The decision to establish a formal Management Information and Control System (MICS) becomes almost inevitable in today’s business climate. The accelerating needs for uniform, concise and timely information by all levels of management dictates the establishment of such a system. The results can be better control of and greater profitability from the enterprise. Essentially the functioning of a MICS involves transmission of all pertinent data necessary to the conduct of a business to one or more management information centers, where it is maintained mid then disseminated in discrete form to all levels of management. This description provides no reference to computers or any other specific type of data processing equipment. This is to emphasize that possession of data processing equipment is not a pre-requisite for a MICS. Computers, punched card equipment, data collection and transmission equipment, etc., are excellent tools that can, if costs and volume warrant, be extremely useful in a MICS programme.
Reluctance of much management to undertake a MICS programme can be traced to the confusion and lack of understanding surrounding the subject of information systems, and how they can be effectively installed: Management is continuously -faced with the frustrations of receiving inadequate, incorrect or untimely information. As a result the validity of management decisions and actions based on this type of information is at times questionable. Timely, adequate and correct information – the means through which management can effectively monitor, control, and plan is becoming increasingly elusive businesses grow in size and complexity.
Progressive companies recognizing this situation are at various stages on development and installation of Management Information and Control System. In many cases the management of these companies, although disillusioned at times with the progress, costs and results achieved, still continues on the path toward MICS. The reasons for this continued determination on the part of management to pursue MICS can be found in its desire to achieve a state in information. Storage, use and handling that will achieve.
- Uniformity of Information: With a single source generating the required information.
- Reliability of Information: Resulting from adequate controls established and Constantly monitored on all input and output of the system.
- On Time Response: Communication of established information needs as often and as quickly as desired.
As these items are achieved the benefits resulting from an MICS become evident, the potential for achievement of substantial reductions in operating costs, information that management can refer to quickly and simply to assist in its decision process, and a smoother more efficient organization that can supply the information when needed. With these benefits available, management can realize such basic contributions to cost reduction and higher profits as improved sales forecasting and production control, increased inventory turnover rate, increased productivity of all facilities etc. The realization and extent of any savings is completely dependent upon management’s ability to understand and effectively utilize the information generated by the system.
An additional cost savings aspect of installing Management Information and Control System is achieved through the elimination, modification and/or combination of system and procedures previously used by the organization. These more immediate savings can be impressive, but not nearly as much as the potential long-range savings that can be achieved once the system is installed. Management should also realize that both short and long-range savings could start being attained without waiting for the installation of the entire system.
Following is a representative listing of the type of information that can be made available to management from a well designed and installed Management Information and Control System. The ability of the system to produce this type of information on time and in a usable form depends on the means employed to design and install the system.
- Sales status by product, territory, sales an, etc., with variances.
- Cash position.
- Inventory position in units and/or dollars-comparison to budgeted.
- Inventory items not meeting minimum turnover rate for an established period.
- Profit position – by profit centers for an established period.
- Production status – by product, plan etc., including orders not on time and reasons for variances.
- Projection of inventory and sales position using a simulation model
- Budget variances of expenses, capital expenditures, projects, etc., by budget centers.
- Personnel skills inventory of all company employees.
Credit: Management Control Systems-MGU