BUS 137 Module 5: Controlling Chapter 14: Foundations of Control Chapter 15: Operations Management

organizational processes

the way organizational work is done

PERT network analysis

a flowchart-like diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity

control

management function that involves monitoring activities to ensure that they're being accomplished as planned and correcting any significant deviations.

3. __________ is the performance​ characteristics, the features and the​ attributes, and any other aspects for which customers will pay. A. Service B. Management control C. Transformation D. Value E. Productivity

value Correct. Value is provided to customers through transforming raw materials and resources into a product or service that end users desire.

operations management

the study and application of the transformation process

management by walking around (MBWA)

when a manager is out in the work area interacting with employees

project management

the task of getting project activities done on time, within a budget, and according to specifications

slack time

the time difference between the critical path and all other paths

Keeping Track with a Balanced Scorecard Approach **Balanced scorecard** approach looks at more than the financial perspective by typically looking at four areas that contribute to a company's performance: **Managers should: develop goals for each of the four areas and then measure whether goals are being met.**

* Financial * Customer * Internal Processes * People/innovation/growth assets The **balanced scorecard** approach looks at more than the financial perspective by typically looking at four areas that contribute to a company's performance: **financial, customer, internal processes**, and **people/innovation/growth assets**. According to this approach, managers are supposed to develop goals in each of the four areas and then measure whether the goals are being met.

Organizational Processes and Leadership

** Better demand forecasting ** Select functions done collaboratively with other partners in the chain ** New measures needed for evaluating the performance of various activities along the chain Value chain management radically changes **organizational processes**—that is, the way the organization's work is done. Managers must critically evaluate all organizational processes by looking at the organization's unique skills, capabilities, and resources. They must then determine where value is being added and eliminate non-value-adding activities. For each process, all participants should ask questions such as "Where can internal knowledge be leveraged to improve flow of material and information?", "How can we better configure our product to satisfy both customers and suppliers?", "How can the flow of material and information be improved?", and "How can we improve customer service?" Three important conclusions about how organizational processes must change are: 1. Better **demand forecasting** is necessary and possible because of closer ties with customers and suppliers. 2. Selected **functions** may need to be done collaboratively with other partners in the value chain. This collaboration may even extend to sharing employees. 3. Finally, new measures are needed for **evaluating the performance** of various activities along the value chain. The importance of **leadership** to value chain management is clear—from top organizational levels to lower levels, managers must support, facilitate, and promote implementation and ongoing practice of value chain management. Managers must make a serious commitment to identifying what value is, how that value can best be provided, and how successful those efforts have been. Additionally, leaders should outline expectations for what's involved in the organization's pursuit of value chain management and managers should clarify expectations regarding each employee's and partner's role in the value chain.

Employees and Human Resources

** Flexible job design ** Effective hiring process ** Ongoing training **Employees are an organization's most important resource** so they play an important part in value chain management. Three main **human resources requirements** for value chain management are: 1. Flexible approaches to job design. 2. An effective hiring process. 3. Ongoing training. **Flexibility is the key description of job design in a value chain management organization**. Traditional functional job roles—such as marketing, sales, accounts payable, customer service representatives, and so forth—are inadequate in a value chain management environment. Instead, jobs need to be designed around work processes that link all functions involved in creating and providing value to customers. In designing jobs, the focus needs to be on how each activity performed by an employee can best contribute to the creation and delivery of customer value, which requires flexibility in what employees do and how they do it. These types of jobs require employees who are flexible, so the organization's hiring process must be designed to identify those employees who have the ability to quickly learn and adapt. Also, the need for flexibility requires a significant investment in ongoing employee training. Whether the training involves learning how to use information technology software, how to improve the flow of materials throughout the chain, how to identify activities that add value, or how to make better decisions more quickly, managers must ensure that employees have the knowledge and tools they need to do their jobs. The last requirement for value chain management is a **supportive organizational culture and attitudes**, such as sharing, collaborating, openness, flexibility, mutual respect, and trust. These attitudes encompass not only the internal partners in the value chain but also external partners. Starbucks CEO Howard Schultz (in the photo above) visits with coffee bean growers in China about the importance of producing high quality beans and establishing responsible growing practices. Schultz's personal visits with external partners illustrate his support of Starbucks' cultural attitudes of sharing, openness, collaborating, and mutual respect.

Explain the nature and importance of control The Communication Process While high employee turnover is almost always dysfunctional, low turnover is not necessarily the best goal. An absence of turnover often can mean a complacent manager, one who's willing to accept mediocre employee performance. In an effective organizational control system, managers are encouraged to identify and remove marginal employees. Low levels of employee turnover can be functional only if the right people—those who are the weakest performers—are the ones leaving. Controlling is the final step in the management process. Managers must monitor whether goals that were established as part of the planning process are being accomplished efficiently and effectively. That's what they do when they control. Appropriate controls can help managers look for specific performance gaps and areas for improvement. Things don't always go as planned. But that's why controlling is so important! In this chapter, we'll look at the fundamental elements of controlling, including the control process, the types of controls that managers can use, and contemporary issues in control.

**Control** is the management function that involves monitoring activities to ensure that they're being accomplished as planned and correcting any significant deviations. Managers know that their business units are performing properly only after they've evaluated which activities have been accomplished and how the actual performance compares with the desired standard. An effective control system ensures that the ways in which activities are completed attains the organization's goals. The effectiveness of a control system is determined by how well it facilitates goal achievement. The more a control system helps managers achieve their organization's goals, the better it is. In the photo above, John Jamason, media and public information manager, talks to employees working in the new social media monitoring room at the Palm Beach County Emergency Operations Center. Social media such as Facebook and Twitter will help the center track and monitor information during storm emergencies to get help to people in need. **Control is important, therefore, because it's the only way that managers know whether organizational goals are being met and, if not, the reasons why.** The value of the control function can be seen in three specific areas:

Correcting Performance

**Immediate corrective action ** Basic corrective action When faced with a decision, managers can choose among three courses of action: do nothing, correct the actual performance, or revise the standards. So how do you correct actual performance? Depending on the problem, a manager can take different corrective actions. For instance, if unsatisfactory work is the reason for performance variations, the manager could correct it with training programs, disciplinary action, changes in compensation practices, and so on. One decision a manager faces is whether to take **immediate corrective action,** which corrects problems right away to get performance back on track, or to use **basic corrective action,** which looks at how and why performance deviated before correcting the source of deviation. Effective managers analyze deviations and, if the benefits justify it, take the time to pinpoint and correct the causes of variance.

