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Chapter 6

Chapter 6. CONTROLLING. Chapter Outcomes. Describe the control process. Contrast two types of corrective action. Compare preventive, concurrent, and corrective control. Explain how a supervisor can reduce costs. List the characteristics of an effective control system.

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Chapter 6

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  1. Chapter 6 CONTROLLING

  2. Chapter Outcomes Describe the control process. Contrast two types of corrective action. Compare preventive, concurrent, and corrective control. Explain how a supervisor can reduce costs. List the characteristics of an effective control system. Explain potential negatives that controls can create. Explain what is meant by the term just-in-time inventory systems. Describe what is meant by the term value chain management. Identify the ethical dilemmas in employee monitoring. Explain what is meant by employee theft and its effect on the organization.

  3. EXHIBIT 6–1 The control process.

  4. Measuring actual performance Personal observation Statistical reports Oral reports Written reports

  5. EXHIBIT 6–3 Example of a cause-effect (fishbone) diagram.

  6. EXHIBIT 6–7 Three types of control.

  7. Major cost categories Direct labor costs Indirect labor costs Raw material costs Supportive supplies costs Utility costs Maintenance costs Waste costs

  8. Reducing costs Improve methods Level the work flow Minimize waste Install modern equipment Make cuts selectively

  9. Inventory control Just-in-time system Kanban

  10. Value chain management Managing the sequence of activities and information about product flow from start to finish Value added Customer perceived value How is value provided to the customer? Effectiveness oriented

  11. Supply chain management An internal process focusing on the efficient flow of incoming materials to the organization Efficiency oriented

  12. EXHIBIT 6–9 Characteristics of effective controls.

  13. Can controls create problems? Employee resistance Misdirection of effort Ethics and control devices

  14. Minimizing employee resistance Encourage employee self-control Employee participation in setting the standards Provide regular feedback

  15. Contemporary control issues Employee Theft Annual losses in billions 35% of employees admit to stealing Sarbanes-Oxley Act Legislation established in July 2002 that establishes procedures for public companies to regulate how they handle and report financial picture

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