Beyond the EU: DORA and NIS 2 Directive's Global Impact
SEPS 302. Chapter 6 Presentation
1. A N G E L A T H O M P S O N , S E P S 3 0 2CHAPTER 6:
CONTROLLING
2. CHAPTER OUTCOMES
• Describe the Control Process
• Contrast Two Types of Corrective Action
• Compare Preventive, Concurrent, & Corrective
• Explain how a Supervisor can Reduce Cost
• List the Characteristics of an Effective Control
System
3. CHAPTER OUTCOMES
• Explain Potential Negatives that Controls can
Create
• Explain Just-in-Time Inventory Systems
• Explain Value Chain Management
• Identify the Ethical Dilemmas in Employee
Monitoring
• Explain Employee Theft and its Effects on
Organizations
4. IMPORTANT TERMS
• Basic Corrective
Action
• Cause-Effect
Diagram
• Concurrent Control
• Control by Exception
• Control Chart
• Control Process
• Corrective Control
• Flow Chart
• Immediate
Corrective Action
• Just-in-time Inventory
System (JIT)
• Preventive Control
• Range of Variation
• Scatter Diagram
• Supply Chain
Management
• Value Chain
Management
12. THE CONTROL PROCESS
How do you compare results with standards?
Determining Acceptable Ranges
Goal Actual +/-
Machine A 5 4 -1
Machine B 7 3 -4
Machine C 8 9 +1
Machine D 7 7 0
27 23 -4
Which Machine has an Acceptable Range?
13. THE CONTROL PROCESS
How do you compare results with standards?
Special Measurement Tools: Cause and Effect Diagrams
Fishbone Diagram
14. THE CONTROL PROCESS
How do you compare results with standards?
Special Measurement Tools: Flow Charts
Event 1 Event 2 Event 3
Event 4Event 5
15. THE CONTROL PROCESS
How do you compare results with standards?
Special Measurement Tools: Scatter Diagrams
16. THE CONTROL PROCESS
How do you compare results with standards?
Special Measurement Tools: Control Charts
22. THE FOCUS OF CONTROL
Direct Labor
Indirect Labor
Raw Materials
Support Supplies
Utility
Maintenance
Waste
What Cost to Control
23. THE FOCUS OF CONTROL
• Step 1: Improve Methods
• Step 2: Level the Work Flow
• Step 3: Minimize Waste
• Step 4: Install Modern Equipment
• Step 5: Invest in Employee Training
• Step 6: Make Cuts Selectively
Cost Reduction Programs
24. THE FOCUS OF CONTROL
Paying Attention to Inventory
Just-In-Time Inventory System
25. THE FOCUS OF CONTROL
Value Chain Management
vs.
Supply Chain Management
26. THE FOCUS OF CONTROL
Quality Control
YouTube Video Link
27. THE FOCUS OF CONTROL
Characteristics of Effective Controls
• Timeliness
• Economy
• Flexibility
• Understandability
• Reasonable Criteria
• Critical Placement
• Emphasis on the Exception
28. THE FOCUS OF CONTROL
When Controls Create Problems
Employee Resistance
29. THE FOCUS OF CONTROL
When Controls Create Problems
Misdirection of Effort
30. THE FOCUS OF CONTROL
When Controls Create Problems
Ethics and Control Devices
34. KNOWLEDGE CHECK
• Go to the following URL to take a brief quiz on what
you have learned today.
https://testmoz.com/292136
• The quiz is worth 50 points.
• This quiz must be completed by 11:59pm, Monday
May 5, 2014
• Good Luck!
Editor's Notes
Talking Points:
Talking Points: The control process consists of three separate and distinct steps: (1) measuring actual performance, (2) comparing results with standards, and (3) taking corrective action.
Talking Points: Personal observation provides firsthand, intimate knowledge of the actual activity. As such, it is probably the most widely used means by which supervisors assess actual performance.It permits intensive coverage because minor as well as major performance activities can be observed. It also provides opportunities for the supervisor to “read between the lines.” Personal observation can pick up verbal omissions, facialexpressions, and tones of voice that may be missed by other methods.
Talking Points: This measuring deviceis not limited to computer outputs. It also includes graphs, bar charts, and numerical displays of any form that supervisors may use for assessing performance.
Talking Points: Information can also be acquired through oral reports, that is, through conferences,meetings, and one-to-one conversations. The advantages of oral reports are that they are fast; allow for feedback; and permit language expression and tone of voice, as well as words themselves, to convey meaning.
Talking Points: Actual performance can be measured by written reports. The strength of written reports is that they offer greater comprehensiveness and conciseness than is typically found in oral reports. They are also easier to catalog and reference. Written reports are often combined with statistical reports. They may also be used to precede or follow up oral reports.
