Page 202 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Unit 9: Performance Measurement Systems

Self Assessment Notes

Fill in the blanks:
9. ………………. is a continuous process of comparing products and operations with the
strongest competitors or the best practices in similar operations of the best performing
company.
10. …………………….. means at the extreme there are zero inventories, and goods are
produced or ordered only when they are needed.

9.7 Computer Integrated Manufacturing and its Influence on
Management Control Process

In petroleum refineries, chemical processing and similar processing plants, materials and energy
enter at the start and as various stages of the process and the finished products come out at the
end without any involvement of manpower. Human beings maintain the equipment, check the
quality of the process, and if it goes out of control, shut it down and bring it back into control.
Similarly, product control systems in other industries also have undergone sea change that have
now come very close to those found in process manufacturing. These developments include
numerically-controlled machine tools, robots and computers that integrate the work of other
computers. This has resulted in the reduction of manpower involvement, reduction in paperwork,
elimination of duplicate record keeping, inconsistencies of data in separate systems, decrease in
inventory, decrease in throughput time and consequent reduction in production costs.
Complicated, expensive computer systems are now used to link together various stages of
production such as Manufacturing Resource Planning II (MRPII), Flexible Manufacturing System
(FMS), Manufacturing Accounting and Production Information Control Systems (MAPICS II),
Manufacturing Resource Planning and Execution System (MRPX) and Computer Aided
Manufacturing (CAMI). These systems incorporate into a single system all or at least several of
the formerly separate systems for product design, order processing, accounts receivable, payroll,
accounts payable, inventory control, bills of materials, capacity planning, product scheduling
and product cost accounting.
The following are the implications of management control process:

1. Increase in task control: Fully developed system converts certain production activities
that once required management control into task control.
2. Better information: The system provides information more accurately more consistently,
with more detail and at much less cost than the systems they supersede.
3. More prompt information: Information is available shortly after the event occurs; in some
cases, practically instantaneously.
4. Work teams: Under the newer systems, performance focuses on the performance of the
whole team.
5. Business unit controller: One consequence of the team approach is that business unit
controller should be made primarily responsible for assisting the business unit manager
in planning and controlling the units’ operations.

Task Discuss the performance reporting at various levels of management. Give examples
of some reports.

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