Aloha Product

Topics: Management, Marketing, Measurement Pages: 2 (577 words) Published: November 12, 2008
Aloha Products
Evaluation of the current management control syste
Aloha Products maintains a centralized control system. This includes the purchase of raw materials, marketing and sales. This management control structure does not give the plant managers control on any of the major activities of a production facility. According the case information, the plant manager does not control the green beans purchase, production schedule or the production mix, nor do they have control over sales or marketing. Regardless they are evaluated on the basis of the performance of their plants. Aloha Products has a cost center structure, but the control system is attempting to measure the roasting plants on a profit center system. Having a profit center measurement approach for infrastructure that operates in a cost center approach, will not provide reasonable measurements for the management control system. The plant manager's concern regarding the evaluation system is valid. Without proper control over the input and output you cannot expect the plant manager to perform well. Aloha, should not tie the gross margin of the plant to the manager's evaluation without giving them the ability to control all the variables that affect the gross margin. In my opinion, current measurement system is not appropriate. Given the current situation, the managers evaluation should not directly tied the gross margin. Recommendations of the current management control system

Given the volatile nature of the coffee market, having a central purchasing unit is necessary. Expecting each plant to handle the coffee purchases will add unnecessary overhead cost to the company. My recommendation is to restructure the purchase unit as an operational arm of all three plants. Purchase department should take the requirements from each of its plants and execute them. This gives Aloha to achieve cost savings from bulk purchasing. This approach also gives the plants an opportunity to control their...
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