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Controller's Guide to Planning and Controlling Operations by Steven M. Bragg

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GENERAL DISCUSSION OF ACCOUNTING/STATISTICAL STANDARDS: BENCHMARKING

MEANING OF ACCOUNTING/STATISTICAL CONTROL

Control by definition assumes that a plan of action or a standard has been established against which performance can be measured. To achieve the objectives that have been set forth for the business enterprise, controls must be developed so that decisions can be made in conformance with the plan.

In small plants or organizations, the manager or owner personally can observe and control all operations. The owner or manager normally knows all the factory workers and by daily observation of the work flow can determine the efficiency of operations. It is easy to observe the production effort of each employee as well as the level of raw materials and work-in-process inventory. In most cases, by the observation of the factory operation, inefficiencies or improper methods can be detected and corrected on the spot. The sales orders can be reviewed and determinations made about whether shipments are being made promptly. Through intimate knowledge of the total business and communicating on a daily basis with most employees and customers, the owner is able to discern the effectiveness of sales effort and customer satisfaction with the products.

However, as the organization grows, this close contact or direct supervision by the owner or manager is necessarily diminished. Other means of control are required to manage effectively, such as accounting controls and statistical reports. ...

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