Control Based Processes
February 12, 2025
In the context of growing market competition, organizations are focusing more on closer partnership across supply chain. Increasing efficiency in sales and distribution process facilitates an organization to maintain its competitive edge. Best practice processes, embedded in an ERP package, are an enabler in this direction. The important components of sales modules: Sales inquiry handling. […]
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Introduction To survive in the current competitive and global environment, it is important for the organization to continuously look at ways to improve efficiency and productivity. It needs to discover a new, easy and cost-effective way of manufacturing or providing services. Work study and industrial engineering play important role in job simplification, job design, job […]
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Every organization that is engaged in production, sale or trading of Products holds inventory in one or the other form. While production and manufacturing organizations hold raw material inventories, finished goods and spare parts inventories, trading companies might hold only finished goods inventories depending upon the business model. When in case of raw material inventory […]
Now, since we know about the different types of processes that an organization has, it is essential that we understand that these are just the pieces of the puzzle. How these pieces fit together is what creates a masterpiece or an average organization. However, understanding the components has given us a clear idea of what an excellent organization ought to do:
But achieving these tasks consistently in the best possible manner is contingent upon the ability to design impeccable processes and put them together in a seamless system. Here are some of the challenges that one expects to face in this endeavor:
Although we have succeeded in figuring out the component processes, there is no fixed formula for putting them together. It is very similar to the study of the human brain, the functioning of which continues to be mysterious and illusive. This is where the skill of the entrepreneur comes into action.
What makes it so difficult to assemble the component processes into a system is the idea of complexity. Complexity means that all the processes are inter-related and have many interaction points. Hence a small change can have a cascading effect throughout the organization. Also information is being constantly produced in the organization. It is difficult to aggregate them and make sense of them so that feedback can be used to initiate corrective action. Complexity is a very large number of inter-actions happening at any instance within the system.
To add to complexity, systems are dynamic. This means that they exchange energy and information with the environment on a real time basis. Systems are never in equilibrium but rather always searching for equilibrium.
For instance consider the recent sub-prime mortgage crisis. With the collapse of Lehman Brothers many companies had to write off huge sums, Lehmann owed them. The speed at which a highly rated company went bankrupt shows the idea of dynamicity. A few months earlier anyone would have given credit to Lehmann Brothers. But at that time, it would have been sheer folly to be associated with Lehmann in any way. This shows that there are no rules in a dynamic system as everything is susceptible to change.
The complexity and dynamic nature of an organization combine with variety to produce an incomprehensible system.
Variety is the idea of possible changes in the environment. The idea is to forecast the possible states an environment can take and be prepared with a plan for each of these states. This is known as Ashby’s law of Requisite Variety. It states that only variety can combat variety. Hence to ensure that an organization maintains homeostasis, the variety of corrective actions must be greater than the variety of the environment.
Organizations all over the world are researching ways and means to successfully manage complex dynamic and variable systems. However at the moment, it is a game of imperfections. The organizations with the less imperfections i.e. relatively stronger systems is a better system. As a summary, here is what makes it difficult:
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