Service Firms vs. Manufacturing Firms

**Manufacturing firms** produce physical goods, such as cars or food products **Service firms** produce nonphysical outputs in the form of services, such as medical and transportation All organizations produce goods or services through the **transformation process**. **Manufacturing organizations** produce tangible, physical goods such as cars, cell phones, and food products. **Service organizations** produce nonphysical outputs such as medical and health care services, transportation services, entertainment services, and so on. The U.S. economy, and to a large extent the global economy, is dominated by the creation and sale of services. Most of the world's developed countries are predominantly service economies. In the United States, almost 77 percent of all economic activity is services and in the European Union, it's nearly 73 percent. In lesser-developed countries, the services sector is less important, accounting for only 33 percent of economic activity in Nigeria, 37 percent in Laos, and 38 percent in Vietnam. **Most of the world's developed countries are predominantly service economies.2 In the United States, for instance, almost 78 percent of all economic activity is services, and in the European Union, it's nearly 73 percent. In lesser-developed countries, the services sector is less important. For instance, in Chad, it accounts for only 32 percent of economic activity; in Laos, only 44 percent; and in Bolivia, 48 percent.**

What is Quality?

**Product Quality Dimensions** Performance - operating characteristics Features - important special characteristics Flexibility - meeting operating specifications over some period of time Durability - amount of use before performance deteriorates Conformance - match with preestablished standards Serviceability - ease and speed of repair of normal service Aesthetics - how a product looks and feels Perceived quality - subjective assessment of characteristics (product image) **Service Quality Dimensions** Timeliness - performed in promised period of time Courtesy - performed cheerfully Consistency - giving all customers similar experiences each time Convenience - accessibility to customers Completeness - full service, as required Accuracy - performed correctly each time

Improving Productivity

**Productivity = People + Operations variables** Technology is helping businesses to improve their productivity in order to survive, especially in a market filled with low-cost competitors. Two major global manufacturers of jetliners have copied manufacturing techniques from Toyota. Other manufacturers are replacing manpower with machines that are so reliable that they make flawless parts without human operators. High productivity leads to economic growth and development of countries, and to higher wages and company profits without causing inflation. Individual organizations also benefit from a more competitive cost structure and the ability to offer more competitive prices. Companies outside of manufacturing are also pursuing productivity gains. For example, Pella Corporation's purchasing office improved productivity by reducing purchase order entry times by more than 50 percent, decreasing voucher processing by 27 percent, and eliminating 14 financial systems. Its information technology department also slashed e-mail traffic in half and the human resources department cut benefit enrollment processing by 156.5 days. Organizations that hope to succeed globally are looking for ways to improve productivity. For example, the Canadian Imperial Bank of Commerce, which automated its purchasing, is saving several million dollars annually.

Keeping Track: What Gets Controlled? Keeping track of an organization's finances

**Ratio analysis**. (See Exhibit 14-6.) Ratios are calculated using selected information from the organization's balance sheet and income statement. **Budget analysis**. Budgets are used for both planning and controlling. **Planning tool**: indicates which work activities are important and what and how much resources should be allocated to those activities. **Controlling tool**: provides managers with quantitative standards against which to measure and compare resource consumption. Significant deviations require action and a manager to examine what has happened and why and then take necessary action.

15-3 Describe how value chain management is done.

**The Value Chain Management Process** The dynamic, competitive environment facing contemporary global organizations demands **new solutions** The dynamic, competitive environment facing contemporary global organizations demands new solutions. Understanding how and why value is determined by the marketplace has led some organizations to experiment with a new **business model**—that is, a strategic design for how a company intends to profit from its broad array of strategies, processes, and activities. For example, IKEA, the home furnishings manufacturer, transformed itself from a small, Swedish mail-order furniture operation into the world's largest retailer of home furnishings by reinventing the value chain in the home furnishings industry. The company offers customers well-designed products at substantially lower prices in return for the customers' willingness to perform key tasks traditionally done by manufacturers and retailers—such as getting the furniture home and assembling it. The company's adoption of a unique business model and willingness to abandon old methods and processes have worked well.

Criteria for Measurement

**What** managers measure is probably more important to the control process than **how** they measure Selecting the right criteria to measure is critical for evaluating performance, but what we measure also influences the areas of work on which people in the organization will focus their efforts. Some control criteria are applicable to any management situation. • Because all managers direct the activities of others, criteria such as employee satisfaction or turnover and absenteeism rates can be measured. • Keeping costs within budget is also a fairly common control measure. However, any comprehensive control system needs to recognize the diversity of activities among managers. For example, a production manager in a paper tablet manufacturing plant might use measures of the quantity of tablets produced per day, tablets produced per labor hour, scrap tablet rate, or percentage of rejects returned by customers. In contrast, marketing managers use measures such as percent of market held, number of customer visits per salesperson, or number of customer impressions per advertising medium. While some activities are more difficult than others to measure in quantifiable terms, most activities can be broken down into objective segments that can be measured. Ultimately, the manager determines what value a person, department, or unit contributes to the organization and then converts that contribution into standards. When a performance indicator cannot be stated in quantifiable terms, managers should use subjective measures, while recognizing the limitations of the data.

Quality Goals

1. ISO 9000 2. Six Sigma To publicly demonstrate their commitment to quality, many organizations worldwide have pursued challenging quality goals. The two best known are **ISO 9000 and Six Sigma**. **ISO 9000** is a series of international quality management standards established by the International Organization for Standardization, which set uniform guidelines for processes to ensure that products conform to customer requirements. These standards cover everything from contract review to product design and delivery, and have become the internationally recognized standard for evaluating and comparing companies in the global marketplace. In fact, this type of certification can be a prerequisite for doing business globally. Motorola popularized use of stringent quality standards through a trademarked quality improvement program called **Six Sigma** **Six Sigma** is a quality standard that establishes a goal of no more than 3.4 defects per million units or procedures. Although it's an extremely high standard to achieve, many quality-driven businesses are using it and benefiting from it. Although manufacturers seem to make up the bulk of Six Sigma users, service companies—such as financial institutions, retailers, and health care organizations—are also beginning to apply it. Although it's important for managers to recognize the benefits from obtaining ISO 9000 certification or Six Sigma, the key benefit comes from having work processes and an operations system in place that enable organizations to meet customers' needs and employees to perform their jobs in a consistently high-quality way. Six Sigma is a quality standard that establishes a goal of no more than 3.4 defects per million units or procedures. What does the name mean? Sigma is the Greek letter that statisticians use to define a standard deviation from a bell curve. The higher the sigma, the fewer the deviations from the norm—that is, the fewer the defects. At One Sigma, two-thirds of whatever is being measured falls within the curve. Two Sigma covers about 95 percent. At Six Sigma, you're about as close to defect-free as you can get.52 It's an ambitious quality goal! Although it's an extremely high standard to achieve, many quality-driven businesses are using it and benefiting from it. For instance, General Electric estimates that it has saved billions since 1995 by using Six Sigma, according to company executives. Although it's important for managers to recognize that many positive benefits come from obtaining ISO 9000 certification or Six Sigma, the **key benefit comes from the quality improvement journey itself**.

