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Creating the
Management System
Why You Need A Management System
• It serves the company in the following ways
– It is a set of tools to help Owner manage sales
– It is a set of tools to help Owner monitor operating cost
– It provides the means to continuously improve
– It adds profit to the bottom line
– It frees the Owner to delegate and monitor results
Management System
FORECASTING - PLANNING
ASSIGNING
EXECUTING -
FOLLOW-UP
REPORT -
REVIEW
VARIANCE
Management Elements
FORECASTING:• Establish business vision
• Setting goals and expectations that are– defined– communicated– quantified
• Review current and past performance to improve systems and ensure profitability
Management ElementsPLANNING - ASSIGNING
• Determines a course of action
• Clear expectation of how activities, resources
and energy will be used
• Utilization of resources to attain goals within a
time-frame and quality and quantity standards
Management Elements
IMPLEMENT – FOLLOW-UP• Managing the plan• Reacting immediately to variances• Inspection / audit phase of the system• Assure compliance to the plan• Identify potential problems and initiate corrective
action• Requires constant feedback
Management Elements
REPORT & REVIEW
• Communicating results on a timely basis
• Analysis conducted after results are reported
• To better forecast and plan
• Make necessary changes in future activities
Management System
FORECASTING - PLANNING
ASSIGNING
EXECUTING -
FOLLOW-UP
REPORT -
REVIEW
VARIANCE
What are the Management Parts?
ORGANIZATION DESIGN
OPERATIONAL PRODUCTIVITY
SALES & MARKETING
RESULTS
FINANCIAL PERFORMANCE
ORGANIZATION & OPERATIONS
Job descriptions
Functional Organization
Task and Duties
Capacity planning
Questionnaire
Recruiting
Employee Turnover
Employee HandbookIncentive Structure
Coaching
Operations & Organization
Job Description
Task Duties List
Measurable Evaluation
Job Monitor
Pareto Analysis
Opportunity Log
Daily Action ListWeekly Operating
ReportDaily Operating
Report
Weekly ManagementReport
Weekly Pareto Analysis
Key PerformanceIndicators
Forecast Trends
Capacity Planning
Production Schedule
CIP’s Continuous Improvement Process
Method ChangesActivity Changes
Financial Master Budgets
PerformanceEvaluation
Forecast Plan - Assign Implement -Follow-Up Report -Review
SALES & MARKETING
SALES BUDGET
MARKETING BUDGET
PROMOTIONS
ADVERTISING
SALES TRAINING
INCENTIVIES
MARKETING REVIEW
COMMISIONS
Current target markets
Untapped MarketsSales Control
Telemarketing
Sales agreements
Sales Budget Sales Manpower Sales CallsSales Management
Report
Sale IncentivesKey Performance
Indicators
Forecast Trends
Sales Planning
Market Planning
CIP’s Continuous Improvement Process
Method ChangesActivity Changes
Forecast - Plan Assign Implement -Follow-Up Report -Review
Marketing Budget Sales Training
SALES PERFORMANCE SYSTEM
FINANCIAL PERFORMANCE
LABOR BURDEN
ACCOUNTS RECEIVABLE
COST OF GOODS SOLD
INCOME STATEMENT
BUDGETS
BALANCE SHEET
ACCOUNTS PAYABLE
OVERHEADVARIANCES
Job Costing
ACCOUNTS RECEIVABLE
Daily / Weekly Operating Report
Financial System
Accounts Payable
Accounts Receivable
Labor Burden
Break-Even
Cash Flow Variance Report
Weekly StatusReport
Income Statement
Cost of Goods Sold Balance Sheet
Chart of Accounts
Profit Centers
History Review
CIP’s Continuous Improvement Process
Method ChangesActivity Changes
Forecast Plan - Assign Implement -Follow-Up Report -Review
Overhead
MANAGEMENT SYSTEM REVIEW• A management system enables managers to:
– PLAN• What has to be done?• How long it will take?• What resources are required (manpower, machines, skills, equipment, energy)?
– ASSIGN• Who does what? When?• Each function is a portion of a synchronized overall plan.• Control the whole by managing the parts.
– EXECUTE /FOLLOW UP• Monitor performance in relation to expectations.• Identify and correct off-schedule conditions.• Solve variance problems.
– REPORT / REVIEW• Attainment.• Performance.• Exception
What is the Owner's Role?• Run the Management System
• By:
– Recruit & select the best people
– Set company goals and assign responsibility and authority
– Demand financial performance
– Measure and improve
Management System
FORECAST / PLAN
ASSIGN
EXECUTE - FOLLOW-UP
REPORT - REVIEW VARIANCE
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