One of the biggest problems we have been facing in Thana Works is that despite achieving the production targets on a number of occasions, the net working results leave us in the red at the end of any reckoning period. The reasons for this is not far to seek. Production at any cost is demanded and production at any cost, literally, is what we get. And our systems of feed back and control are such that wer realise the cost of the production only after the same is made, when it is too late to do anything about it.
There are a number of reasons for this --- primary among which is the over - centralisation of accountability coupled with diffusion of responsibility. As a result the person who does that job is not accountable and therefore does not feel fully involved or committed or even motivated. On the other hand, the person who is accountable is not fully responsible, having to depend on many others, with the result that “what is happening” is neither fully known nor clearly discerned.
The ideal situation would be to have each manufacturing unit set-up as completely independent plants, with only certain services like Accounts, Planning, Welfare, IRD and Administration etc. centralised. This could be done in 3 phases as outlined below:
Phase I : Materials Accountability placed under Unit Head
1. The unit Stores should come under the Unit Head.
(2)
2. Based on the production budget, the material budget should be arrived at and then taking stocks into consideration, the net amount of purchases to be made during the year should be arrived at.
This amount should then be put at the disposal of Unit Head and he would be authorised to indent for material of the value not exceeding this amount during the entire year.
At the end of the year, the value of material consumed in production plus the material lying in stores and shop floor should be equal to the opening stock plus net purchases made during the year.
The following results are expected to be achieved as a result of the above procedure :
a) Owing to a limit on purchases that will be allowed to be made, for a certain expected production level, there is bound to be much greater care about material consumption by the unit resulting in reduction in excess consumption due to spoilage., less etc.
b) While the Unit Manager will have considerable flexibility of operation in terms of what to procure, when and how much, because of the constraints on overall purchases, he will procure only that material which is required for production. This will help in controlling the inventory level as well as reducing chances of un-required material flowing in or excess material flowing in, due to errors in indenting, delayed information to WPD regarding cancellation of items rendered obsolete due to changes in design or not required due to change in production plan.
(3)
Phase II : Quality Accountability placed under Unit Head
1. The next step in decentralisation of accountability would be to place the unit Q.C. i.e. line inspection, under the charge of the Unit Head. Coupled with the responsibility of material accountability placed on the Unit Head, as above, the responsibility for quality would further ensure reduction of scrap, spoilage etc. as well as make the individual units more quality - conscious since they would now be asked not only to account for the physical production, but its quality too.
2. Under the present set- up, the production man right from the shop floor to the highest level thinks that his job is only to produce and the quality is someone else’s look out.
By the same token, the Quality Control man works within the narrow confines of only checking the components/products for conformance to design specifications and is least concerned about how production is getting affected as a result of his actions, much less about what he can do to help reduce the rate of rejections, if not prevent them altogether.
By making quality of the product the responsibility of Unit Manager, a lot of “quality problems” would get sorted out at the early stages owing to greater inter-actions at the operating level instead of at much higher levels as today, where more often not, the problems recedes to the background and prestige takes over.
(4)
Phase III : Purchase Accountability placed under Unit Head
1. The final step in decentralisation would be to place all component purchases under the Unit Head. With this, the unit would become an integrated profit centre.
2. The Unit Manager should be given a production budget (so many units of expected quality), a material budget (purchases not exceeding a specified amount) and a target of not working results to be achieved.. For the latter, he will be free to make his ‘Make/Buy’ decision as well as do necessary price negotiations/vendor development to ensure that
(a) he does not exceed the budgeted amount,
(b) achieve the working result target.
Any funds saved by him, after budgeted production, may be carried forward to his account for succeeding year for use at this discretion on capital expenditure over and above the sanctioned amount.
The proposed decentralisation is expected to have following advantages :
1. Responsibility and accountability will be brought to one point leading to establishment of clear cut goals and thus initiate clear-cut lines of action.
2. Total job responsibility to a Unit Head will allow him considerable degree of freedom of action, which would encourage initiative and innovation and help to bring out the best in people.
(5)
3. Efficient units will no longer need to be saddled with the lead of inefficient units, nor will inefficient units be able to any longer shield their performance under that of the efficient one. The grain will get sifted from the chaff.
4. By making Production, Quality Control, Stores & Purchase, the responsibility of the Unit Head, the endless (and unavoidable) disputes and arguments between these departments would now get resolved at the operating level. This would mean raking quick decision since the concerned people would be involved, instead of the bosses, who each, separately, need to be briefed by their assistants.
The above is only, of course, an outline of this idea and, naturally, far greater details would have to be gone into, once it is decided to implement this.
(Hemendra K. Varma)
July 1979
VL - Thane
No comments:
Post a Comment