MANAGEMENT CONTROL SYSTEM

IN MANUFACTURING
ORGANIZATION
(SUMUL DAIRY)
PREPARED BY: SUBMITTED TO:

PROF.JAYDEEP CHAUDHARY
BHIMANI ZAHIDA (03)
MAHETA POONAM (21)
PIPALIYA MANISHA (45)
SHAIK MUBERUNISA (52)
CONTENT
 Introduction
 Types of Control
 Control Process
 Control Technique
 Qualities of Effective Control System
 About Sumul Dairy
 Control Mechanism in Sumul Dairy
 Introduction

 The modern manufacturing environment is characterized by

intense international competition, rapid product innovation,
turnover and obsolescence, increased use of automation, and
significant organizational changes in response to new
manufacturing technologies
 It is generally accepted that these changes in the manufacturing
environment should be accompanied by changes in performance
evaluation and reward systems to derive higher performance.
However, it is very complicated to identify the required design of
a management control system in such a new environment.
Definition
 Henry Fayol: Control consists in verifying whether everything
occurs in conformity with the plan adopted, the instructions
issued and the principles established
 Koontz and O’Donnell: Controlling implies measurement of
accomplishment against the standard & the correction of
deviations to assure attainment of objectives according to
plans.
The Cycle of Control
The Cycle of Control

Plan

Correct
Execute

Monitor Evaluate
 Types of Control
 Organizational Control ( Administrative Control )-formal rules

and standard operating procedures

 Informal Group Control - based on principle of mutual Controls
 Individual level Control ( Self Control )- the result of control
exercised by the individual on himself or her self
 Political Control- socio economic environment
 Control Process
The Control Process

Standard Yes
Compare Do Nothing
Attained?
Performance
to Standard No

Objectives Variance Yes

Do Nothing
Acceptable?

Measure No
Standard Performance
Identify
Standard Yes
Causes
Acceptable?

No
Correct
Revise
Performance
Standard

Robbins et al., Fundamentals of Management, 4th Canadian Edition

©2005 Pearson Education Canada, Inc.
 Control Technique
Traditional Control Techniques:-
 Personal observation.
 Statistical reports and analysis.
 Break-even analysis.
 Budgetary control.
 Cost control.
 Production control.
 Inventory control
Advance control techniques:-
 Management Audit.
 Return on Investment.
 Responsibility Accounting
 Programme Evaluation and Review Techniques (PERT).
 Critical Path Method (CPM).
 Management Information Systems (MIS).
 Zero-based Budgeting.
Qualities of Effective Control System
 Corrective Action
 Accuracy
 Timeliness
 Economy
 Flexibility
 Understandability
 Reasonable Criteria
 Strategic Placement
 Emphasis on Exceptions
 Multiple Criteria
 About Sumul Dairy
 The Surat District Co. operative Milk
Producers' Union Ltd., SUMUL is trade
name and literally meaning sound price,
came into existence on August 22, 1951.
 Sumul or Surat Milk Union Limited,
which is now renamed as The Surat
District Co-operative Milk Union Ltd, is
one among the 12 district unions which
acts as manufacturing units of dairy
products for Gujarat Co-operative Milk
Marketing Federation Limited, the
marketers of Amul and Dhara brand of
products.
Objective of Sumul dairy
 To provide year round milk market for their surplus milk and to earn
reasonable returns for the milk to improve their quality of life.
 To procure milk and process it into good quality milk and milk products
to market it at most economically and efficiently to give maximum
overall net returns to the producers and general satisfaction to the
consumers.
 To provide essential technical inputs and services to the producers at
their door steps in an economic and efficient manner and also in a way
most acceptable to them to increase milk production and to reduce the
cost of production.
 Control Mechanism in Sumul
Dairy
 Control is necessary to measure & to monitor the performance
of each activity done by human being or machine.
Input: They procure milk from various villages of Surat District.
Milk is main input for the dairy product. Besides this, other
inputs like pasteurization machinery, pouches for packaging
etc.
 They use different system as a control mechanism
4. Procurement System
5. Animal husbandry system
6. Milk chilling system
Operations:
 Capacity utilization: They use 99.999% of total capacity. In
pouch section they are having 110% capacity utilization.
 Machinery maintenance: Rated capacity of machinery is the
important aspect. For the purpose of maintaining quality, they
need all the system work properly.

Marketing: Their goal is to give 87 paisa per liter to the rural

area. They manage all the expenses from 13 paisa per liter. In
this 13 paisa per liter, they also include expense related to
marketing activities
Budgeting process
 They set department wise objectives. Each dept. having their own cost.
In month of March every year they exercise the budget.
 Every dept. submit their variables to A.G.M finance
 A.G.M. finance makes the list of activity and divides all the cost in fixed
& variable cost.
 From the past data, they see the scope of improvement area
 Then they decide key performance area (at board level)
 Purchase committee consider the budget
Environmental variable:
 They follow ISO 14000 for environmental control. Energy
conservation is the crucial part. Every year they process 20%
more milk than previous year & reduce 3% of energy
conservation
Key Parameter for control

 They segregate all control parameter as department wise, area wise and
person wise. For the purpose of control they use the equation given
below:
 OEE (Overall equipment efficiency) =
 Availability Rate of Men and Machinery (%) * Performance rate of Men
and Machinery against desired capacity * Quality Rate
 For any dairy the benchmark of OEE is 87%. But in the case of Sumul
Dairy the OEE is 92%.
 From above all, we can say that the system in this dairy is well organized
and well controlled.
Individuals
play the game,
but teams win
championships.