3.12 Controlling Flashcards
What is controlling in management?
A management activity that measures how well an organisation achieves its goals and objectives. It involves setting standards, measuring actual performance against the standards, and taking corrective action if needed.
What are the steps in controlling?
- Set standards 2. Measure performance 3. Compare standards against performance 4. Take corrective action
What are the four types of management control?
- Stock control 2. Quality control 3. Credit control 4. Financial control
What is stock control?
A management activity that aims to keep optimum stock levels so that the organisation doesn’t have too much or too little stock.
What are the types of stock in a business?
- Raw materials 2. Work in progress 3. Finished goods 4. Merchandise
What is the optimum stock level?
The ideal level of stock that a business should have of a particular item.
Example: A shop will have more ice cream stock in summer than winter.
What is the maximum stock level?
The largest amount of stock that can be held in a business at once, depending on the availability of storage.
What is the minimum level of stock?
The lowest amount of stock that should be held.
What is the re-order level?
The level of stock at which a new order of stock should be placed.
What is lead time?
The time from when an order is placed to the stock arriving in the stockroom.
What are the methods of managing stock levels?
- Manual 2. EDI 3. JIT
What is a manual stock take?
Employees physically count and record all stock in the business, which can be recorded on a computer to identify differences.
What is EDI?
Electronic Data Interchange, allowing computer-to-computer communication for exchanging information without human interaction.
What are the benefits of EDI to stock control?
- Quick to reorder 2. More efficient 3. Short lead times 4. Shorter processing times
What is JIT?
Just In Time, where a business holds minimum raw materials and receives regular deliveries to ensure they never run out of stock.
What are the risks of having too much stock?
- Risk of theft 2. Lower profits 3. Risk of not selling 4. Lack of money
What are the risks of having too little stock?
- Loss of sales 2. Loss of economies of scale 3. High costs 4. Production delays
What are economies of scale?
Business benefits when buying stock in large quantities from suppliers, often resulting in discounts.
What is quality control?
A set of procedures used to monitor work completed to ensure it meets the standards set.
What is the purpose of quality control?
- Detect issues 2. Prevent issues 3. Correct issues 4. Improve quality
How does a business achieve quality control?
- Inspections 2. Quality circles 3. Quality awards 4. Total quality management (TQM)
What are inspections in quality control?
A trained inspector tests finished goods, either by testing all or a sample.
What are quality circles?
A group of employees who meet regularly to identify and discuss quality issues and propose solutions.
What are the benefits of quality circles?
- Increased employee motivation 2. Reduced costs 3. Improved consumer satisfaction
