Routine Decisions

Routine decisions are day-to-day decisions which do not usually have a large impact on the organisation. They are stereotyped and do not usually

require much reflection. For example, a consignment of chemicals is received which need to be stored in a cool, dry place. Two storage areas are available -  one warm and humid, the other cool and dry. Where to put them?

There are many such decisions to be made in any organization - far more than major decisions which require reflection. The management effort which would be needed to handle all these small-scale and usually non-critical decisions operating decisions would be immense and detract from the managers' involvement in more critical areas, so the tendency is to push them as far down the organization as possible and to establish a standard procedure for them, even to automate them so that stocks might be automatically reordered whenever they fall below a reorder level. This results in the lowest decision effort being made and keeps the cost of routine decisions low.. The thinking goes into the standard procedure, and thereafter it requires very little effort to keep operations flowing.

Problems can arise if some sort of control is not kept over these decisions. in the example of the chemicals above, they might get stored in the hot, humid area because of lack of space or oversight or lack of knowledge on the part of the decision maker.

A mining operation stored bags of cement and metal parts in the open.. After a few years they had to write off over $100 million in unusable materials, where it might have cost $10 million or less to provide protection. This was done as a temporary expedient which became permanent when attention shifted elsewhere and incoming stocks were "routinely" added to the growing pile, as per established procedure.

There are also classic examples of the dangers inherent with automatic reordering, where a product was being discontinued and reordering continued unabated, resulting in the write-off of large stocks.

Another problem is when routine decisions are applied on non-routine occasions. Many companies and government departments have experienced adverse publicity on such occasions when administrative personnel continue to apply the routine procedures to something which is an exception to the rule.

So there are definite cost and skilled manpower advantages to simplifying routine decisions. In fact this is essential. But it is necessary to have some sort of periodic review and the y must also be considered when affected by decisions elsewhere. They are adequate for the rule, but beware the occasional exception.

 


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