Effective management controls

Abstract

From all the modern management echniques which have been developed, two clear divisions of controls have emerged; the control which is applied before the event and that which is applied after the event. Although the former is aimed at the prevention, and the latter at the cure, of adverse situations, it must always be remembered that a manager needs to use the controls in order to be fully competent. Application incorporating Management by Exception to the manufacture of printed circuits can lead to a much improved profit. As an example, the Purchase Control Report, chosen because purchases constitute a high proportion of the total costs, enables the manager to ensure that a cash problem never arises from his purchasing actions. This same thinking adopted for other activities produces an increase in performance and can encourage the preparation of an operating plan, or Budget, which is the company's plan for profit and acceptable cash flow. The whole control system thus comprises the Budget, the drive to ensure its achievement in a positive manner by proper use of before the event controls, and the monitoring of the actual performance against the target after the event by the periodic management accounts. The proper use of ratios is an important aid to control. As an example, the return on capital ratio is used to show that a proposal to purchase an NC drilling machine should not be approved because of the significantly adverse effect on profitability.

Citation

Josephs, R. (1975), "Effective management controls", Circuit World, Vol. 1 No. 4, pp. 30-33. https://doi.org/10.1108/eb053657