The impact of manufacturing flexibility on management control system design

Résumé du document

Before presenting and analyzing the research undertaken by Mrs. Abernethy and Mrs. Lillis on the impact of manufacturing flexibility on management control system, we estimate that it is important firstly to know more about the careers of these two professors. On the section of their book "Accounting, Organizations and Society" which deals with the "Impact of manufacturing flexibility on management control system design", the two Professors started by highlighting a management dilemma. This one is not expressly indicated, but we describe it as follows: Controlling manufacturing activities are sometimes considered as irrelevant when firms implement certain manufacturing strategies.For instance, the two authors began their paper by referring to Kaplan (1990) who expressed: "The relevance of accounting is most seriously questioned in firms implementing "new" manufacturing strategies".

Extraits

[...] Co-operation and co-ordination is favoured among functional subunits (Bruns and Waterhouse, 1975), and the structure of the organization should become organic (Parthasarthy and Sethy, 1993). To enable functional interdependencies, integrative liaison devices should be created. These are “regular, personal and intensive contact among experts and decision makers of different departments” (Miller, 1988). To summarize this section in schematic and simplest way, we decided to construct a table * No reference was done about strategic mission and strategic typology in the paper. We added it to make a link with some definitions we have previously seen. [...]

[...] This flexibility required imposes complex, multifunctional problems. Cross-functional co-ordination is then required (Bowen et al, 1989). On the contrary, some firms prefer to focus, in their strategy, on cost minimization, rather than differentiation. The two authors referred to Porter's terminology (1980, 1985) to underline that this kind of firms compete on the basis of cost leadership. They could have also used other terminologies, for instance: “harvest strategy” (Gupta & Govindarajan, 1984) and “defenders” (Miles & Snow, 1978) to describe this strategy. [...]

[...] Then, the two researchers will conduct an exploratory analysis of these data, to answer to their management question. We can notice that we have no indication about time and budgets required for this study. Conceptual framework In a first part, the Professors have reviewed the literature which has examined the relationship between control system design and strategic commitments. This concluded with a number of exploratory propositions. Afterwards, they will test these theories to validate them or not. This process is then the contrary of a grounded theory because the authors do not start form scratch, but from theories already constructed. [...]

[...] Then, on this part, the two Professors also distinguished flexible firms with the ones which are not. When a company use product standardization, and then have production processes relatively stable, it can use an efficient mechanistic structure, which emphasizes “high vertical and horizontal task differentiation, centralized decision making, vertical information flows and functional groupings” (Mintzberg, 1983; Miller, 1988). This structure requires a minimum co-ordination which can be managed by formal standardized procedures and processes (Parthanasy & Sethy, 1993). On the other hand, when a company wants to be flexible to customer demands and expectations, few co-ordination problems appear. [...]

[...] Manufacturing flexibility appears in the companies using a strategy which attempts to maximize differentiation (Parthasarthy & Sethi, 1993). We could use the terminologies “build strategy” (Gupta & Govindarajan, 1984) and “prospectors” (Miles & Snow, 1978) to describe the profile of these enterprises, but these ones are not used by the authors. To meet customer- driven demands is then the strategic priority of this kind of enterprises. Their competitive advantages are based on customization and flexibility, to provide products which are demanded by the customers and that the other competitors do not offer. [...]