MANAGEMENT PROBLEMS Perhaps one reason w h y there are so many technical people in chemical management today is that technical people are at their best when concerned with trouble shooting and its end result, smooth operation. Good management is certainly based on smoothness of administration and ability to recognize problems and solve them fairly, easily, and quickly. The articles following are from the program of the Subdivision of Chemical Management at the 129th ACS Meeting, Dallas, Texas.
important parts of the controlling function. Because the method of control must meet the needs of immediate subordinates as well as the manager, it is essential that the control be developed jointly with the subordinates. Oftentimes the staff men can contribute in determination of the key points of an operation that dictate whether or not objectives are being accomplished according to plan. The importance of agreement upon the control devices by the manager and immediate subordinates cannot be overemphasized, as the manner in which control of the operations supervised by subordinates is established is the key to successful cooperation within the management team. Thorough discussion in establishing the control gives full freedom to subordinates in defining the important aspects of operations they supervise and develops an understanding between them and their manager of the objectives he is endeavoring to reach. If there is a lack of understanding between subordinates and manager of the importance of an operation, difficulty and confusion are certain to follow when the time arrives to consider the performance of individuals and equipment. The controls must require the minimum amount of information that can be tolerated. If too many data are required by the manager, subordinates will tend to feel that supplying the information to the manager gives him the power of daily decision over activities which should be their area of decision. The result—a feeling that the manager lacks confidence in his subordinates and a limitation has been placed upon authority. If too few data are required, inadequate to indicate clearly when operations are at an unacceptable level, subordinates may not understand the importance of operations they supervise. The obvious result is that the operation is not under control by the manager but is fully controlled only by his subordinates.
MANAGEMENT CONTROLS C. E. SMITH, JR. Humble Oil and Refining Co., Baytown, Tex.
J . HE responsibilities of plant management for the preparing of plans and the directing of production and shipping operations are to be defined by Loosli. The administrative function of controlling, however, seems to be generally the least understood, and by popular definition of subordinates is probably either the most unused or abused. It is in this area of plant management that degrees of success or failure in administration are most readily determinable. It requires the most tactful assistance of staff and calls upon the highest qualities for leadership of management. It is also an area in which the actions of management are often the subject of considerable controversy. Control means to check, to regulate, to keep within limits, to test or verify. For control to be accomplished, standards of performance must be established to identify what is wanted. Control devices must be agreed upon to indicate whether or not and to what degree standards are being maintained. Actual results must be compared to standards and then appropriate follow-up steps must be taken where such are indicated. All controls are established for the benefit of that part of management that cannot be at the scene of operations at all times. In setting up control devices for management's use we must explain the meaning of this term as we use it. To the operator of a machine, control devices may be levers, valves, and gages. To the operator of a hydrocarbon processing unit containing a number of machines, control devices may become pressures, temperatures, valves that vary flow rates, measurements of quantities of fluids, and of quality of fluids in which laboratory tests become control devices. The requirement by the unit operator that the machine operator re34 A
cord data secured as he carries out the steps of a procedure can itself be a control device to assure that consideration is given to each step. To the foreman supervising this and other operating units, control devices become data describing the sum of quantities produced on more than one unit by more than one operator for periods of time. Quality measurements may be associated with volumes of product that have not been used as a control device by an operator. Control devices used by the foreman may cover greater periods of time than each of those used by his subordinates. The type of control device will change as the objective of the person using the device broadens in scope. The comparison of control devices of the plant manager and those of one of the firstline supervisors in his organization is an illustration of differences in breadth of objective. Breadth of Objective In each area of responsibility of an administrator there must be control devices—manpower, money, and the like. In the same areas of responsibility each succeeding level of authority in the organization has different control devices, elaborating the details until every plant item is thus covered. The controls may take many forms— from monthly reports to brief daily verbal contacts. Whatever the form, they must meet the needs of management in the briefest possible manner. They must rapidly and efficiently indicate when the operation or activity is not at an acceptable level, that objectives arc not being reached, or that standards of performance must be subjected to review. The actual development of a control device by a manager is one of the most
INDUSTRIAL AND ENGINEERING CHEMISTRY
There must be clear understanding that a manager is responsible for judging the performance of men and equipment
under his supervision. The agreement upon what constitutes control is as surance of this understanding. The control devices must be reported as often as necessary to maintain ac ceptable operations. Certain daily in formation is required. Periodic con trols in the form of reports, summarizing operations by units as determined ap propriately, cover subjects of a more general nature, that do not need daily consideration. The information for such controls must be adequate to allow the manager quickly to pinpoint situations that deviate from acceptable standards. Once controls have been agreed upon between subordinates and managers, adequate follow-up and appropriate action where deviations from plans are indicated will regularly in themselves appraise the adequacy of the controls. If the controls that have been agreed upon are inadequate, upsets in operation not anticipated by the manager will con tinue to point out that a subordinate has failed to pinpoint controls that were of the most importance.