Goals of Value Chain Management

A good value chain is one in which a sequence of participants works together as a team, each adding some component of value—such as faster assembly, more accurate information, or better customer response and service—to the overall process. The better the collaboration among the various chain participants, the better the customer solutions. When value is created for customers and their needs and desires are satisfied, everyone along the chain benefits.

Load Charts

A modified version of the Gantt chart is a **load chart**. Instead of listing activities on the vertical axis, load charts list either whole departments or specific resources. This information allows managers to plan and control for capacity utilization. In other words, load charts schedule capacity by workstations. In Exhibit 15-6, shown here, we see a load chart for six production editors at the same publishing firm. Each editor supervises the design and production of several books. By reviewing the load chart, the executive editor who supervises the six production editors can see who is free to take on a new book. If everyone is fully scheduled, the executive editor might decide not to accept any new projects, to accept some new projects and to delay others, to ask the editors to work overtime, or to employ more production editors.

14.4 Discuss contemporary issues in control.

Adjusting controls for cross-cultural differences may be necessary, primarily in the areas of measuring and taking corrective actions. Workplace concerns include workplace privacy, employee theft, and workplace violence. For each of these, managers need to have policies in place to control inappropriate actions and ensure that work is getting done efficiently and effectively.

CH. 15 Operations Management

After studying this chapter, you will be able to: • Define operations management and explain its role. • Define the nature and purpose of value chain management. • Describe how value chain management is done. Discuss contemporary issues in managing operations

Obstacles to Value Chain Management

As desirable as value chain management may be, managers must tackle several obstacles in managing the value chain, as seen here in Exhibit 15-3. These **obstacles include organizational barriers, cultural attitudes, required capabilities, and people**. **Organizational barriers** are among the most difficult to handle. These **barriers include refusal or reluctance to share information, reluctance to shake up the status quo, and security issues**. Without shared information, close coordination and collaboration is impossible. And the reluctance or refusal of employees to shake up the status quo impedes efforts toward value chain management and prevents its successful implementation. Finally, because value chain management relies heavily on a substantial information technology infrastructure, system security and Internet security issues need to be addressed.

Keeping Track of an Organization's Finances: Budget Analysis

Budgets are used for both **planning** and **controlling**. **Budget** analysis is also used. Budgets are used for both planning and controlling. As a planning tool, a budget indicates which work activities are important and which resources, and how much of these resources, should be allocated to those activities. As a controlling tool, budgets provide managers with quantitative standards against which to measure and compare resource consumption. Significant deviations require action— the manager examines what has happened and why, and then takes necessary action.

Capabilities and People

Capabilities: ** Coordination and collaboration ** Configuration that satisfies customers and suppliers ** Education of internal and external partners People: ** Commitment ** Time ** Energy We know that value chain partners need numerous **capabilities**. Several of these—coordination and collaboration, the ability to configure products to satisfy customers and suppliers, and the ability to educate internal and external partners—aren't easy to attain. However, they're essential to capturing and exploiting the value chain. The final obstacles to successful value chain management can be an organization's **people**. Without their unwavering commitment to do whatever it takes, value chain management won't succeed. In addition, value chain management takes an incredible amount of time and energy on the part of an organization's employees. Motivating such high levels of effort isn't easy for managers to do.

Benefits of Value Chain Management

Collaborating with external and internal partners to create and manage a successful value chain strategy requires significant investments of time, energy, and other resources and a serious commitment by all chain partners. So why do it? Because it benefits everyone involved. 1. Improved procurement (acquiring needed resources) 2. Improved logistics (managing materials, service, and information) 3. Improved product development (close relationships with customers leads to developing products they value) 4. Enhanced customer order management (managing every step to make sure customers are satisfied)

14-4 Discuss contemporary issues in control

Contemporary Issues **Cross-cultural differences ** Workplace concerns The importance of control as a managerial function cannot be overstated. Two control issues that managers face today are **cross-cultural differences** and **workplace concerns**. Workplace concerns include technology usage, employee theft, and workplace violence.

3. The staff at​ Zane's meets every Saturday morning before the store opens and discusses what went on during the week. If Chris Zane reprimanded an employee at this meeting about the way​ he/she had handled a customer request during the​ week, this would be an example of​ ________ control.

Correct. In feedback​ control, the control takes place after the activity is done. Reprimanding an employee for something that has already happened is feedback control. Next Question

15-4 Discuss contemporary issues in managing operations

Contemporary Issues: ** Technology ** Quality initiatives ** Project management With soaring global demand and higher costs for energy and materials, virtually every aspect of the economy needs to be re-examined and many products must be redesigned for greater efficiency. Let's now look at three contemporary issues that managers face in managing operations: 1. Technology's role in operations management 2. Quality initiatives 3. Project management To be more responsive, operations managers need systems that can reveal available capacity, status of orders, and product quality while products are being manufactured. To connect more closely with customers, production must be synchronized across the enterprise. To avoid bottlenecks and slowdowns, the production function must be a full partner in the entire business system. Technology now allows organizations to control costs, particularly in the areas of predictive maintenance, remote diagnostics, and utilities. These savings are worth a lot if they prevent equipment breakdowns and subsequent production downtime. Managers who understand the ability of technology to create more effective and efficient performance know that managing operations is more than the traditional view of simply making a product. Instead, the emphasis is on working together with all the organization's business functions to find solutions to customers' business problems.

The Importance of Control **Planning** Goals Objectives Strategies Plans **Controlling** Standards Measurements Comparison Actions **Leading** Motivation Leadership Communications Individual and Group Behavior **Organizing** Structure Human Resource Management

Control is important because it's the only way that managers know whether organizational goals are being met and, if they are not being met, the reasons why. The value of the control function can be seen in three specific areas: planning, empowering employees, and protecting the workplace. As the final step in the management process, controlling provides a **critical link to planning**, as we see here in Exhibit 14-1. If managers didn't control, they'd have no way of knowing whether their goals and plans were being achieved and what future actions to take. The second reason controlling is important is because **it can empower employees.** Many managers are reluctant to empower their employees because they fear that something will go wrong and they will be held accountable. However, an effective control system provides information and feedback on employee performance and minimizes the chance of problems. The final reason that managers control is **to protect the organization and its assets**. Organizations face threats from natural disasters, financial pressures and scandals, workplace violence, supply chain disruptions, security breaches, and even possible terrorist attacks. Comprehensive controls and backup plans help minimize such work disruptions.

