4.3 Control Process

So now, let’s move into the fifth function of management. Controlling, we need to make sure our plan stays on track. So, how do we go about that, why do we need controlling? Well, we said before that controlling is about eliminating ri-, risk, so we need to establish performance standards, goals, so that we know where we’re, we’re going and then understand when it is getting off track. And we need to be able to take corrective action. So what is a standard? Well a standard is a documented requirement or specification that provides a guideline or characteristics that can be used as a base line, a starting point, to ensure that materials, and products, and processes, and services meet the intended purpose. That comes right out of an, the ISO organization in Geneva, Switzerland that is the foundation for all of the ISO standards. So the control process requires that a manager define measurable objectives for people, systems, and products, and processes. So, how do we go about establishing and setting up a control process? Well there are four steps. Four steps, okay, so first, what are we gonna hold ourself to? So, we need to decide upon the goal or the standard, what do we want, then, too, we have to figure out what are we really getting? What’s real? What are the real results and we have to figure out what we got. What are we getting? What is being delivered? What is our real output? Three, simply calculate the difference. Compare what we’re getting to what we wanted, and then, of course, we have to make adjustments, get the plan back on track. So these four steps are required in any type of control process. So you say, okay, I want to always keep $1000 in my checking account. Cool. You call the bank and the bank you find out, after they give your balance, say you’ve got $40 in your checking account. Whoa, you’re $960 short. So now you have to figure out, well, how do I make adjustments? Do I quit spending? Do I need more money? Do I need to up, I mean raise or lower the standard? What do I need to do? Somehow I’m, is that going to be a one month anomaly or is that ongoing? In a company we want to achieve, we want to achieve, a 99% on time delivery standard. And we measure and we find that we’re at 95% rather than 99%, so we’re 4% below what we wanted. So what do we do? How, and we, first we need to figure out why and how do we take corrective action in order to get to that goal of 99%. Is that goal real? Can we ever get to 99%? If not, we need to make adjustments there. If it is attainable, and we’ve done it before, then why are we off track? Everything in the controlling function needs to be measured two ways. Everything needs to be measured two ways. First, we need to be able to measure quantitatively. Quantitatively is all about the numbers. If it can be calculated, if it, we can see sizes and numbers of peoples and amounts of monies and hours of operation and the pounds of chicken that we, you know, that we served, the number of meals that we serve that is quantitative. And qualitative, how do your customers feel? So qualitative is about the five senses. Hearing and seeing and smelling and tasting and touching, and perception, feeling. You walk into a coffee shop, smell the coffee, look at the environment, what do you see? Is it comfortable? Is it noisy, it is relaxing? How does the display look? How do things taste? Quantitative, how many customers? How, what’s the price? How many different selections of muffins do they have? So everything that must be able to be managed to be measured in two ways quantitative and qualitative. Can you make decisions based upon qualitative? Absolutely. Absolutely. Starbucks did. Starbucks, seven, eight years ago, decided to have Howard Schultz leave the business, leave the every day running of Starbucks, and they hired a new executive team. And that executive team decided that since we have this great environment, we can sell more by putting food service and grills into the Starbucks. And they remodeled, they spend millions of dollars remodeling many, many, many hundreds of Starbucks stores and sales started to decline, decline. And so the board of directors asked Howard Schultz to come back and Howard Schultz commenced, or commissioned a survey, a customer survey. And the results of this survey said customers don’t smell the coffee. And Howard Schultz made a decision with the rest of the executive team, to take that food service, those grills out and get it back to their core business of a coffee shop. Millions of hours based upon it doesn’t smell like a coffee shop anymore. Would you go into a, would you continue to go into a an ice cream parlor. And display the, the, the the displays of ice cream was all dirty and the counter was all smudgy and filthy, and the floor was filthy, and you’re gonna let those people, those servers serve you ice cream? I wouldn’t. So quantitative and qualitative. In addition to the two measures there’s three parts of a control system that we need to look at. So those three parts are, what can we do before we even start on day one or for the next day? Feedforward to try to prevent things from happening, early warning. Concurrent, real time, real time, what can we do real time to make sure that things are going right? And lastly, one that we’re all familiar with, post activity controls feedback. What was delivered? What is the output? Did we achieve goals or standards? Feedforward Controls, let’s look at those. So, you’re in business, you got that restaurant, so, feedforward, hm, we first have to have knowledge of what we want the system to look like, and how it should work and respond. So, we want to be able to look at feedforward controls so that we can predict whether our system will work before we even start. We want to determine if the operation will meet requirements. We want to identify how the operation will be positioned for the next day for ongoing. So let’s look at it. So, your restaurant, what is, you know, what is the architecture? What does the environment look like? Comfortable? Chairs and seats and waiting area, menu, food service, the wait staff, are they knowledgeable? Have they trained? Have they tasted the food? Many restaurants, national restaurants, have a requirement that all of their wait staff taste every one of the dishes on the menu, so that they can respond appropriately when somebody says, what does this taste like? If you have a if you have an operation and you don’t care whether every, anybody knows what the food tastes like, and they say, I don’t know, you’re on your own. Well, so feedforward, how do we prelimi-, how do we prevent bad things from happening? Control what we can. So now, we move into day two, our, day two of our operation, or into, actually, getting our operation going. So we have concurrent controls, these are controls that monitor the operation while things are in progress. Cleanliness of the operation, opening and closing hours, the temperature of the food. How about, is the equipment working? Is the hot food coming out hot and the cold food coming out cold? Is our wait staff delivering food in a reasonable time from the time they take the order until they deliver it back to you. Concurrent. You can make adjustments to eliminate errors and risk. The, the wait, the cycle time from the time a wait, the waitstaff takes an order until they deliver it, it’s getting to be too long, so how can they make adjustments? Maybe the manager goes back there and helps to serve some of that food. Maybe they need to get somebody back in the kitchen to help get the food out and to get the food out. And lastly, management by walking around. So you have your restaurant, food is served, people are eating they’re at their dessert, they’re getting ready to pay their bill and you go and say, how was everything? How did it taste? Did we serve you appropriately? So concurrent controls the second type of control mechanism. And then lastly feedback controls, and you’re all familiar with feedback, it is post evaluation, it measures the operation’s actual results. Okay? It, you have to determine whether the output aligned with your goals. Did it satisfy customers? And you have to rebalance for the next day. How was our staff today? Do I need to make adjustments for tomorrow? How much money did we bring in? How did our supplies last? Were they appropriate? We need to make adjustments? And we analyze that performance and continually improve, and we identify deviations in what went wrong. Was it in the feedforward, the concurrent, or feedback? Where do we need to make adjustments in this process? And lastly, how do we review our performance, motivate our staff to continue to come back? Frequent flyer programs, frequent shopper programs, I, come into my yogurt shop and I will punch your card when you get ten visits you get a free yogurt. Acquire your mileage and take a free flight, keep the customer motivated.