Certo, S. (2009), “Modern Management”, (11/ed); Prentice Hall, ISBN 978-0136010166 - Chapters 21 and 22 Lecture Slides:Please refer to links in this module
Assignments: 250 Words for each Question
--Participate in course discussion
Essay Questions:
Question 1. What is ratio analysis. What ratios do you think are most valuable to managers in your company or an organization you know about?
Question 2. Some theorists believe that people are basically trustworthy and that controls are unnecessary and counterproductive. Others believe that people are untrustworthy and we need to look over their shoulder. These are Douglas MacGregor's Theory X and Theory Y. What is your opinion on this complex issue?
Question 3. What are the positive and negative issues of automation impacting our society today? Support your response with practical examples and situations.
Question 4. What different kinds of organizational controls are functioning within an organization with which you are familiar?
Question 5. Describe the six steps involved with information system performance. Use a practical example to illustrate the significance of these steps.
Module summary:
As the scale and complexity of modern work organizations grow, the problem of control in organizations gains in significance. Control is making things happen as planned. Controlling is the process managers go through to control. The controlling process has three main steps: (1) to evaluate performance, (2) to compare measured performance to standards, and (3) to take corrective action. To evaluate performance, a unit of measure must be established, and performance must be observed.
Standards used for comparison include profitability standards, market position standards, productivity standards, product leadership standards, personnel development standards, employee attitude standards, and standards reflecting relative balance between short- and long-range goals. Corrective action is action taken to bring performance up to standard. Corrective action should focus on planning, organizing, and influencing. There are three types of control: precontrol, concurrent control, and feedback control. The controller or comptroller is usually a staff person who gathers information that helps managers control. The controller usually works with information about: (1) profits, (2) revenues, (3) costs, (4) investment, and (5) discretionary expenses. Managers should perform cost-benefit analyses to determine how much controlling activity is justified. The human related aspect of controlling is power. Power is the ability to influence others. The total power of a manager equals position power plus personal power. Managers can increase personal power by: (1) making people feel obligated, (2) being seen as an expert in an area, (3) having others identify with them, and/or (4) holding the purse strings.
Guidelines for controlling include: (1) Do not overemphasize the short term; (2) Do not frustrate through controlling; (3) Do not disregard extenuating circumstances; (4) Keep control activities in the proper perspective; and (5) Remember that controlling is a means, not an end. To make the control process more effective, managers should: (1) verify that controlling suits the situation; (2) use control to achieve many ends; (3) act on information quickly; and (4) make controlling understood.
Production control ensures that an organization produces goods and services as planned. Production is the transformation of organizational resources into products, while productivity is the ratio of outputs to inputs. Five traditional strategies can be used to increase productivity: (1) train the work force, (2) use automation and robotics, (3) make products easier to assemble, (4) upgrade equipment, and (5) hire more qualified employees. While increasing productivity, managers should not ignore quality. Management has come to realize that quality is not an afterthought, but rather it is a continuous process that when done properly, reduces rework, production delays, and poor use of time and materials. Quality assurance starts with quality standards and ends when a quality product is delivered to the customer. A "no rejects" philosophy helps management control quality on the front end instead of at the end when it's too late. Quality circles-small groups of workers who meet to solve a particular quality problem-are being used more and more as a way of involving the employee and gaining commitment. Automation can be defined as electromechanical devices replacing human effort.
In addition to understanding production and productivity, managers need to be aware of strategies, the plan of action, systems, organizational components (linked together to help complete a process), and the flow of interrelated events toward a goal. Operations management deals with such management activities as the selecting, designing, operating, controlling and updating of production systems. Operations management transforms resources
into finished products through a number of key strategies: (1) capacity strategy, (2) location strategy, (3) product strategy, (4) process strategy, (5) layout strategy, and (6) human resource strategy. After the operational plan has been developed, the specific tasks needed to accomplish the goals are considered. Operations control includes such activities as: (1) just-in-time inventory control, (2) maintenance control, (3) cost control, (4) materials control, (5) advanced manufacturing support, and (6) master scheduling, inventory control, aggregate planning, etc.
In addition to the production management tools listed, there are other selected operational control tools to be considered: (1) management by exception, (2) management by objectives, (3) breakeven analysis, (4) decision tree analysis, (5) work measurement, (6) payoff table, (7) value analysis, and (8) computer-aided design and manufacturing. Management by exception ensures that managers handle only exceptional issues.
Management by objectives uses employee-participation to improve productivity. Breakeven analysis generates information about various levels of profit or loss associated with various levels of production. Managers can use either graphic or algebraic breakeven models or a combination. Materials requirement planning plots the flow of materials. Just-in-time (JIT) inventory control is one form of materials requirement planning.
Two other control tools which do not deal directly with the production process are budgets and ratio analysis. A budget is a planning and a control tool. In using budgets, managers should emphasize significant expenses, justify expenses each year, and change budgets periodically. Ratio analysis is a control tool that summarizes the financial position of an organization by calculating ratios based on various financial measures. There are four types of ratios: (1) liquidity, (2) leverage, (3) activity, (4) profitability.