14.1 Explain the nature and importance of control.

Control is the management function that involves monitoring activities to ensure that they're being accomplished as planned and correcting any significant deviations. As the final step in the management process, controlling provides the link back to planning. If managers didn't control, they'd have no way of knowing whether goals were being met. Control is important because (1) it's the only way to know whether goals are being met and, if not, why; (2) it provides information and feedback so managers feel comfortable empowering employees; and (3) it helps protect an organization and its assets.

Feedback Control

Control that takes place after a work activity is done The most popular type of control relies on feedback. In **feedback control**, the control takes place after the activity is done. This type of control has **two advantages:** 1. Feedback gives managers meaningful information on how effective their planning efforts were. Feedback that shows little variance between standard and actual performance indicates that the planning was generally on target. If the deviation is significant, that information can be used to formulate new plans. 2. Feedback enhances motivation because people want to know how well they're doing.

Concurrent Control

Control that takes place while a work activity is in progress **Concurrent control**, as its name implies, takes place while a work activity is in progress. For instance, Google's director of business product management and his team keep a watchful eye on one of its most profitable businesses—online ads. They watch the number of searches and clicks, the rate at which users click on ads, and the revenue this generates. Everything is tracked hour by hour, compared with the data from a week earlier, and charted. If something is not working well, they fine-tune it. Computers and computerized machine controls can be designed to include concurrent controls, such as organizational quality programs that inform workers whether their work output is of sufficient quality to meet standards. **The best-known form of concurrent control, however, is direct supervision, and MBWA is a great way for managers to do this.** United Airlines uses concurrent control at its Network Operations Center in Chicago that runs 24 hours a day, seven days a week. To ensure safe travel for passengers, employees monitor weather patterns, coordinate with air traffic control from across the country, route aircrafts, and communicate directly with flight crews.

2. Tom​ Girard, Director of Retail​ Operations, indicates that he is able to keep​ "hands-on" with the​ staff, and he is always aware of how individual employees have performed and what skills they need to work on. This suggests that Girard practices​ ________. A. benchmarking B. management by walking around​ (MBWA) C. a balanced scorecard approach D. feedforward control E. authoritarian leadership

Correct. **Management by walking around​ (MBWA)** is a phrase used to describe when a manager is out in the work​ area, interacting directly with​ employees, and exchanging information about​ what's going on.

5. At the corporate​ level, Zane's uses formal surveys that ask the customers about their engagement in the​ process, whether they had a positive experience with​ Zane's Cycles, and if they were satisfied. What source of information does this​ represent? A. Benchmarking B. Oral reports C. Personal observation D. ​Written/statistical reports E. Analytics

Correct. Survey results are likely written​ and/or statistical reports. Statistical reports would reduce the survey information to​ graphs, charts, or other displays of numerical data​ (such as numerical ratings of levels of​ satisfaction). The survey results would probably also have a written report of comments​ and/or suggestions made by customers.

4. Chris Zane relies on his employees to take care of the customer in every situation. Even if Zane has to step in and reassure the customer in the​ process, he then hands the situation off to his employees to resolve the​ customer's issue. Which step of the control process does this​ describe? A. Assessing B. Taking action C. Comparing D. Measuring E. Planning

Correct. The crisis situation would be considered a deviation outside an acceptable of variation that needs attention. This is when Chris Zane implements the third step in the control​ process: taking action. He takes action by assuring customers that they will be taken care of and then hands the situation to his employees for final resolution.

Ch. 14 Zane's Cycles 1. Managers must ensure that goals are being met and procedures are being followed. To do​ this, they employ control systems. Control involves monitoring activities to ensure that they are being accomplished and correcting deviations. Which of the following is the BEST example of​ control? A. ​Zane's takes the feedback from its formal and informal surveys and tweaks its service offerings to improve its relationship with customers. Your answer is correct. B. Employees at​ Zane's are empowered to satisfy the customer independent of upper management. C. Recreational equipment and​ high-end equipment are located in different parts of the store so that customers know where to go. D. ​Zane's measures customer service satisfaction after every point of contact. E. ​Zane's considers every transaction that the customer can potentially make during their​ lifetimes, rather than viewing each transaction singularly.

Correct.​ Zane's monitors customer satisfaction through its** informal and formal surveys** to ensure that customers are happy. If the survey results suggest areas needing​ improvement, Zane's corrects those deviations by tweaking its service offerings to improve its relationship with customers.

15-2 Define the nature and purpose of value chain management

Every organization needs customers to survive and prosper. Customers want some value from the goods and services they purchase or use, and the customers decide what has value. **Value is defined as the performance characteristics, features and attributes, and any other aspects of goods and services for which customers are willing to give up resources (usually money).** **Organizations must provide that value** to attract and keep customers. Value is defined as the performance characteristics, features and attributes, and any other aspects of goods and services for which customers are willing to give up resources (usually money). Value is provided to customers through transforming raw materials and other resources into some product or service that end users need or desire when, where, and how they want it. **Value chain management** is the process of managing the sequence of activities and information along the entire value chain. It is externally oriented and focuses on both **incoming materials** and **outgoing products and services**. Value chain management is effectiveness oriented and aims to create the highest value for customers.

14.3 Discuss the types of controls organizations and managers use.

Feedforward controls take place before a work activity is done. Concurrent controls take place while a work activity is being done. Feedback controls take place after a work activity is done. Financial controls that managers can use include financial ratios (liquidity, leverage, activity, and profitability) and budgets. One information control managers can use is an MIS, which provides managers with needed information on a regular basis. Others include comprehensive and secure controls, such as data encryption, system firewalls, data backups, and so forth, that protect the organization's information. Also, balanced scorecards provide a way to evaluate an organization's performance in four different areas rather than just from the financial perspective.

14-3 Discuss the types of controls organizations and managers use Management can implement controls **before** an activity commences, **during** the activity, or **after** the activity has been completed

Feedward Control Input - Feedforward control Anticipates problems Processess - Concurrent control Corrects problems as they happen Output - Feedback control Corrects problems after they occur A few important performance indicators that executives in the intensely competitive call-center service industry measure are: cost efficiency, the length of time customers are kept on hold, and customer satisfaction with the service provided. To make good decisions, managers want and need the type of information that will help them control work performance. Management can implement controls before an activity begins (called **feedforward control**), while the activity is going on (called concurrent control), or after the activity has been completed (called **feedback control**). You can see this timing illustrated here in Exhibit 14-5. The most desirable type of control—**feedforward control**—prevents problems because it takes place before the actual activity starts. • For instance, when McDonald's opened its first restaurant in Moscow, it sent company quality control experts to help Russian farmers learn techniques for growing high-quality potatoes because McDonald's demands consistent product quality no matter the geographical location. • Another example of feedforward control is the scheduled preventive maintenance programs on aircraft done by the major airlines. However, feedforward controls require timely and accurate information that isn't always easy to obtain, so managers frequently end up using the other two types of control.

