Discuss the consequences of poor planning and poor controlling in Business.

Use examples and scenarios to enhance your discussion where possible.

Planning and Controlling are two of the four major functions of management processes
of an organization, the other two being organizing and leading.

Planning

Planning determines an organization’s goal and by which means the organization can
achieve it. It gives managers an opportunity to adjust to a certain type of environment
instead of reacting to it. Planning helps in anticipating and managing risks that may
arise in future. In short, planning means preparing tomorrow, today. There are four
major planning stages: Strategic Planning, Tactical Planning, Operational Planning and
Contingency Planning.

The military saying “if you fail to plan, you plan to fail” is very true. Without a good
planning, managers are bound to face several problems. Let us have a look at Scenario
1 below.

Company A is deals with supplying of polyester sewing thread to the local and overseas
market. It has a warehouse which stores finished goods and raw materials. Also, the
production floor consists of Dyeing Machines with the smallest capacity of 6Kg to
largest capacity of 1200Kg, dryer, 64 winding machines with a packing and delivery
area. It has one laboratory for preparation of recipes for bulk dyeing, a planning room
and testing room as well.

Company A is facing many problems due to poor planning in various sectors, as listed
below.

 Use of resources, time and energy wasted.

 Poor decision making and forecasting - overstock of raw materials and finished
goods.
 There is no job objective and thus motivation to achieve company goals is nil.
 Lack of cohesion among floor workers and management as well. Some of them
do not know with whom they have to report.
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 The Organization cannot cope with changes or deal with problems. Advanced
technology is missing since the machines have been outdated and computers
and printers of the company need to be upgraded.

Now, let us see in details, below, what is happening in Company A.

It has an overstock of raw materials and this is taking too much space. This of
course diminishes cash flow. If only there would have been a good forecasting of
orders from the Marketing Department, the purchaser would not have bought an
excess of grey yarn. The money used for buying the dormant stock could have
been invested in replacing the outdated dyeing machines and computers .Due to
these machines, customers are complaining of late delivery. These semi
automatic machines need to be replaced by new, fully automatic machines. The
latter in comparison to the old machines will use fewer vapors since one dyeing
will be taking 30 minutes less to get completed, which means lead time will be
improved. Fully automatic machines mean fewer operators to operate the
machines. One operator only will be needed to load and unload machine only.
Now, Company A has an excess of 3 operators per shift. In addition to this, there
is also excess overtime done by these workers since there is no control from
higher level management.

There is always a problem of team work among the workers. When the operator
has finished loading his machine, he sits idle for one hour waiting to answer an
“operator call” from the machine, to input chemicals, instead of helping another
operator who is overloaded with dyed yarns which he has to spin.

Controlling
On the other hand we have Controlling, which is the management function in
which managers establish and communicate performance standards to people,
processes and devices against a plan.

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 Poor controlling has many negative effects on an organization. These are listed
below.

 Plans are less effective. There is no measure of progress or poor feedback

leading to flop of any plan.
 Cost of production keeps on increasing due to lack of quality control; in the
case of a manufacturing company where the rate of right first time is low that
is in case of scenario A, reprocessing of orders will be frequent. This leads to
longer lead-time and thus late delivery resulting in no customer satisfaction.
 Poor control over financial activities, of the organization. We will keep on
spending without knowing how much we have spent.
 There is no monitoring of the performance of workers. Poor performances of
workers lead to poor output of products or services.
 There is no standard set and thus marketing value of the product is low. For
example, in the Mauritius, 40/2 polyester sewing thread are sold in cones of
5000m.

Hence, we conclude that in order to have a good management process in an

organization, we must have a good planning to start with, in order to have a good
control over the whole process.