Introduction
The concepts of responsibility and controllability are vital in the decision-making and handling of different scenarios in a plant such as the case of the Anderson Forklift Company. Basically, the aspect of responsibility refers to the act of accepting the authority assigned to an agent or office within the confines of the law of a company. The obligation to accept the roles assigned is often controlled by the imputed authority on an office-bearer in a hierarchal order of control in an organization. The specific role is often attached to an individual who is responsible for decisions and actions within the level of responsibility. On the other hand, the concept of controllability defines the “degree of influence that a specific manager has over costs, revenues, and related items for which he or she is responsible” (Drury, 2012, p. 389). This analytical paper attempts to explore the above concepts in the Anderson Forklift case study and propose solutions to the current problems facing the company.
Case Study Analysis
From the Anderson Forklift case, the purchasing manager has full power over the aspects of cost to the point that she or he is directly carrying out the purchasing duty. Besides, the purchasing manager is empowered to seek the most cost-effective contract. In the ideal, it is expected of the purchasing manager to establish the most cost-effective purchasing combination for the engines at the most friendly market price than the current deal the office has been pursuing. The current cost of the outsourced engines is not sustainable as reflected in the increasing costs. The purchasing manager should take the responsibility for the inability to get the engines at the best possible price that would not result in runaway costs to the company (Stone, 2008). Besides, it is the responsibility of the production manager to work closely with the purchasing manager within the warehouse environment in the best interest of the company. As a team, the purchasing manager and production manager should be able to seek a contract that is not only sustainable in purchasing engines but also profitable to the company since they have control over cost aspects in the production cycle (Drury, 2012).
As indicated in the Anderson Forklift case, the overall overhead costs incurred within the manufacturing plant for the month of June was way above the initial budget. From the investigations, the probable cause was a hike in the utility rate by a higher magnitude that was previously predicted in the June budget. In this case of a hike in the rate of utility within the manufacturing plan, the agent of the Anderson Forklift Company who should take full responsibility for the rising costs is the production manager. Despite the fact that controlling rising cost is a difficult venture, the production manager should have tried to arrest the situation in the month of May before it got out of hand (Drury, 2012).
Although the utility rates are often fixed in most companies, the production manager still had the responsibility of raising the alarm and summoning other personnel to address the situation within the confines of the most cost effective production matrix. For instance, the production manager may reverse the current dilemma by adopting an aggressive cost reduction strategy such as cutting down on wastes from fuel, overtime, and inefficiency by some of the technicians. Besides, the production manager might introduce an efficiency policy requesting the personnel to turn off machines when not in use, switch off the lights, and close running water when not in use (Stone, 2008). These conservation measures might reduce the rising cost by a favorable margin to counter the fixed utility rates at the Anderson Forklift Company (August, 2008). In addition, the production manager might think about purchasing more proficient engines and machines in collaboration with the purchasing manager to reduce the overhead costs as a result of machine inefficiency or breakdown.
In order to arrest the abuse of office by technicians such as the current user of Van 3, the service manager should introduce a stricter rule on use of company property within the confines of the formal contract. In addition, the overtime claims should be monitored by the service manager by advising employees who work too slowly to embrace efficiency and optimal performance as part of the cost cutting initiatives (Drury, 2012). Through this approach, the service manager will be in a position to monitor performance of each employee within the set targets on a weekly or monthly basis (August, 2008). As a result, the slow nature of employees such as Fred Snert will not cost the company more money in terms of overtime payments. In the end, the managers responsible for controlling costs, efficiency, purchasing, and production will be in a position to monitor each of these aspects without compromising on optimal performance at the most effective cost.
Conclusion
In summary, it is apparent that the current levels of performance and costs at the Anderson Forklift Company are not sustainable due to the rising costs that exceed the set budgets. In order to reverse this trend, it is imperative for the managers to introduce efficiency production and service matrices such as purchase of proficient machines, reducing wastages, and rolling out a new service contract for the technicians defining the use of company property and meeting monthly targets.
References
August, R. (2008). International Business Law: Text Cases and Readings. New York: Routledge.
Drury, C. (2012). Management and Cost Accounting. Alabama: Cengage Learning EMEA.
Stone, R. (2008). The Modern Law of Contract. New York: Routledge