6. _________ is the key description of job design in a value chain management organization. A. Flexibility B. Empowerment C. Cultural attitude D. Organizational processes E. Transformation

Flexibility Correct. Flexibility supports the whole value chain process. Employees and jobs both must be flexible when looking for value in the operations of the organization.

Pert Network Analysis (see figure)

Gantt charts and load charts are helpful when the activities or projects being scheduled are few and independent of each other. But projects requiring the coordination of hundreds or thousands of activities—some of which must be done simultaneously and some of which cannot begin until earlier activities have been completed—requires another solution. The program evaluation and review technique—usually called **PERT**, or the **PERT network analysis**—was originally developed in the late 1950s for coordinating the more than 3,000 contractors and agencies working on the Polaris submarine weapon system. This project was incredibly complicated, involving hundreds of thousands of activities that had to be coordinated. PERT is reported to have cut two years off the completion date for the Polaris project. A PERT network is a diagram like a flow chart that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity. With a PERT network, a project manager must think through what has to be done, determine which events depend on one another, and identify potential trouble spots, as seen in Exhibit 15-7. PERT makes it easy to compare the effects alternative actions will have on scheduling and costs, and allows managers to monitor a project's progress, identify possible bottlenecks, and shift resources as necessary to keep the project on schedule. To understand how to construct a PERT network, you need to know three terms: **events, activities**, and **critical path**. **Events** are end points that represent the completion of major activities. Sometimes called milestones, events indicate that something significant has happened or an important component is finished. In PERT, events represent points in time. **Activities**, on the other hand, are the actions that take place. The time an activity consumes is determined by the time or resources required to progress from one event to another. The critical path is the longest or most time-consuming sequence of events and activities required to complete the project in the shortest amount of time.

Employee Turnover

High employee turnover: Almost always dysfunctional because you might be losing good employees BUT low employee turnover isn't necessarily the best goal GOOD IF low performers are the ones leaving BAD IF you have a complacent manager who's not willing to deal w/ employees whose performance is mediocre or poor **In an effective organizational control system, managers should identify and remove marginal employees**

2. Managers must focus on improving productivity. It is​ everyone's job. For this​ reason, it is important for managers to remember the​ formula, Productivityequals=Operations variablesplus+​____________. A. human resources B. conversion processes C. raw materials D. input variables E. assets

Human Resources Correct. Effective organizations successfully integrate people into overall operations management.

8. The​ ________ standards have become the internationally recognized standard for evaluating and comparing companies in the global marketplace. A. control B. operations C. ISO 9000 D. Six Sigma E. project management

ISO 9000 Correct. Achieving ISO 9000 certification provides proof that a quality operations system is in place.

Revising Standards

If performance consistently exceeds the goal, then the goal may need to be raised. If the variance results from an unrealistic **standard**—one that is set too low or too high—the standard, not the performance, needs corrective action. For example, if performance consistently exceeds the goal, then a manager should look at whether the goal is too easy and needs to be adjusted. However, managers must be cautious about revising a standard downward. It's natural to blame the goal when an employee or a team falls short, rather than accept that one's performance was inadequate. If you believe the standard is realistic, fair, and achievable, tell employees that you expect future work to improve and then take the necessary corrective action to help make that happen.

Gantt Charts

If you were to observe a group of supervisors or department managers for a few days, you would see them regularly detailing what activities have to be done, the order in which they are to be done, who is to do each, and when they are to be completed. The managers are doing what we call scheduling. Managers use several devices to help them with scheduling. The **Gantt chart** is a planning tool developed around the turn of the century by Henry Gantt. It's essentially a bar graph, with time on the horizontal axis and the activities to be scheduled on the vertical axis. The bars show output, both planned and actual, over a period of time. The Gantt chart visually shows when tasks are supposed to be done and compares the assigned date with the actual progress on each. Here in Exhibit 15-5 we see a Gantt chart that was developed for book production by a manager in a publishing firm. Time is expressed in months across the top of the chart. Major activities are listed down the left side. Planning the project involves deciding what activities need to be done to get the book finished, the order in which those activities need to be done, and the time that should be allocated to each activity. The green shading represents actual progress made in completing each activity. Note that most activities were completed on time except for the "review first pages" activity, which is almost two and a half weeks behind schedule. Given this information, the manager might take corrective action to make up the lost time and stem further delays. At this point, the manager can expect that the book will be published at least two weeks late if no corrective action is taken.

Controlling Technology Usage

Is my work computer really mine? Do I have a right to privacy at work? Today's workplaces present considerable **control challenges** for managers. From monitoring employees' computer usage at work to protecting the workplace against violence, managers need controls to ensure that work can be done efficiently, effectively, and according to plan. Employers can (and do) read your email, tap your telephone, monitor your work by computer, store and review computer files, monitor you in an employee bathroom or dressing room, and track your whereabouts in a company vehicle. In fact, some 30 percent of companies have fired workers for misusing the Internet and another 28 percent have terminated workers for e-mail misuse. A big reason that managers feel they need to monitor what employees are doing is that employees are hired to work, not to surf the Web, watch online videos, or shop. In fact, a survey of U.S. employers said that 87 percent of employees look at non-work-related websites while at work and more than half engage in personal website surfing every day. Another reason that managers monitor employee e-mail and computer usage is that they don't want to risk being sued for creating a hostile workplace environment because of offensive messages, an inappropriate image, or concerns about racial or sexual harassment. This is one reason companies might want to monitor or keep backup copies of all e-mail. Finally, managers want **security**.They need to ensure that company secrets aren't being leaked via instant messaging, blogs, social media outlets, or phone cameras. Because of the potentially serious costs, many companies have **workplace monitoring policies**. These should be developed to control employee behavior in a nondemeaning way and with the employees' full knowledge

Keeping Track of Employee Performance

It's also important to keep track of **employee performance**. This includes assessing whether employees are doing their jobs as planned and meeting goals that have been set. If not, employee counseling or employee discipline may be needed.

Comparing Performance to Goals

Let's work through an example. Chris Tanner is a sales manager for Green Earth Gardening Supply, a distributor of specialty plants and seeds in the Pacific Northwest. Chris prepares a report during the first week of each month that describes sales for the previous month, classified by product line. Exhibit 14-4 displays both the sales goals (the standard) and actual sales figures for the month of June. After looking at the numbers, should Chris be concerned? Sales were a bit higher than originally targeted, but does that mean there were no significant deviations? That depends on what Chris thinks is significant; that is, what is outside the acceptable range of variation. Look at the figures in the exhibit again. Even though overall performance was quite favorable, some product lines need closer scrutiny. If sales of heirloom seeds, flowering bulbs, and annual flowers continue to be over what was expected, Chris might need to order more product to meet customer demand. Because sales of vegetable plants were 15 percent below goal, Chris may need to run a special on them. As this example shows, both overvariance and undervariance may require managerial attention, which is the third step in the control process.

