1. Supervision CHAPTER 6 DESIGNING AND IMPLEMENTING CONTROLS Saigon Institute of Technology

2. Chapter Outcomes 1. Describe the control process 2. Contrast two types of corrective action 3. Compare preventive, concurrent, and corrective control 4. Explain how a supervisor can reduce costs 5. List the characteristics of an effective control system 6. Explain potential negatives that controls can create 7. Explain what is meant by the term just-in-time inventory systems 8. Describe what is meant by the term value chain management 9. Identify the ethical dilemmas in employee monitoring 10. Explain what is meant by employee theft and its effect on the organization

3. Controlling Management functions Planning Organizing Leading Controlling

4. Control Process Measure actual performance Compare results with standards Take corrective action Performance standards Results

5. Control Process (cont) Measure actual performance Methods Personal observation Statistical reports Oral reports Written reports What to measure Establish criteria based on goals

6. Control Process (cont) Compare results with standards Determine acceptable range of variation Special measurement tools Cause-effect diagrams Flow charts Scatter diagrams Control charts

7. Control Process (cont) Take corrective action Immediate Right now Basic Gets to root cause  permanent elimination

8. Type of Controls Preventive control Anticipate & prevent undesirable outcomes Concurrent controls Take place while activities are in progress Corrective controls Feedback after an activity is finished to prevent future deviations

9. Focus of Control Costs Inventories Quality Safety Employee performance

10. Cost Control Cost categories Direct labor costs Indirect labor costs Raw material costs Supportive supplies costs Utility costs Maintenance costs Waste costs

11. Cost Control (cont) Cost reduction program Improve methods Level the work flow Minimize waste Install modern equipment Invest in employee training Make cuts selectively

12. Inventory Control Why control inventory? Just-in-time (JIT): inventory items arrive when they are needed Kanban

13. Value Chain Management Value chain management Supply chain management

14. Quality Control Why control quality? Needed at multiple points Comprehensive quality control: includes preventive, concurrent, & corrective controls

15. Characteristics of Effective Controls Timeliness Economy Flexibility Understandability Reasonable criteria Critical placement Emphasis on the exception

16. Problems Created by Controls Employee resistance Misdirection of effort Ethics and control devices

17. Contemporary Control Issues Employee theft Sarbanes-Oxley Act