MANAGEMENT CONTROL SYSTEM IN MANUFACTURING

ORGANIZATION(SUMUL DAIRY)

PREPARED BY: SUBMITTED TO:

PROF.JAYDEEP CHAUDHARYBHIMANI ZAHIDA (03)MAHETA POONAM (21)PIPALIYA MANISHA (45)SHAIK MUBERUNISA (52)

CONTENT Introduction Types of Control Control Process Control Technique Qualities of Effective Control System About Sumul Dairy Control Mechanism in Sumul Dairy

Introduction

The modern manufacturing environment is characterized by

intense international competition, rapid product innovation,

turnover and obsolescence, increased use of automation, and

significant organizational changes in response to new

manufacturing technologies

It is generally accepted that these changes in the manufacturing

environment should be accompanied by changes in performance

evaluation and reward systems to derive higher performance.

However, it is very complicated to identify the required design of

a management control system in such a new environment.

Definition

Henry Fayol: Control consists in verifying whether everything

occurs in conformity with the plan adopted, the instructions

issued and the principles established

Koontz and O’Donnell: Controlling implies measurement of

accomplishment against the standard & the correction of

deviations to assure attainment of objectives according to

plans.

The Cycle of Control

Plan

Execute

Monitor Evaluate

Correct

The Cycle of Control

Types of Control

Organizational Control ( Administrative Control )-formal rules

and standard operating procedures

Informal Group Control - based on principle of mutual Controls

Individual level Control ( Self Control )- the result of control

exercised by the individual on himself or her self

Political Control- socio economic environment

Control Process

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.

The Control ProcessThe Control Process

Identify

Causes

Correct

Performance

Variance

Acceptable?

Revise

Standard

Standard

Attained?

Standard

Acceptable?

Yes

Yes

Yes

No

No

No

Compare

Performance

to Standard

Measure

Performance

Objectives

Standard

Do Nothing

Do Nothing

Control Technique Traditional Control Techniques:- Personal observation. Statistical reports and analysis. Break-even analysis. Budgetary control. Cost control. Production control. Inventory control Advance control techniques:- Management Audit. Return on Investment. Responsibility Accounting Programme Evaluation and Review Techniques (PERT). Critical Path Method (CPM). Management Information Systems (MIS). Zero-based Budgeting.

Qualities of Effective Control System Corrective Action Accuracy Timeliness Economy Flexibility Understandability Reasonable Criteria Strategic Placement Emphasis on Exceptions Multiple Criteria

About Sumul Dairy The Surat District Co. operative Milk

Producers' Union Ltd., SUMUL is trade name and literally meaning sound price, came into existence on August 22, 1951.

Sumul or Surat Milk Union Limited, which is now renamed as The Surat District Co-operative Milk Union Ltd, is one among the 12 district unions which acts as manufacturing units of dairy products for Gujarat Co-operative Milk Marketing Federation Limited, the marketers of Amul and Dhara brand of products.

Objective of Sumul dairy  To provide year round milk market for their surplus milk and to earn

reasonable returns for the milk to improve their quality of life. To procure milk and process it into good quality milk and milk products

to market it at most economically and efficiently to give maximum overall net returns to the producers and general satisfaction to the consumers.

To provide essential technical inputs and services to the producers at their door steps in an economic and efficient manner and also in a way most acceptable to them to increase milk production and to reduce the cost of production.

Control Mechanism in Sumul Dairy

Control is necessary to measure & to monitor the performance of each activity done by human being or machine.

Input: They procure milk from various villages of Surat District. Milk is main input for the dairy product. Besides this, other inputs like pasteurization machinery, pouches for packaging etc.

They use different system as a control mechanism

1. Procurement System

2. Animal husbandry system

3. Milk chilling system

4. Route Management System

Operations: Capacity utilization: They use 99.999% of total capacity. In

pouch section they are having 110% capacity utilization.

Machinery maintenance: Rated capacity of machinery is the

important aspect. For the purpose of maintaining quality, they

need all the system work properly.

Marketing: Their goal is to give 87 paisa per liter to the rural area.

They manage all the expenses from 13 paisa per liter. In this 13

paisa per liter, they also include expense related to marketing

activities

Budgeting process They set department wise objectives. Each dept. having their own cost.

In month of March every year they exercise the budget.

Every dept. submit their variables to A.G.M finance

A.G.M. finance makes the list of activity and divides all the cost in fixed

& variable cost.

From the past data, they see the scope of improvement area

Then they decide key performance area (at board level)

Purchase committee consider the budget

Environmental variable:

They follow ISO 14000 for environmental control. Energy

conservation is the crucial part. Every year they process 20%

more milk than previous year & reduce 3% of energy

conservation

Key Parameter for control

They segregate all control parameter as department wise, area wise and

person wise. For the purpose of control they use the equation given

below:

OEE (Overall equipment efficiency) =

Availability Rate of Men and Machinery (%) * Performance rate of Men

and Machinery against desired capacity * Quality Rate

For any dairy the benchmark of OEE is 87%. But in the case of Sumul

Dairy the OEE is 92%.

From above all, we can say that the system in this dairy is well organized

and well controlled.

Individuals play the game,but teams win championships.

Individuals play the game,but teams win championships.

Individuals play the game,but teams win championships.