Keeping Track of an Organization's Information **Information - a critical tool for controlling other organizational activities** **WHY** Managers need **right information** at the **right time** and in the **right amount** to help them monitor and measure organizational activities **HOW** A **Management Information System (MIS)** **Information - an organizational resource that needs controlling**

Management information system (MIS): A system used to provide management with needed information on a regular basis To monitor and measure **organizational activities**, managers need the right information at the right time and in the right amount. To measure **actual performance**, managers need information about what is happening within their area of responsibility and about the standards against which to compare actual performance. Managers also require analyzed data to determine if deviations are acceptable and to help develop appropriate courses of action. The way managers do this is with a **management information system (MIS)**. It can be manual or computer-based, although most organizational MIS are computer-supported applications. "System" in MIS implies order, arrangement, and purpose. An MIS focuses specifically on providing managers with information (that is, processed and analyzed data) and not merely data (which are raw, unanalyzed facts). Information is an organizational resource that needs controlling. In 2012, there were 47,000 reported security incidents and 621 confirmed data breaches. Information is critically important to everything an organization does, so this information needs to be protected. Managers must have comprehensive and secure controls in place to protect the information they receive. These controls range from data encryption and system firewalls to data backups and other techniques. Information controls should be monitored regularly to ensure that all possible precautions are in place to protect important information. The organization should look for problems in places it might not even have considered, like search engines. Equipment such as laptop computers, tablets, and even RFID (radio-frequency identification) tags are vulnerable to viruses and hacking.

Quality Control

Many experts believe that organizations that are unable to produce high-quality products won't be able to compete successfully in the global marketplace. Here in Exhibit 15-4 we see a description of several dimensions of quality. We're going to define quality as the ability of a product or service to reliably do what it's supposed to do and to satisfy customer expectations. Managers must address the issue of how quality is achieved. A good way to look at quality initiatives is in relation to the management functions—planning, organizing and leading, and controlling—that need to take place. When **planning for quality**, managers must have quality improvement goals, strategies, and plans to achieve those goals. Organizations with extensive and successful quality improvement programs tend to rely on two important approaches to their employees: cross-functional work teams and self-directed or empowered work teams. It's not surprising that quality-driven organizations rely on well-trained, flexible, and empowered employees. Finally, when controlling for quality, managers must recognize that quality improvement initiatives aren't possible without having some way to monitor and evaluate their progress. Whether it involves standards for inventory control, defect rate, raw materials procurement, or other operations management areas, controlling for quality is important.

Range of Variation

Next comes the step in which we compare the actual performance to the standard. Although some variation in performance can be expected in all activities, it's critical to determine an acceptable **range of variation**, as seen here in Exhibit 14-3. Any deviations outside this range require attention.

PERT in Action (see figure)

Now let's apply PERT to a construction manager's task of building a 6,500-square-foot custom home. As a construction manager, you recognize that delays can turn a profitable job into a money loser. You must therefore determine how long it will take to complete the house. You have carefully dissected the entire project into activities and events. Exhibit 15-8 outlines the major events in the construction project and your estimate of the expected time required to complete each activity.

5.1 Define operations management and explain its role.

Operations management is the transformation process that converts resources into finished goods and services. Manufacturing organizations produce physical goods. Service organizations produce nonphysical outputs in the form of services. Productivity is a composite of people and operations variables. A manager should look for ways to successfully integrate people into the overall operations systems. Organizations must recognize the crucial role that operations management plays as part of their overall strategy in achieving successful performance.

Barriers and Cultural Attitudes

Organizational Barriers: ** Refusal or reluctance to share information ** Reluctance to break up the status quo ** Security issues Cultural Attitudes: ** Trust ** Control **Organizational barriers** are among the most difficult to handle. These barriers include refusal or reluctance to share information, reluctance to shake up the status quo, and security issues. Without shared information, close coordination and collaboration is impossible. And the reluctance or refusal of employees to shake up the status quo impedes efforts toward value chain management and prevents its successful implementation. Finally, because value chain management relies heavily on a substantial information technology infrastructure, system security and Internet security issues need to be addressed. Unsupportive **cultural attitudes**—**especially attitudes toward trust and control**—can also be obstacles to value chain management. To be effective, partners in a value chain must trust each other. There must be a mutual respect for, and honesty about, each partner's activities all along the chain. But too much **trust** can also be a problem. Nearly all organizations are vulnerable to theft of intellectual property—that is, proprietary information that's critical to an organization's efficient and effective functioning and competitiveness. Another cultural attitude that can be an obstacle is the belief that when an organization collaborates with external and internal partners, it no longer controls its own destiny. This is not true. Even with the intense collaboration that's important to value chain management, organizations still control critical decisions such as what customers value, how much value they desire, and what distribution channels are important.

5. Beth is having trouble leveraging the value chain. She seems to have a good understanding for what the customer is willing to pay for. She has just invested in the right technology to take her product to the next level. For some reason​ though, she is always feeling like she is the only one focused on finding value. Which of the barriers to value chain management is Beth​ experiencing? A. People B. Organizational barriers C. Cultural attitude D. Organizational processes E. Transformation

People Correct. Employees must have unwavering commitment to doing whatever it takes to find value in the process for the customer.

7. John is focused on hitting his goal this quarter. He is closely watching the​ timeline, coordinating the​ work, and getting the activities done. John is truly emulating​ ________. A. prioritizing B. organization C. project management D. planning E. leadership

Project management Correct. Project management is the task of getting the activities done on​ time, within​ budget, and according to specifications.

Controlling Workplace Violence

Recent data show that 17 percent of work-related deaths in the United States were workplace homicides and some 2 million American workers are victims of some form of workplace violence, such as verbal abuse, purposeful damage of machines or furniture, or assaults by coworkers. And office rage isn't a uniquely American problem. A survey of aggressive behaviors in Europe's workplaces found that between 5 percent and 20 percent of European workers are affected by workplace violence. The key factors contributing to workplace violence are: employee stress caused by job uncertainties, declining value of retirement accounts, long hours, information overload, daily interruptions, unrealistic deadlines, and uncaring managers. Other experts have described dangerously dysfunctional work environments characterized by: • Employee work driven by time, numbers, and crises • A destructive communication style (for example, where managers communicate in an excessively aggressive, condescending, explosive, or passive-aggressive style) • Excessive workplace teasing or scapegoating • Authoritarian leadership with a rigid mindset of managers versus employees • Unresolved grievances • Repetitive, boring work • A hazardous work environment Managers can deter or reduce possible workplace violence by using feedforward, concurrent, and feedback control to help identify actions that they can take, such as those summarized here in Exhibit 14-8.

