Internal Control is Based on the Logic of Prevention

At the morning meeting of all management cadres on Aug 29, 2022, Mr. Wang explained that internal control should be based on the logic of prevention, not the logic of early warning.

Since the establishment of the early warning mechanism, I have received 20-30 level 5 early warning emails every day. If the level 4 early warning is twice as much as the level 5 early warning, then the number of level 4 early warnings will reach 40-60, plus level 3, level 2, and level 1 warnings, management cadres may have to deal with hundreds of warnings every day. So many early warnings occur every day, indicating that our process control is imperfect, and the results of execution deviate from the planned goals. A company that has done a good job in internal control should be calm, rather than constantly warning, just like a firefighting system that cannot hear fire alarms every day. The establishment of an early warning mechanism is helpful for management cadres to know which areas are insufficient and avoid blind spots in their work. When dealing with early warning, on the one hand, we should intervene in the handling of the problem as soon as it occurs, that is, grass-roots cadres should pay attention to and deal with it at the first level of early warning. On the other hand, as the person in charge of the modules in charge (including finance, business, engineering, logistics, quality assurance, human resources, standard office, etc.), they should lead the team to formulate preventive mechanisms for each module according to the company's overall plan.

Be active and promising

On August 26th, when I inspected the workshop, I found that the D16426 two-tone frames had already been threaded with fishing thread in the workshop, but the acetate material of the black temple tips were still in the cutting room, and the logistics department did not do any preliminary deployment. The existence of this phenomenon in the enterprise indicates that the staff of the logistics department does not grasp the dynamic information of materials, do not understand the actual production progress of the workshop, lack initiative in work and fail to do a good job in internal control. "Internal control" refers to a unit in order to achieve its business objectives, to ensure the safety and integrity of the assets, to ensure that the correct accounting information is reliable, ensure management policy being carried out, ensure that business activities of economy, efficiency and effect in unit interior take self-adjustment, constraint, planning, evaluation and control of a series of the floorboard of the method, means and measures. Internal control is in the enterprise to achieve the main goal of the premise, everyone in the enterprise should use the right method, do what should be done. It emphasizes an obligation and responsibility that must be done. In the aspect of internal control, we should be active and promising. We cannot rely on human post-mortem inspections to find problems, we cannot rely on systematic early warning to find problems, and we cannot rely on historical summaries to find problems. We should establish a preventive mechanism at the planning stage, set up firewalls logically, and make capacity estimates and cost budgets during planning. Just like the fire protection system, in addition to the corresponding fire protection hardware facilities, preventive work should also be done in the management mechanism, such as establishing a fire safety system, signing a safety responsibility letter, organizing safety education, establishing a voluntary fire brigade and a regular fire inspection mechanism, etc..

Find a way

At the manager's meeting on Monday, the head of the business department reported that the OH001 project was developed in August, and the completion rate of samples sent was 94%, but the matching rate with the annual plan was only about 30%. The annual new product development plan formulated by the company is determined through in-depth market research and scientific order forecasting. It is subdivided into customers, brands, materials, specific to which month and which week to develop what kind of new products. If the actual new product development project does not follow the annual development plan, it may lead to the samples sent to the customer that are not what the customer needs; the order quantity of a certain material will not meet the production capacity plan; we will miss the customer's selection of our sample opportunity. Perhaps, according to the annual new product development plan, it may not be possible to receive orders, but blindly developing and sending samples will only result in a waste of costs. During this period of time, management cadres are reading the book "Reducing Costs to the End". The author's point of view is to ensure that the value flow of R&D expenses is consistent with corporate value and customer value. For us, to ensure that the value flow of R&D expenses is consistent with enterprise value and customer value, it is required that the new products we develop are purposeful and targeted, and the probability of being selected by customers can basically be estimated, so as to ensure that the money is spent on the cutting edge. I often say to management cadres: whether it is business, R&D, delivery, quality management, or finance, human resources and administrative management, we must be managed. It is necessary to hold more small meetings to implement a specific project, solve a specific problem, and overcome a certain technical problem, and less general conferences. At the meeting, it is necessary to clarify the work objectives and direction, discuss the method of solving the problem, determine the specific action plan, assign each person's work tasks, etc., and agree on the completion time. At the same time, it should also be reviewed and summarized regularly. Find a solution to the problem in this way of brainstorming. Through the overcoming of a mountain one by one, to achieve from partial victory to the overall realization of strategic goals, and then improve the internal control ability and the overall management level of the enterprise.

Give the results

Being active and promising is to solve the problem of cognition and attitude, and finding out the method is a requirement of the executive level. No matter how scientific the planning is, and no matter how lively the execution process is, if we only focus on the form and not on the result, or even take the means as the goal, it is not what we want. Every Friday night, the company organizes a "three VS three" basketball competition for members above the manager. I have seen some managers dribble the ball from left to right, and then from right to left, running back and forth, sweating profusely, and in the end the ball is missed by the opponent without a shot. The purpose of playing basketball is to shoot and score, but actions that are not aimed at scoring are all tricks. Also as Comrade Mao Zedong said, "Love without the purpose of marriage is a hooligan". Whether it is internal control or daily management, we should have a goal-oriented and result-oriented thinking. Therefore, the company requires that when performing each job or each project, we must have the awareness of results, the thinking of getting things done, and the team members should work together to make the best use of their talents and materials. Through good results reflect the value and meaning of our work.

Internal control is to require everyone in the enterprise to use the correct method and do what should be done. It is everyone's obligation and responsibility. In order to do a good job in internal control, we should be proactive and not rely on human post-mortem inspection to find problems, not rely on systematic early warning to find problems, and not rely on historical summaries to find problems. In the planning stage, a preventive mechanism should be established, a firewall should be set up logically, and production capacity estimates and cost budgets should be prepared during planning. To find a way is to require the work of business, research and development, delivery, quality, finance, human resources and other modules to be managed. Find a solution to the problem in this way of brainstorming. Through the overcoming of a mountain one by one, to achieve from partial victory to the overall realization of strategic goals, and then improve the internal control ability and the overall management level of the enterprise. When carrying out each job or each project, we must have the awareness of results, the thinking of getting things done, and the team members should work together to make the best use of their talents and materials. Through good results reflect the value and meaning of our work.