Published on December 9th, 2018 | by Guest0
Good Quality Management Systems
Administration is often referred to as “management.” Administration, or the necessity for it, is the bane of those theorists who think that a perfect society can be devised in which no one is the boss. No matter how skilled or competent each worker, and in tum each foreman, there must be some method for directing all their activities toward one harmonious goal. The direction of all the operations to achieve a number of definite goals is the problem of quality management system.
Without planning, accomplishment can be neither scheduled nor guaranteed. Planning is the determination in advance of the effects proceeding from a certain course of action, thereby permitting the careful choice of the particular course which is productive of the greatest gain over a period of time. This involves the full cognizance of the advantages, the disadvantages, the attendant costs, and the gains accruing from a particular course of action. Certain events cannot be solved upon their occurrence unless their coming has been expected and proper preparations have been made. An example of the latter situation is the business cycle.
Policies are to a business what the writings of Moses and the teachings of Christ or Mohammed are to the followers of these religious faiths. Policies are the fundamental statements which set forth the objectives of the business. There are certain major policies that every business must formulate. Primarily, these are:
An example of the difficulties of determining product policies is offered by a company that realized too late that the product it was making no longer had its former demand and that this demand was decreasing so rapidly that the company would soon be out of business. The company searched frantically for another product for which the present plant facilities could be used. One of the products considered was cast iron pipe. The reader of magazine advertisements is informed that cast iron pipe is the guaranty of the end of the municipality troubles with water and sewage pipe systems. The company under discussion thought it had a national market, but it found that the market for cast iron pipe is almost completely a local market.
It is essential, of course, that the amount of the plant to be devoted to mass production and job-order production be determined and that scheduling and routing be properly planned.
Sales policies are also of great importance to any business. No matter how fine the product, no matter how fine the plant, if the product cannot be satisfactorily sold after production, there is obviously no business. Sales policies include such things as determining the channels, the price structure, and the types of advertising, the territory and the methods of compensating salesmen.
Financial policies are of great importance. Someone has said, “If I can write a nation’s songs, I care not who leads its army.” A fine thought, but unfortunately it is not nearly as true as saying, “I care not who leads a nation’s army or who is elected to any position of importance so long as I can write the nation’s budget.”
The budget is the most important tool in financial planning and therefore one of the most important factors in the development and implementation of policies. Budgets are discussed here under “Planning” rather than as a phase of the controller operations because their proper determination is not a purely financial or accounting function but requires the combined efforts of the best brains of the enterprise. Much of the implementation of the budget and the financial policies is the responsibility of the controller. This applies particularly to the actual negotiations for securing capital and the placing of insurance.