Process for introducing management control in SMEs
How do human mechanisms evolve in an SME during the introduction of management control and what are their impacts on the implementation of strategic management in times of crisis?
The introduction of a new system often changes group dynamics and increases the doubts and fears of individuals by challenging their spheres of influence (Feeling of being irreplaceable and indispensable).
In order to steer the strategy through Lean management, and in a context of an economy driven by Big Data, Management Control is seen as a powerful tool for providing information that supports the decision-making inherent in modern uncertain and changing environments.
The orientation of business models and strategies are thus guided by the measurement of operational efficiency. The management of data and interfaces becomes essential for the management of the strategy.
A process of alignment and improvement
The interoperability of digital platforms (Intranet or SAAS) is necessary for agility, both internally for production management and externally by integrating subcontractors and stakeholders.
Without educational and human support aimed at involving all the actors in the organization, attempts to introduce management audit to analyze the results of Lean Management may remain ineffective and face failure.
Tarek Chanegrih and Jordane Creusier (1) shown that only the most mature companies in Lean Manufacturing achieve total alignment; Alignment of management control systems for the operational level and alignment of higher level control systems.
In the Lean philosophy, the customer occupies a central place in the co-development of products and services (uberization of the economy).
After the co-design where he imagines his solution, even the production is transferred to the consumer by delegating part of the work to him (DIY Do It Yourself).
“We see the development of networks led by a core firm or more fluid value networks with organic functioning. The company coordinates all the inter-organizational flows to deliver its product-service offer to the end consumer.”
Cinzia Parolini (2)
The KPI visual management charts implemented in the Toyota system since its inception in support of real-time digitalized Management Control rethink the optimization of strategy, design and industrialization.
The acceleration and the level of quality of the supply chain put pressure on the organizational quality of companies; deadlines, Just In Time, stocks, lean flows, Industry 4.0…
A synergy for Value creation and Performance management
Management Control becomes a multidimensional strategic tool instead of just being an operational process optimization tool. Associated with the Lean Value Stream (VSM), the Management Control matrices highlight the complexity of creating value for the customer and the sources of internal improvement; Cost analysis, investment ROI, forecast management, operational and strategic dashboards.
All the interest of associating it with Lean is to simplify, optimize, this value stream to improve the agility of structures that have sometimes become too complex and facilitate strategic or operational decision-making.
“Information today supplants natural resources and human knowledge in the digital economy and we are then faced with a system in which the notion of volume disappears for practically all actors. The marginal cost tends to zero and the only dimension to control is the capacity and its use.”
Pierre Mevellec (3)
Lean and Kaizen thus offer a new dimension to Management Control, Performance Management.
The Lean “Hoshin Kanri” method (4) of strategy management transforms the vision into missions and then specific actions by process to achieve the objectives set by the strategy.
Management control and audit makes it possible to analyze the links between the different components of the value stream and the maturity of the processes. It also helps to monitor and evaluate performance indicators at different levels: global, functional or operational.
In summary, the benefits of integrating Management Control with Lean practices are :
- Management control and audit is a powerful tool for providing information and guidance for decision-making in a context of Big Data and Lean management.
- Management control and audit requires alignment and integration of systems and practices at different levels of the organization, as well as educational and human support for all the actors involved.
- Management control and audit enables value creation and performance management by simplifying, optimizing, and monitoring the value stream for the customer, as well as the capacity and use of resources.
- Management control and audit leverages Lean and Kaizen methods, such as Hoshin Kanri, to translate the vision into missions and actions, and to analyze the links and maturity of the processes.
“Financial control is a critical function in organizations. It helps ensure that the organization’s objectives are achieved, that resources are used efficiently and effectively, and that the organization complies with relevant laws and regulations.”
Henri Bouquin
References :
1- The Effect of Internal and External Lean Practices on Performance: A Firm-Centered Approach
2- The Value Net: A Tool for Competitive Strategy
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