Talking Points: What you measure is probably more critical to the control process than how you measure it. What you measure determines, to a great extent, what employees will attempt to emphasize.Example: You tell your employees that they have to have all timesheets in by Wednesday as a control criteria. Employees turn in their timesheets all throughout the day and some even turn them after 5pm which is the time you leave. HR has to have them by 5pm in their box. Emily, one of your employees, tells you that she turned hers in at 6pm after you left on Wednesday. Technically she did as you asked, but not at the control criteria that you actually intended. Keep in mind that some control criteria are applicable to most supervisory situations, while others are job specific. For instance, because all supervisors direct the activities of others, criteria such as employee satisfaction and absenteeism rates have universal application.Almost all supervisors also have budgets for their area of responsibility set in dollar costs. Keeping costs within budget, therefore, is a fairly common control measure. However, control criteria need to recognize the diversity of activities among supervisors. The key is that what you measure must be adjusted to fit the goals of your department.
Talking Points: The comparing step determines the degree of variation between actual performance and the standard. Some variation in performance can be expected in all activities; it is therefore critical to determine the acceptable range of variation.Deviations in excess of the acceptable range become significant and receive the supervisor’s attention. In this comparison stage, you need to be concerned with the size and direction of the variation.Explain this Example (page 146 – 147)
Talking Points: Cause-effect diagrams (also sometimes called fishbone diagrams) are used to depict the causes of a certain problem and to group the causes according to common categories such as machinery, materials, methods, personnel, finances, or management.These diagrams look somewhat like a fishbone, with the problem—the effect—defined as the head. On the “bones,” growing out of the “spine,” are the possible causes of production problems. They’re listed in order of possible occurrence. Cause-effect diagrams provide guidance for analyzing the influence that alternative courses of action will have on a given problem.
Talking Points: Flowcharts are visual representations of the sequence of events for a particular process. They clarify exactly how things are being done so that inefficiencies can be identified and the process improved. Example above of a basic flow chart
Talking Points: Scatter diagrams illustrate the relationship between two variables. These diagrams visually depict correlations and possible cause and effect.
Talking Points: Control charts are the most sophisticated of the statistical techniques we describe. They are used to reflect variation in a system. Control charts reflect measurements of sample products averaged with statistically determined upper and lower limits.As long as the process variables fall within the acceptable range, the system is said to be “in control”.When a point falls outside the limits set, the variation is unacceptable. Improvements in quality should, over time, result in a narrowing of the range between the upper and lower limits through elimination of common causes.
Talking Points:
Talking Points: Preventative control is a type of control that anticipates and prevents undesirable outcomes.An example of a preventative control that occurs in your life is when the doctor tells you to exercise, keep a healthy weight and diet so you don’t get Type 2 Diabetes (which completely preventable)
Talking Points: Concurrent Control is a type of control that takes place while an activity is in progress Example: To ensure that your food comes out tasting great, you may check the temperature throughout cooking, or use a utensil to check the taste
Talking Points: Corrective Control is a type of control that provides feedback after an activity is finished to prevent future deviations.Example: an example of corrective control could be teacher grading a student on a speech and giving feedback to the student of what they could do different on the next speech project.
Talking Points:
Talking Points:
Talking Points: Have you gone over budget? Then it’s time to come up with some ideas. Cost reduction programs are implemented when this happens.Need help doing so? There are six-steps that help you in reducing cost.1. Improve methods. Having a meeting to talk about have meeting needs to be eliminated. Getting rid of unnecessary activities like this will increase efficiency.2. Level the work flow. Peaks and valleys in a work flow imply inefficiencies. By leveling the work flow, you can make do with fewer employees and cut down on overtime.3. Minimize waste. In your company you got to close the preverbal screen door; you can’t let all the cold air out. This means not leaving lights on, throwing away paper when it can be used as scratch paper, and making sure your employees are using their time wisely.4. Install modern equipment. Living in modern society means you have to work in a modern society. If your team is still working on type writers, then you are definitely behind the ball. Budget for new equipment to replace obsolete and worn-out machinery, computers, and the like.5. Invest in employee training. Sometimes you gotta spend money to make money and spending money on educating and improving your workforce can increase you return on investment vastly. 6. Make cuts selectively. Avoid across-the-board cuts. Make cuts where they will generate the greatest efficiencies.
Talking Points: just-in-time (JIT) inventory system is a system in which inventory items arrive when they are needed in the production process instead of being stored in stock.One of the ultimate goals of JIT is to have only enough inventory on hand to complete the day’s work—thereby reducing a company’s lead time, inventory, and associated costs.Another is to eliminate raw material inventoriesby coordinating production and supply deliveries precisely. When the system works as designed, it results in a number of positive benefits for a manufacturer: reduced inventories, reduced setup time, better work flow, shorter manufacturing time, less space consumption, and even higher quality.