When agreement as to controls exists between subordinates and managers, there is unanimity of purpose in the management team of the organization. Subordinates can carry out their re sponsibilities in an atmosphere which provides maximum latitude of authority with incentive to direct and improve their operations. Many employee re lations problems arise simply because of a lack of understanding of the purpose of management in establishing controls over the activities of subordinates. When there is agreement on controls, subordinates can direct the activities under their supervision without a feeling of restriction of authority, and as the same atmosphere is built between all levels of supervisors down through the organization, each supervisor can oper ate knowing that he has the maximum authority for the responsibility he has been assigned. When control devices indicate inadequate performance of people, limitations on authority can be set with a clear understanding between the supervisor and the subordinate.
ΜΜΙΙΜΤΓ ®IF A. R. LOOSLI American C y a n a m i d Co., N e w York 2 0 , Ν. Υ.
-L H E management of inventories and costs is a part of the entire plant manage ment operation. Sometimes it becomes a part from, rather than a part of, however. Inventories, if allowed to increase disproportionately to sales, add costs—hidden costs which seldom, if ever, show up on a cost or balance sheet in detail. Costs of warehousing excess inventories are analyzed infre quently. It is a vicious circle. Excess raw material inventories add to costs of finished products, which, if allowed to build up beyond an adequate amount, add more hidden costs and soon there is reflected a dwindling gross profit. This is especially true where there are excessive inventories in a declining price market. If production planning is done ade quately, inventory control will result. Some factors to be considered are: Current conditions affecting the end use of the product Effective use of labor—maintaining a constant work force Major raw material availability and stability Whether the product is made in multi ple-use equipment Whether it is a "batch" or "continuous
process," and the related time cycles of each Sales volume and unit order Stability of product or "expiration dating" in the case of some antibiotics, biologicals, and pharmaceuticals Branch warehouse needs In all divisions of American Cyanamid the general plan outlined by J. E. Plitt in two "Plant Management" features earlier this year [IND. ENG. CHEM. 48, April, 93 A; May 89 A (1956)] is followed. This consists of working on a 3-month operative production basis with a constant look at a full year ahead—that is, a level of production is planned for each 3-month period, ad justed, if necessary, each month within an established framework which will give minimum costs for a given level of production. The economies that can accrue from steady production are many. There is no break-in time of new employees, raw materials can be ordered regularly to take advantage of planned deliveries, losses from start-up or shut down are reduced, lost personnel time is at a minimum. To get a 3-month production plan, sales estimates are made, adequate in ventories in relation to sales are de termined, and production levels are
planned. The production planning man, well versed in sales requirements and inventory goals gained from past information and from conferences with sales people, now sits down with the production group and discusses the production requirements. Discussion is a critical part of produc tion and inventory planning. After some discussion, a plan is frequently agreed to on the spot, and this plan is subsequently published. What tools have been used, then, in production planning? Sales estimates—tempered by past experience Adequate inventories—determined from sales level Production capacity—at various man power levels Common sense—agreement by ex perts on a plan to follow Publication of the plan What if sales estimates are wrong? They sometimes are. The purpose of inventory is to cover, at minimum ex pense, possible changes in sales volume. Over the years a keenness of forecasting can be developed, so that few such emer gencies occur. There are other classifications of in ventory beyond those of finished inven tory and sales needs which must not be overlooked or neglected in good practice of inventory control. Cyanamid recog nizes five main inventory groupings: 1. 2. 3. 4. 5.
Finished stock Work in progress Raw materials Fuels Stores and supplies
There is a relationship among these classifications—admittedly geared to the finished stock position. Inventory levels of finished stock are constantly being reviewed. As finished stock goals change, the limits of the other classifica tions change. Each year the inventory performance of all products is reviewed and new in ventory objectives are established. The offhand, but effective, "cut by at least 1 0 % " theory is used for the coming year. Each division compiles a reasonable inventory for each product and for each classification. The total for all products is the inventory objective or goal for review and approval by the inventory committee. Within this framework, a division manages its inventory. Each month, inventories are discussed on a company-wide basis by the inventory committee, a review group only, com prised of the budget director and comp troller and a representative (assistant general managers) from each division. Actual control comes from each division operating within the framework of over all policy laid down by the committee. In a few years, and in some industries now, inventory will be controlled, proVOL. 48, NO. I I
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NOVEMBER 1956
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