COMPORTAMIENTO DE LOS SEMICONDUCTORES

Proposition

Senior management use multiple ’indirect' reports to compensate for the omission of specific reports reflecting the key dimensions of production's potential contribution to corporate competitiveness

The absence of specific reports showing performance on the senior managers' KMTs led to the use of a series of indirect reports.

An example of indirect reports was found in the brake case. The Managing Director used a combination of reports to attempt to regulate delivery perform­ ance. Shortages and stock levels were noted from the weekly sales / stock report and compared against daily and weekly output reports. Machine utilization reports were used selectively to examine known bottlenecks. Despite this, he was unable to ensure satisfactory delivery levels. He attributed this failure to inadequacies in the answers provided by the Production Managers when they reported on the shortfalls in output. He considered they did not reveal the important primary or secondary causes of the restriction in output, which inhib­ ited him from taking appropriate corrective action. He claimed that even when the primary problems were solved, secondary problems would constrain output to current levels unless they too were resolved. Despite these views, which were strongly expressed, no evidence was found of attempts to change the reports or to make the Production Managers provide better explanations of the shortfalls.

Sim ilarly, the introduction of new products had been identified as a critical factor in corporate competitiveness. This required new products to be intro­ duced quickly and tooling costs to be reduced substantially. None of the reports dealt specifically w ith these issues. Instead, the timing of introductions was monitored via the minutes of the product development committee. While this enabled detailed follow up of specific products / components and the departments concerned, it was of limited value to senior management in evaluating progress on reducing the overall lead times. This was, however, needed, to at least match the times of the ir competitors. Management was aware that customers consider the higher than average tooling costs a disadvantage in obtaining contracts. The costs were monitored via the monthly departmental accounts. While this gave

117

them accurate accounts, (within the reliability of standard costing systems), of the cost of the toolmaking fa c ility , it did not assist them to analyse the cost of individual tools or to identify how they could be reduced to a competitive level.

In the kitchen furniture case a similar substitution of indirect monitoring occurred in respect of delivery performance.

9.312 Use of partial reports Proposition

The partial nature of the reports received by senior management further weakened the analysis of production performance because of the limited nature of their content.

Although similar to the use of substitute reports, partial reports d iffe r subtly from them, in that they addressed an important issue, albeit incompletely.

The brake case Managing Director was aware from the monthly accounts that the factory labour variance was 61% over standards. However, he could not identify whether it was localised in particular parts of the plant. Neither was he able to identify whether particular families of products had better or worse variances than the average. This forced him to seek general rather than partic* ular solutions. Sim ilarly, although aware that output for certain families of products was below target, he was unable to identify if this arose from giving inappropriate priority to other items in the range.

Total staff costs were regarded as an important element in works costs. They were monitored using the ratio of to tal hours to standard hours, which revealed that they exceeded t i l . The Managing D irector paid close attention to the total of the overall ra tio, but significantly less to those of the subsections. Five years historical data was available, providing comparative figures for the group's LK and continental plants. Despite this, no evidence was found of his using the information to exercise control over indirect labour costs beyond the simple practice of restricting replacement of vacancies. No form of trend analysis was

US

undertaken, simply the visual inspection of graphs.

The brake case Managing Director was aware of limitations in his information; in particular he wanted to know the labour contents of the plant load and to measure labour efficiency. The work study department was working on the production of a new report showing the labour requirements of the plant load. The report was inaccurate and slow to produce, as some of the figures were unavailable and all of the calculations were done by hand. The data for these calculations existed in the accounting database, but the Plant Manager was advised by the computer department of a delay of approximately 3-6 months and an internal re-charge of 112,000 to obtain them.

3.313 Limitations of the strategic control information

In both the clutch and the kitchen furniture cases an inadequate link was detected between the pattern of information received by senior management and the role production needed to play in bringing about competitiveness. It was concluded tha t this reinforced the view that the directors' information was inadequately linked with production's major manufacturing tasks. Although aware of a fa ilu re to meet their performance levels, senior management lacked the information with which to review e ffe ctive ly their long term performance.

Not only were important dimensions of performance not covered by reports, but, in addition, in other important areas, the reports received were limited in their content. The lim itation of a nunber of these 'partial reports' was suffic­ iently great so that managers receiving them could not be expected to realistic­ ally control performance on these topics.

The degree to which important themes in the KMTs were either omitted e ntirely, or only partially covered, strictly limited senior management's scope in

119

evaluating the ra te of improvement in performance. Even where an aspect of performance was covered, the content of the report did not fa c ilita te e ffe ctive monitoring of trends. Consequently, senior management were unable to adequ­ ately gauge whether the problems leading to their plants being 'out of control' were being overcome and, if so, what ra te of improvement was being achieved. The only exception to this general problem was that of total costs. The account­ ing system in the main 'out of control' cases reflected where any overall level of loss of planned profits occurred. V et in neither case could this information show senior managers where an individual product's 'actual' costs were, or were not, improving.

5.32 The Contribution of S taff to Senior Managements' Control of Production

I have shown that senior management lacked the information or analyses to effe ctive ly control production. Traditionally responsibility for providing such reports has been given to functional specialists. Earlier studies by manufacturing strategists and organizational theorists have criticised the Taylorian model for fragmenting responsibility for control between the functions. I, therefore, decided to examine how, if at all, functional staff affected senior management's control of production.

3.321 Senior managers' use of s ta ff to control production Proposition

Where the line and staff system is used, senior management expect staff groups to bring about the main revisions to the manufacturing task.

Senior management in the 'out of control' cases outlined their expectations of the various functions' contribution to competitiveness. This established their relative importance and identified what was expected of them. The la tte r dealt with how these contributions a ffected the long term controllability of the plant, and whether these e ffo rts emphasised new systems or the exercise of compliance to existing systems. The result of this discussion in the brake case is shown below in Figure 11.

120

Fi " ““ • - - - * to Current