Costs and satisfaction Essay


Armco Inc., is the sixth greatest producer of stainless, electrical, and carbon steels and steel items in the United States, as well as the Armco Inc Midwestern Steel Division is its major division. The biggest subdivision with the Steel Department is the Kansas Works which produces two products: milling media and carbon cable rod. In January 1991, a new overall performance measurement program for Kansas Works was implemented simply by Bob Non, the Representative of Finance, with the aim of providing managers the best info that would better enable these to enhance firm performance. According to Mister. Nenni, the newest system was designed so that managers would prioritize certain crucial objectives rather than the numerous particulars provided by the Operating Statistics Report they own used in yesteryear. The new system also should provide an improved basis pertaining to evaluating operating managers and manufacturing administrators. This includes a balanced set of efficiency measures, including quality, schedule achievement, and safety, in addition to costs. The cost information were changed to include only those that happen to be controllable by each individual working manager. Lastly, one of the most significant changes in the old product is the elimination of the Cost Above measure, consequently decreasing the fee detail inside the new functionality reports noticeably. Although the fresh system hopes to help the managers and increase their give attention to relevant data, some are even now complaining and dissatisfied because of the lack of data and insufficient details they may have been comfortable with. Some in fact prefer having the old system back, where monthly and annual tendencies are displayed that allows those to compare real costs with objectives. In accordance to one supervisor, the old report provided " the minimal amount of detail necessary”.


What is the optimal performance evaluation program for the Kansas City Performs to adopt? If the chosen product is optimal, should it be implemented to other subdivisions of Armco, Inc. Midwestern Steel Department? Areas of Consideration (see show 1)

Kansas Works must look into the following elements in determining what the maximum performance evaluation system to consider. •Goals and objectives of the division

•Purpose and functions of each section

•The Incentive System

•Understandability and relevance.

•The Department as a Cost Center

Substitute Courses of Action

After with the preceding factors, we now proceed to the courses of action the division can take to determine the optimal performance analysis system.

1 . Return to the System (see exhibit 2)


•Managers are familiar with the outcome of the program. This reduces discontent and frustration and enables managers to concentrate on their particular work instead of continually make a complaint about the system. •The reports were given in a monthly or weekly basis which allows the managers take instant action to solve specific emerging problems. Drawbacks

•Because it really is detail focused, managers may misappropriate the cause of the problem like a problem with the accounting program rather than a true problem with operations. •Too very much detail might lead managers to focus on challenges whose results are temporary, rather than details that consider the bigger picture and whose effects are long-term. •The reports done are certainly not in line with the goals from the division of commencing activities which have been the most value-adding to the department.

2 . Implement completely the New System (see exhibit 2)


•This system not only caters to the best management nevertheless also towards the middle towards the lower branches of the organization by providing a typical that serves the division as a whole, and not just to the standards for their specific department. •It provides a more objective technique of measuring the performance of the department with the division. •By streamlining expense reports, it will include only the most relevant...

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