Management by the numbers

Management by the numbers is broad concept involving using gathering of statistics data, applying mathematical and numerical methods as a main and (sometimes) only technique used by management. This concept is closely related with operations management and both uses same methods and techniques in:

• decision making - the process of choosing among alternative courses of action in order to achieve a goal or solve a problem.,
• performance planning and monitoring - involves setting targets and objectives for an organization or individual, and regularly assessing progress towards those goals.,
• capacity planning - the process of determining the production capacity needed by an organization to meet changing demands for its products or services.,
• inventory management - involves overseeing the flow of goods and materials, including ordering, storing, and tracking inventory levels.,
• supply chain optimization - involves the coordination and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.,
• scheduling and project management - involves planning and organizing resources, such as people and equipment, to complete a project on time and within budget.,
• resource planning - involves identifying and allocating the resources an organization needs to achieve its goals, such as personnel, materials, and equipment.,
• forecasting and simulation - is the use of statistical and mathematical techniques to predict future events or outcomes, and to test different scenarios in a simulated environment.

The concept of management by the numbers completely ignores aspects of social relations prevailing in the organization, the relationship between employees and management, communication, motivation, etc.

Examples of Management by the numbers

• Utilizing Scorecards - Scorecards are a method of tracking performance and results, making it easier to identify areas in need of improvement and areas of success. Scorecards are used to compare performance to predetermined goals, and to benchmark performance against other organizations in the same industry.
• Analyzing Financial Ratios - Financial ratios are used to compare the financial performance of companies. This analysis can be used to identify which areas of the company are performing well and which areas need improvement.
• Developing Key Performance Indicators (KPIs) - KPIs are metrics that measure the performance of an organization or team. These indicators are used to measure progress, identify areas of success, and identify areas for improvement.
• Creating Balanced Scorecards - Balanced scorecards are designed to measure both financial and non-financial performance. This type of analysis is used to measure performance in areas such as customer satisfaction, employee engagement, and process efficiency.
• Developing Forecasting Models - Forecasting models are used to predict future outcomes. These models are used to predict future sales, overhead costs, and other financial metrics. This information can be used to make decisions about the future of the organization.

Advantages of Management by the numbers

Management by the numbers is a method of utilizing numerical data and mathematical techniques in order to make decisions and operate a business. Benefits of this approach include:

• Increased accuracy: By relying on numerical data, decisions are made based on facts rather than on subjective opinions or personal feelings. This reduces the risk of errors and increases the accuracy of decisions.
• Improved efficiency: By using numerical data, managers can quickly identify the most efficient and cost-effective path to achieving their goals.
• Increased objectivity: With numerical data, managers can make decisions based on facts rather than on subjective opinions or personal feelings. This reduces bias in decision-making and gives managers a more objective view of their operations.
• Enhanced scalability: Using numerical data allows managers to set objectives and make decisions that can be easily scaled up or down, depending on the size of the organization and the needs of the business.
• Reduced costs: By relying on numerical data, managers can identify areas where costs can be reduced or eliminated, resulting in savings for the organization.

Limitations of Management by the numbers

Management by the numbers is a technique used by management that involves gathering and analyzing numerical data. However, it is not without its limitations. The following are some of the main drawbacks to this approach:

• Lack of Human Insight: Management by the numbers relies heavily on statistics and numbers, which can leave out the human element that is necessary for understanding the bigger picture. It can also lead to tunnel vision in decision-making, focusing too much on the numbers and not enough on the potential consequences of a decision.
• Over-Reliance on Technology: Management by the numbers often requires the use of technology and software, which can be expensive and difficult to use. It can also be difficult to find and maintain the necessary resources to make the system work as intended.
• Lack of Flexibility: The statistical data used for management by the numbers is often static and does not consider the changing nature of the business environment. This can lead to decisions that are out of date and no longer relevant.
• Limitations of Data: The data that is used in management by the numbers may be incomplete or inaccurate. This can lead to incorrect decisions and wasted resources.
• Lack of Context: Management by the numbers relies on the numbers and statistics to make decisions, and does not take into account the context of the data or the situation. This can lead to decisions that are not informed or appropriate for the business.

Other approaches related to Management by the numbers

The following are related approaches to Management by the Numbers:

• Strategy Management: This approach involves setting and managing objectives and strategies, measuring performance, and using data to inform decisions.
• Six Sigma: This approach focuses on improving quality by reducing errors and defects in processes.
• Lean Management: This approach focuses on reducing waste and improving efficiency by streamlining processes and eliminating non-essential activities.
• Total Quality Management (TQM): This approach focuses on improving quality through customer feedback and employee involvement.
• Balanced Scorecard: This approach involves measuring performance across multiple dimensions, including financial, customer, internal process, and learning & growth.
• Process Management: This approach focuses on managing processes to ensure that they are efficient, effective, and meeting customer needs.

In summary, there are a number of other approaches related to Management by the Numbers, including Strategy Management, Six Sigma, Lean Management, Total Quality Management, Balanced Scorecard, and Process Management. Each of these approaches focuses on gathering data, measuring performance, and making strategic decisions to improve quality, reduce costs, and enhance customer satisfaction.

Management by the numbers — recommended articles

Operational control — Effective system of control — Flow analysis — Types of control system — Planning and control — Management by projects — Management functions — Interdepartmental planning — Value stream mapping

References

• Cesarone, J. (2007). Project management by the numbers: How earned value analysis can keep you on track. Industrial Engineer, 39(11), 36-42.
• Chase, J. (2012). Operations management. Tata McGraw-Hill.
• Hummel, R. P. (2006). The Triumph of Numbers Knowledges and the Mismeasure of Management. Administration & Society, 38(1), 58-78.
• Krajewski, Lee J., Larry P. Ritzman, and Manoj K. Malhotra. Operations management. Vol. 8. Prentice Hall, 2001.