2. Controlling
It is checking the current performance against
predetermined standards contained in the plans
with a view to ensure an adequate progress and
satisfactory performance
3. CONTROLLING
Process of controlling
Types of controlling
Budgetary and Non-budgetary control techniques
Managing productivity
Cost control
Purchase control
Maintenance control
Quality control
Planning operations
4. Characteristics of control
Control process is universal
Control is a continuous process
Control is action based
Control is forward looking
Control is closely related to planning
5. Need of control
To minimize dishonest behavior of employees
To discover deviations in the management
Control can minimize mistakes
To indicate corrective action
6. Importance of controlling
Policy verification
Adjustments in operation
Psychological pressure
Coordination
Employee morale
Efficiency and effectiveness
8. The Control Process
11-8
1. Establish standards of performance, goals, or
targets against which performance is to be
evaluated.
Managers at each organizational level need to
set their own standards.
9. The Control Process
11-9
2. Measure actual performance
Managers can measure outputs resulting from
worker behavior or they can measure the
behavior themselves.
The more non-routine the task, the harder it is to
measure behavior or outputs
10. The Control Process
11-10
3. Compare actual performance against chosen
standards of performance
Managers evaluate whether – and to what extent –
performance deviates from the standards of
performance
chosen in step 1
11. The Control Process
11-11
4. Evaluate result and initiate corrective action if
the standard is not being achieved
If managers decide that the level of performance
is unacceptable, they must try to change the way
work activities are performed to solve the
problem
13. Critical control points and
standards
• The point selected for control process is called
critical points
• Types of critical point standards:
– Physical standards -
– Cost standards
– Capital standards
– Revenue standards
– Program standards
– Goals as standards
– Strategic control
15. Types of Control
11-15
Feedforward Controls
Used to anticipate problems before they arise so that
problems do not occur later during the conversion
process
Giving stringent product specifications to suppliers in
advance
IT can be used to keep in contact with suppliers and
to monitor their progress
16. Types of Control
11-16
Concurrent Controls
Give managers immediate feedback on how
efficiently inputs are being transformed into outputs
Allows managers to correct problems as they arise
17. Types of Control
11-17
Feedback Controls
Used to provide information at the output stage about
customers’ reactions to goods and services so that
corrective action can be taken if necessary
18. Requirement for effective
control
• Suitability
• Flexibility
• Economical
• Simple
• Motivation
• Forward looking
• Objective
• Control should reflect the organization structure
and needs
• Control should lead to corrective action
• Less time
19. BUDGETORY CONTROL
TECHNIQUES
Budget – A budget is a vital role of planning and
control for future activities. It is an estimate of the
future needs to be calculated.
20. Control Techniques
A) Traditional Techniques
Personal observation
Break even analysis
Statistical reports
Budgetary control
B) Modern Techniques
Management audit
Return on investment
PERT and CPM
Management information system
21. Budgetary control
Budgetary control is the process of determining
various budgets for the business unit for future.
It serve as a method of control
22. Objective of Budgetary control
It aims at the maximization of profits
It decides upon and controls the expenditure on
development and research
It provides an adequate working capital
To coordinate the activities of different units in the
organization
To plan and control the income and expenditure of
the organization
To decentralize the responsibility of various
individuals in the organization
23. Problems of Limitations of
Budgeting
Inflexibility
Inaccuracy
Distortion of goals
Hiding inefficiencies
Expenditure
24. Effective budgetary control
Definite objective
Support of top management
Flexibility
Budget committee
Budget education
Good feedback
Participation
Communication
Reward and punishment
Proper recording of operation
26. Functional classification
a) Sales budget : It is an estimate of expected
sales during a budget period.
