Nature of Effective Controls


Information Quality

A key factor in the effectiveness of a control system is the quality of the information it receives. Control system information must be accurate and up to date. The best controls get their information from the points where operations generate it. In many cases, control systems can supply data in real time, but systems still have to process a lot of data, leading to delays.

Planning

Raw control system information is not useful to management unless a comparison to established benchmarks and targets is possible. To allow such a comparison, a tight integration of the control system with the planning process is essential. The focus of the control system must match the focus of the strategic or operational plan.

Flexibility

An effective control system is highly flexible. If the data collected from one source are no longer reflective of the actual situation, management must be able to identify other, better sources of data and adapt the system.

Objectivity

Managers must be able to make decisions and act on the basis of control system results. They can do so credibly only when the decisions are seen to be based on objective data and evaluations. To achieve such objectivity, control systems must be transparent and relevant to the business.

Economics

The cost of a control system must be reasonable compared to the business it controls. The purpose of the system is to reduce unexpected costs and reach competitive goals, and an expensive or intrusive control system increases costs and reduces competitiveness.

By Nathan Phillips

 

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