Successful Value Chain Management

So what does successful value chain management require? Exhibit 15-2 summarizes the **six main requirements: coordination and collaboration, technology investment, organizational processes, leadership, employees/human resources, and organizational culture and attitudes**. Let's look at each of these elements more closely. **Coordination and collaboration** among all members of the chain is absolutely necessary to achieve its goal of meeting and exceeding customers' needs and desires. To successfully collaborate, all partners must identify things that their customers value, share information, and be flexible as far as who does what. Significant **investment in information technology** is necessary to restructure the value chain to better serve end users. According to experts, the **key tools include a supporting enterprise resource planning software (ERP) system** that links all of an organization's activities, sophisticated work planning and scheduling software, customer relationship management systems, business intelligence capabilities, and e-business connections with trading network partners.

Keeping Track of an Organization's Finances: Ratio Analysis

Some key areas that require control are **finances, company information**, and **organizational performance**. A balanced scorecard approach may be used. For a company to earn a profit, managers need **financial controls**. Traditional financial controls include ratio analysis. Ratios, like those seen in Exhibit 14-6, are calculated using selected information from the organization's balance sheet and income statement.

Operations Management and Company Strategy

Successful organizations recognize the crucial role that **operations management** plays as part of the overall organizational strategy to achieve and maintain global leadership. By the late 1970s, U.S. executives recognized that they were facing a crisis from European and Asian competitors who developed modern, technologically advanced manufacturing facilities that fully integrated manufacturing operations into strategic planning decisions. In response, U.S. companies invested heavily in improving manufacturing technology, increased the corporate authority and visibility of manufacturing executives, and began incorporating existing and future production requirements into the organization's overall strategic plan to establish and maintain global leadership. The strategic role that operations management plays in successful organizational performance can be seen clearly as more organizations move toward managing their operations from a value chain perspective, which we'll talk about next.

Value Chain

That seemingly simple act of turning varied resources into something that customers value and are willing to pay for involves a vast array of interrelated work activities performed by different participants (suppliers, manufacturers, and even customers)—that is, it involves the value chain. **Value chain management (VCM) is externally oriented** and focuses on both incoming materials and outgoing products and services. VCM is effectiveness oriented and aims to create the highest value for customers. This is a contrast to **supply chain management, which is efficiency oriented (its goal is to reduce costs and make the organization more productive) and internally oriented** by focusing on efficient flow of incoming materials (resources) to the organization. Who has the power in the value chain? ■ Is it the supplier providing needed resources and materials? After all, suppliers have the ability to dictate prices and quality. ■ Is it the manufacturer that assembles those resources into a valuable product or service? A manufacturer's contribution in creating a product or service is critical. ■ Is it the distributor that makes sure the product or service is available where and when the customer needs it? Actually, it's none of these. In **value chain management**, **customers** are the ones with the power. They define what value is and how it's created and provided. Using VCM, managers seek to find that unique combination in which customers are offered solutions that truly meet their needs and at a price that can't be matched by competitors

14-2 Describe the three steps in the control process

The **control process** has **three steps**: measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations or to address inadequate standards. Here in Exhibit 14-2, we see how the control process works. Note that the control process assumes that performance standards already exist; these standards are the specific goals created during the planning process. 1. measuring actual performance 2. comparing actual performance against a standards 3. taking managerial action to correct deviations or to address inadequate standards The control process assumes that performance standards already exist, and they do. They're the specific goals created during the planning process.

15-1 Define operations management and explain its role

The Operations System Inputs: people technology capital equipment materials information Transformation Process Outputs: Goods Services Organizations need to have well-thought-out and well-designed operating systems, organizational control systems, and quality programs to survive in today's increasingly competitive global environment. And it's the manager's job to manage those things. **Operations management** refers to the design, operation, and control of the transformation process that converts resources such as labor and raw materials into goods and services that are sold to customers. Here in Exhibit 15-1 we see a simplified overview of the process of creating value by converting inputs into outputs. The system takes inputs—such as people, technology, capital, equipment, materials, and information—and transforms them through various processes, procedures, and work activities into finished goods and services. These processes, procedures, and activities take place throughout the organization so that department members in marketing, finance, research and development, human resources, and accounting produce outputs such as sales, increased market share, high rates of return on investments, innovative products, motivated employees, and accounting reports. As a manager, you'll need to be familiar with operations management concepts to achieve your goals more effectively and efficiently. Operations management is important because: (1) it encompasses processes in both service and manufacturing organizations, (2) it's key to effectively and efficiently managing productivity, and (3) it plays a strategic role in an organization's competitive success.

4. In value chain​ management, who has the power in the value​ chain? A. The manufacturer B. The distributor C. The manager D. The supplier E. The customer

The customer Correct. The customer defines what value is and how​ it's created and provided.

Cultural Differences

The differences among organizational control systems in global organizations are found primarily in the measurement and corrective action steps of the control process. In a global corporation, for instance, managers of foreign operations tend not to be closely controlled by the home office, which in turn often relies on extensive, formal reports for control. The global company may also use information technology to control work activities. • Organizations in technologically advanced nations use **indirect control devices**—particularly computer-based reports and analyses—in addition to standardized rules and direct supervision to ensure that activities are going as planned. In less technologically advanced countries, direct supervision and highly centralized decision making are the basic means of control. Managers in foreign countries may have constraints on what **corrective action** they can take because laws in some countries do not allow managers the option of closing facilities, laying off employees, or bringing in a new management team from outside the country. Another challenge global companies face when collecting data is **comparability**. For instance, a company's manufacturing facility in Mexico might produce the same products as a facility in Scotland, but the Mexican facility might be more labor intensive than its counterpart to take advantage of lower labor costs in Mexico. If top-level executives were to control costs by calculating labor costs per unit or output per worker, the figures would not be comparable.

Project Management

The task of getting project activities done on time, within budget, and according to specifications Many organizations are structured around projects that vary in size and scope. A **project** is a one-time-only set of activities with a definite beginning and ending point. **Project management** is the task of getting the activities done on time, within budget, and according to specifications. Organizations are increasingly undertaking projects that are unusual or unique, have specific deadlines, contain complex interrelated tasks requiring specialized skills, and are temporary in nature. These types of projects don't lend themselves well to the standardized operating procedures that guide routine and continuous organizational activities. In the typical project, team members are temporarily assigned to and report to a project manager who coordinates the project's activities with other departments and reports directly to a senior executive. The project is temporary: It exists only long enough to complete its specific objectives. Then it's wound down and closed up; members move on to other projects, return to their permanent departments, or leave the organization.