Talking Points: -Value chain management is the process of managing the entire sequence of integrated activities and information about product flows along the entire value chain.In contrast to supply chain management, which is internally oriented and focuses on the efficient flow of incoming materials to the organization, value chain management is externally oriented and focuses on both incoming materials and outgoing products and services. Supply chain management is efficiency oriented (its goal is to reduce costs and make the organization more productive), whereas value chain management is effectiveness oriented and aims to create the highest value for customers.
Talking Points:quality control is the Identification of mistakes that may have occurred; monitoring quality to ensure that (it) meets some pre-established standard.What observational techniques are in place to ensure that all requirements for quality are being met?When Ford tests their new model Explorers in those crash test videos we see, they are utilizing quality control measures.
Talking Points:Timeliness. Controls should call attention to variations in time to prevent serious. infringement on a unit’s performance. The best information has little value if it is dated. Therefore, an effective control system must provide timely information.Economy A control system must be economically reasonable to operate. Any system of control has to justify the benefits that it gives in relation to the costs it incurs. To minimize costs, you should try to impose the least amount of control that is necessary to produce the desired results. Flexibility Effective controls must be flexible enough to adjust to adverse change or to take advantage of new opportunities.Understandability Controls that cannot be understood by those who have to use them are of little value. It is sometimes necessary, therefore, to substitute less complex controls for sophisticated devices. A control system that is difficult to understand can cause unnecessary mistakes and frustrate employees; it will eventually be ignored.Reasonable Criteria Control standards must be reasonable and attainable. If they are too high or unreasonable, they no longer motivate. Controls should, therefore, enforce standards that arereasonable; they should challenge and stretch people to reach higher performance levels without being demotivating or encouraging deception.Critical Placement You should place controls on those factors that are critical to your unit’s performance goals. Controls should cover the critical activities, operations, and events within your unit. That is, you should focus on where variations from standard are most likely to occur or where a variation would do the greatest harm.Emphasis on the Exception Because you can’t control all activities, you should place your control devices where they can call attention only to the exceptions. A control by exception system ensures that you are not overwhelmed by information on variations from standard.
Talking Points:How do we this? wherever possible, encourage employee self-control. Once employees know their goals, give them the benefit of the doubt and leave them alone. Let them monitor and correct their own performance. Supplement this with regular communication so that they can let you know what problems they’ve encountered and how they’ve solved them.
Talking Points:People may misdirect their efforts to look good on the control criteria. Because any control system has imperfections, problems occur when individuals or organizational units attempt to look good exclusively in terms of the control devices. In actuality, the result is dysfunctional in terms of the organization’s goals. How to Reduce this? 1. make sure that control standards are reasonable.2. select and evaluate criteria that are directly related to achievement of employee job goals. For example If I were a principal I wouldn’t evaluate how well a teacher was able to hang holiday decorations in her room to determine if she was increasing her children’s math scores.
Talking Points:Computer monitoring can be an excellent control mechanism. Computer monitoring systems can be used to collect, process, and provide performance feedback information about employees’ work that can help supervisors with performance improvement suggestions and with employee development. They have also been used to help supervisors identify employee work practices that might be unethical or costly.
Talking Points:
Talking Points:In a recent survey of U.S. companies, 20 percent said that workplace theft has become a moderate to very big problem.Employee theft is defined as any unauthorized taking of company property by employees for their personal use.13 It can range from embezzlement to fraudulent filingof expense reports to removing equipment, parts, software, or office supplies from company premises.
Talking Points:Signed into law in July 2002 by President Bush, the Sarbanes-Oxley Act establishes procedures for public companies regarding how they handle and report their financial picture. The legislation also established penalties for noncompliance.The penalty aspect of Sarbanes-Oxley for noncompliance is something that is getting executives’ attention. Failure to comply with the requirements stipulated under Sarbanes-Oxley—such as falsely stating corporate financial position—can result in the executive being fined up to $1 million and imprisoned for up to ten years. If the executive’s action is determined to be willful, both the fine and the jail time can be doubled.In 2013, JP Morgan Chase was charged by the U.S. Securities and Exchange Commission for failing to adhere to the Sarbanes-Oxley Act: According to the SEC’s order instituting a settled administrative proceeding against JPMorgan, the Sarbanes-Oxley Act of 2002 established important requirements for public companies and their management regarding corporate governance and disclosure. Public companies such as JPMorgan are required to create and maintain internal controls that provide investors with reasonable assurances that their financial statements are reliable, and ensure that senior management shares important information with key internal decision makers such as the board of directors. JPMorgan failed to adhere to these requirements, and consequently misstated its financial results in public filings for the first quarter of 2012.