The following factors to be considered:
- past sales data
- plant capacity
- financial resource available
- raw material available
27. Functional classification
b) Production budget : It is a forecast of the output for
the period analyzed according to product,
manufacturing and period of production
The following factors to be considered:
- production stability
- plant capacity
- availability of materials and labour
- Time
- sales requirement
28. Functional classification
c) Cost of production budget
d) Material requirement budget
e) Direct labour budget
f) Capital expenditure budget
g) Administrative overhead/cost budget
h) Research and development budget
i) time, space, material and product budget
j) Cash budget
k) Profit budget
29. Classification based on time
a) Long term budget – 5 to 10 years
b) Short term budget – 1 or 2 years
c) Current budget – for a few weeks or few months
30. Classification based on activity
a) Fixed budget
b) Flexible budget
c) Alternative budgets
d) Supplementary budget
31. Budgetary control methods
Planning –programme budgetary system (PPBS)
Zero base budgeting (all expenses must be
justified for each new period)
Human resource accounting
32. Traditional Non budgetary
Control
Report and statistical data
Personal observation
Operational audit
Internal audit
External audit
33. Network analysis
CPM PERT
Critical Path Method
It is activity oriented
CPM is planning
device
It estimate only one
time
It is a deterministic
model
It analysis of cost also
Program Evaluation and
Review Technique
It is event oriented
PERT is control device
It estimate three times
It is probabilistic model
It analyses cost very
less
34. PERT
PERT Techniques estimates three times
i) Optimistic time – shortest time every activity
goes exceptionally well
ii) Most likely time – time required to complete the
activity taking in to consideration of all favorable
and unfavorable elements.
iii) Pessimistic time – this is the time estimates, if
everything goes wrong.
35. Information technology in
controlling
Management Information System(MIS) – a
system of obtaining, abstracting, storing and
analyzing data to produce effective information
for use in planning, controlling and decision
making process.
36. Need for MIS
Internal factors
Resources
Planning and control information
Operational information
Production function
Marking function
External factors
Political and government
Economic condition
Technology
41. Managing productivity
Productivity is one of the major concern of every
manager of the organization
Productivity is a measure of how much input
required to produce a given output i.e. the ratio of
Output/input is called Productivity.
42. Factors affecting Productivity
Technology
Human resources
Government policy
Machinery and equipment
Skill of the worker
Materials
Plant and building
Capital
Research and Development
43. Product & Production design
1. Create ideas
2. Screening the alternatives
3. Selection
4. Prepare preliminary design
5. Final decision
6. Select the process
44. Product Analysis
Marketing
Acceptance of customer, competitive product, pricing,
distribution channel, advertising
Economical
Profit margin, pricing policy, volume of sales, investment
analysis
Production
Selection of suitable process, sequence of operation,
application of new techniques & selection of method to
reduce cost and waste
Product quality & operation
Government policy
Technology
45. Product layout
The arrangement of machines and equipments
according to the product manufacture is called as
product layout.
In this raw materials arrive at one end and leave
the other end as finished product.
46. Operation Research
Operation research is a product of world war II
Operation research applies the methods of physical
scientists and engineers to economic and political
problems.
Operation research is the study of optimization
techniques.
Operation research employs mathematical logic to
complex problems requiring managerial decisions.
47. Operation Research
Definition
Operation research is an experimental and applied
science developed for observing understanding the
purposeful man-machine systems and operations
research workers are actively engaged in applying
this knowledge to practical problem in business,
government and society.
48. Necessity of Operation Research
i. Uncertainty
ii. Responsibility and authority
iii. OR Models
iv. Complex organizations
v. Optimization of resources
vi. Minimizing time
vii. Maximizing profit
viii. Minimizing cost
49. Role of Operation Research in
Business and Management
1. Production Management
Allocation of resources
project scheduling
Inventory policy
Equipment replacement and maintenance
2. Finance Management
Fund flow analysis
Credit policies
Capital requirement
50. 3. Purchasing and procurement
Rules for purchasing
Determining the quantity
4. Distribution
Location of warehouse
Transportation strategies
5. Marketing
Product selection
Competitive strategies
Advertising strategy
51. Main Phases of OR
Formulation of problems
Construction of a mathematical model
Solving the model
Controlling and operating
Testing the model and its solution
implementation
52. Inventory controlling
Inventory consists of stores of goods and other
stocks.