14.2 Describe the three steps in the control process.

The three steps in the control process are measuring, comparing, and taking action. Measuring involves deciding how to measure actual performance and what to measure. Comparing involves looking at the variation between actual performance and the standard (goal). Deviations outside an acceptable range of variation need attention. Taking action can involve doing nothing, correcting the actual performance, or revising the standards. Doing nothing is self-explanatory. Correcting the actual performance can involve different corrective actions, which can either be immediate or basic. Standards can be revised by either raising or lowering them.

Deming: Improving Managers' Productivity

The truly effective organization will increase productivity by successfully **integrating people** into the overall operations system To improve productivity, managers must focus on both people and operations. The late W. Edwards Deming, a renowned quality expert, believed that managers, not workers, were the primary source of increased productivity. He outlined 14 points for improving management's productivity through such practices as: planning for the long-term future, never being complacent with the quality of your product, dealing with the best and fewest number of suppliers, training your employees to understand statistical methods, and making top managers responsible for implementing these principles. The truly effective organization maximizes productivity by successfully integrating people into the overall operations system. For instance, at Simplex Nails Manufacturing in Georgia, production workers were redeployed on a plant-wide cleanup and organization effort, which freed up floor space. The company's sales force was retrained and refocused to sell what customers wanted rather than what was in inventory. As a result, inventory was reduced by more than 50 percent, the plant had 20 percent more floor space, orders were more consistent, and employee morale improved.

Measuring Performance Sources of information: Personal observation Statistical reports Oral reports Written reports

To determine actual performance a manager must get performance records, so the **first step in control is measuring.** **Four sources of information** that are frequently used to **measure actual performance are personal observation, statistical reports, oral reports, and written reports**. While each of these sources has particular strengths and weaknesses, using a combination of them increases both the number of input sources and the probability of receiving reliable information. 1. **Personal observation** provides firsthand, intimate knowledge of unfiltered, actual activity. It permits intensive coverage because minor and major performance activities can be observed, and allows the manager to read between the lines. **Management by walking around (MBWA)** describes when a manager is out in the work area and interacting directly with employees, exchanging information about what's going on. It's an opportunity to pick up factual omissions and observe body language. Personal observation, however, is **subject to the viewer's perceptual biases**, is a time-consuming effort, may be obtrusive, and may trigger concern in some employees. ● 2. Widespread computer use has led managers to rely increasingly on **statistical reports** for measuring actual performance. Statistical reports are not limited to computer outputs. They can include graphs, bar charts, and numerical displays that managers can use for assessing performance. However, statistical reports often focus on only a few key areas and may often ignore important subjective factors. ● 3. Information can also be acquired through **oral reports**, which can be gleaned through conferences, meetings, one-to-one conversations, or telephone calls. Although the information is filtered, it is fast, allows for feedback, and permits expression, tone of voice, and words themselves to convey meaning. It can also be recorded. ● 4. Actual performance may also be measured by **written reports**, which require more preparation time and formality than other measurements of performance. This often makes them more comprehensive and concise than oral reports. Given the varied advantages & disadvantages of each of four measurement techniques, managers should use all four for comprehensive control efforts

Controlling Employee Theft

Up to 85 percent of all organizational theft and fraud is committed by employees, not outsiders, and is estimated to cost about $4,500 per worker per year. **Employee theft** is defined as any unauthorized taking of company property by employees for their personal use. It ranges from embezzlement or fraudulent filing of expense reports to removing equipment or office supplies from company premises. So, why do employees steal? Experts in various fields have different perspectives. Industrial security specialists propose that people steal because the opportunity presents itself through lax controls and favorable circumstances. Criminologists say that it's because people have financial-based pressures (such as personal financial problems) or vice-based pressures (such as gambling debts). Clinical psychologists suggest that people steal because they can rationalize whatever they're doing as being correct and appropriate behavior by telling themselves that "everyone does it" or "this company makes enough money and they'll never miss it." The concept of feedforward, concurrent, and feedback control is useful for identifying measures to deter or reduce employee theft. Here in Exhibit 14-7 we see several possible managerial actions, from careful prescreening of job candidates to openly communicating the costs of stealing. Global employee fraud is estimated to cost organizations $3.7 trillion a year.

load chart

a modified version of a Gantt chart that lists either whole departments or specific resources

project

a one-time-only set of activities with a definite beginning and ending point

balanced scorecard

a performance measurement tool that looks at more than just the financial perspective

Gantt chart

a planning tool that shows in bar graph form when tasks are supposed to be done and compares that with the actual progress on each

Six Sigma

a quality standard that establishes a goal of no more than 3.4 defects per million units or procedures

ISO 9000

a series of international quality standards that set uniform guidelines for processes to ensure that products conform to customer requirements

business model

a strategic design for how a company intends to profit from its brand array of strategies, processes, and activities

control process

a three-step process of measuring actual performance, comparing actual performance against a standard, and taking managerial action to correct deviations

employee theft

any unauthorized taking of company property by employees for their personal use

feedback control

control that takes place **after** a work activity is done most popular type of control relies on feedback

feedforward control

control that takes place before a work activity is done most desirable type of control prevents problems because it takes place before the actual activity the **key to feedforward controls** is taking managerial action **before** a problem occurs (McDonald's in Russia french fries taste like Omaha NE

concurrent control

control that takes place while at work activity is in progress

immediate corrective action

corrective action that addresses problems at once to get performance back on track corrects problems at once to get performance back on track continually to perpetually "put out fires"

basic corrective action

corrective action that looks at how and why performance deviated before correcting the source of deviation looks at how and why performance deviated before correcting the source of deviation source of a problem

events

end points that represent the completion of major activities

Ch. 15 Lab 1. The​ design, operations, and control of the transformation process is called which of the​ following? A. Strategy B. Operations C. Organize D. Lead E. Plan

operations Correct. Operations is the transformation process creating value by converting inputs into outputs. The term operations management refers to the design, operation, and control of the transformation process that converts such resources as labor and raw materials into goods and services that are sold to customers.

service organizations

organizations that produce nonphysical products in the form of services

manufacturing organizations

organizations that produce physical goods

range of variation

the acceptable parameters of variance between actual performance and a standard

value chain

the entire series of work activities that add value at each step from raw materials to finished product

critical path

the longest or most time-consuming sequence of events and activities required to complete a project in the shortest amount of time

value

the performance characteristics, features, attributes, and other aspects of goods and services, for which customers are willing to give up resources

value chain management

the process of managing the sequence of activities and information along the entire value chain

transformation process

the process that converts resources into finished goods and services