Management System Explained

When consultants talk about improving operations they often mention management systems, sometimes they call it Management Operating Systems, from time to time Management Control & Review system but they mean one and the same. This article will define the concept of management systems and how it can be utilised to improve performance.

Management System Definition

A management system is the way in which an organisation is managed and run. It is the combination of different elements, tools and activities working as a system to manage operations. In short, it is the process of managing operations performed by the supervisors, managers and directors.
A business organisation can be seen as a collection of interconnected management systems. A manufacturing company will have one management system for each of the following: production, maintenance management, quality management, HR management, finance and accounts etc. When consultants talk about management system they usually focus on department specific ones. However, these are always a part of a larger management system that spans the whole organisation.

Management System Main Segments

For simplicity, management systems are usually divided into a number of segments. These are the following:
Forecast is made of elements that give some kind of indication as to what the expected results may be. It will always include historical data from the past year and will market expectation for the next year. The result will be performance expectation for the business. Depending on the company, sometimes the budget is a forecast and on occasion, it is generated in the next step of management system planning.

The next group is planning. Usually planning is divided further into at least two groups:. These are: long and short term planning. Long term planning takes the information output from the previous phase (Forecasting) and develops into a tangible plan defining what is to happen and in which month or quarter. It also defines the high level resources requirements based on a list of standards and the application logic. The high level plan is then taken and broken down into detailed weekly and daily plans. These define the exact way in which the target will be achieved and who will be performing it. It goes without saying that throughout the whole planning stage there should be constant checks against availability of materials, parts, people, skill, etc. This is also where the interfaces with other departments take place. Once a detailed daily timetable is finalised (describes time expectations, performance expectations, resource requirement etc) it then needs to be assigned to the people performing it.

Assigning and following up begins with the detailed plan assigned to the people performing it. Here the supervisors explain what is expected and how and gain performance agreement from the staff executing the work. Once the work commences, the supervisors are required to control and follow it up. As the detailed plan has set a performance expectation (goals), the supervisor should use that to control performance against. If there are any deviations the supervisor should take actions to get things back on track. Worst case scenario, if the performance of the day was not as expected changes to the short term plan need to be done. The performance should also be reported daily and show operational KPI's with targets, performance and variance. Reporting is carried out on a daily, weekly and monthly basis. It describes actual performance and is used to both control performance and if needed to modify the plans. Towards the end, the data from the reports is to be used in the forecasting phase to attain a more accurate definition for the next cycle. This creates a cyclic approach to managing one's operations where each iteration gives better and more detailed information for the next cycle.

Simple Management System Model

The Secret Behind a Management System

Management Systems allow to have a more iterative/cyclic approach to managing operations. They force a way of thinking where - plan/act/review during delivery/modify as needed - cycle is repeated thus constantly aiming to improve results. It doesn't however happen at just one level, it happens at all organisational levels. In the figure above the higher we go towards the top, the higher we go in the organisation's hierarchy. The iterative management is not done at just one organisational layer or within one function, it happens at all layers with input from all involved functions. It makes this model very powerful when used to define operational management structure.
Usually an improvement project will start by mapping out the "as is" management system. During the mapping out phase, one can clearly recognise and distinguish all the issues or gaps that lead to potential inefficiencies. Sometimes it shows complete steps missing, periodically there are no feedback loops. Whatever the issue, once mapped out it becomes visible and can be addressed.

How Can Excelr8 Help Your Company?

For us at Exelr8, the key to a successful business and a successful operational excellence initiatives is the management system. It is also here that we often see the largest causes to ineffective operations, whether due to historical reasons or other. We specialise in addressing this together with the client by firstly mapping out the "as is", then designing the "to be" and finally by implementing the change on the ground. We do not write reports, we get involved.
We would be happy to discuss this further with you should you have any queries, please contact us.

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