It refer to the control of raw materials and
purchased materials in store and regulation of
investment in them.
Techniques
Economic Order Quantity
JIT
Production planning and control
53. Just in time (JIT) Inventory
system
This method is also called as zero inventory and
stockless production.
This method is first introduced in japan.
In this method, suppliers delivers the materials to
the production spot just in time to be assembled.
This method reduces the cost of inventory
There is no stock of raw material in stores or in
work
54. Production planning and control
Routing – selection of path which each part of the
product will follow while being transferred from raw
material to finished product.
Scheduling –it involve the deciding of when the work
will begin, duration of time and how much will be
finished.
Dispatching
Inspection
Follow-up or Expediting
55. COST CONTROL
Manager use a financial control method in the
organization which help managers to control an
organization’s financial resources.
Financial statement
Income statement
Balance sheet
Cash flow statement
56. Financial statement
It reflect the financial position and operating
strength or weakness of the organization
Importance of Financial statement
Management
Share holders
Creditors
Labors
Public
Government
57. Income statement
It is also known as profit and loss account.
It performs a report recording, such as change in
income, expense, profit and losses as a result of
business operation during the year.
It summarizes the revenues and expenses of the
perio.
58. Balance sheet
It is the statement which set out the financial
conditions of business company.
It is the cumulative result of all transaction of the
business from its very start
It contains capital and liabilities and assets.
59. Cash flow statement
It shows the impact of transaction on cash
position of the firm and includes all transaction on
cash position of the company.
It help the management to plan the repayment of
loan and long term planning.
It provides the details in respect of cash
generated and applied during the accounting
period.
60. Purchase control
Responsibilities of Purchasing department
Selecting the right suppliers
Obtaining materials at the best prices
Placing purchase order with the suppliers
Enquiring the complaints both from suppliers and
from user department.
61. Types of special purchase
system
Forward buying
Tender buying
Blanket order(multiple delivery dates over a
period of time)
Zero stock
Rate contract
62. Purchasing procedure
1. Processing the requisitions
2. Location and choice of suppliers
3. Placing of order
4. Follow up and expediting
5. Invoice checkup and clearance
6. Maintenance of records
63. Methods of purchasing
Purchasing according to requirement
Price forecasting method
Purchasing for some definite future period
Market purchasing
Speculative purchasing
Contract purchasing
Scheduled purchasing
Public purchasing
Tender purchasing
64. Maintenance Control
Maintenance is the process of keeping the
machines and equipment in good working
condition so that the efficiency of machine is
retained and its life is increased.
65. Plant maintenance control
It is a combination of action carried out by an
organization to replace, repair service the
machineries, component in the manufacturing
plant.
Functions of Plant maintenance
Inspection
Repair
Overhaul
Lubrication
Salvage (reuse)
66. Types of maintenance
Breakdown maintenance Preventive maintenance
Maintenance is done after
breakdown.
The time of breakdown is
unexpected
Cost due to downtime is
more
Production loss takes
place
It affect the quality of good
produced by that
equipment & machineries
It cannot be planned and
scheduled as
systematically
It is done to prevent
breakdown
Maintenance work is
planned and scheduled in
a well advanced manner.
No downtime
No production loss
It is improves the quality of
goods
It can be planned and
scheduled as
67. Quality control
Quality is defined as the degree to which a set of
inherent characteristics fulfill the requirement.
Quality control is the procedure that is followed to
achieve and maintain the required quality.
Dimension of quality are
Performance, features, conformance, reliability,
durability, service. Response and reputation
68. Steps in quality control
Fixing the quality standard
Evaluation of measurement quality
Comparing the measured quality with quality
standard
Finding out the deviation
Reason for variation
Taking correcting action
69. Statistical quality control (SQC)
It means controlling the quality characteristics of a
product or process using statistical method.
Types of control charts
control charts for variables
control charts for attributes
70. Control charts for variable
They are used when the parameter under control is
some measurement of a variable such as
dimension of work part, time for process etc.,
Control charts for attributes
They are used when the parameter under control is
the proportion or fraction of defective.
