Chapter 2 Flashcards
Is a production system also known as ‘pull-it-through approach’
Just-in-time (JIT)
Is the philosophy that activities are undertaken only as needed or demanded.
Inventories are reduced to the minimum and/or zero.
Just-in-time (JIT)
What are the four characteristics of JIT?
- Elimination of activities that do not add value
- Commitment to a high level of quality
- Commitment to continues improvement
- Emphasis on simplifications and increased visibility
What are the main benefits of JIT?
- Working capital position is improved
- Throughput time is reduced
- Areas previously use to store inventories are released
- Lesser waste and more customers satisfaction
Is a technique in which management develop policies and practices to ensure that firm’s products and services exceeds customers satisfaction.
Total Quality Management (TQM)
‘continues quality improvement program’
Total Quality Management (TQM)
Is a formal effort to improve quality throughout organization’s value chain
Total Quality Management (TQM)
Two major characteristics of TQM
- Focus on serving customers
- Systematic problem-solving made-up front-line workers
Is an approach where a business process is diagrammed in detail, questioned and completely redesigned in order to eliminate unnecessary steps, errors and reduce costs.
Process Reengineering
process of creating competitive advantage
Reengineering
“fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed.”
Reengineering
any series of steps that are followed in order to carry out tasks in a business.
Business Process
Steps of Process Reengineering
- Diagrammed in detail
- Every steps must be analyze and justified
- The process is redesigned
Anticipated results of steps for Process Reengineering
- Process is simplified and completed in less time
- Costs and opportunity for errors is reduced
a process by which a firm:
• determine its critical success factors
• studies best practices of other firms achieving theirs success factors
• implements improvements
Benchmarking
Is management technique in which marketing and production process is designed to handle increased variety that results from delivering products and services to customers.
Mass Customization
Four Areas of Critical Success Factor in Balance Scorecard Accounting
- Financial Performance
- Customer satisfaction
- Internal business process
- Innovation and learning
Design of Management Accounting System
- Customer focus theme
- Value Chain and supply chain analysis
Two general strategies for Customer focus theme
• Cost Leadership
• Superior product through differentiation
How would increased global competition affect management accounting?
✓ Information and Communication Technology Management
✓ Cost Management System
Is used to develop a detailed description of the specific activities performed in the operation of the firm.
Provides the basis for activity-based management
Activity analysis
Activity-based Costing (ABC)
Is used to improve the accuracy of cost analysis by improving the tracing of costs to products or to individual customers
Activity-based Costing (ABC)
Uses activity analysis to improve operational control and management control
Activity-based Management (ABM)
Is a sequential process of identifying and removing constraints in a system
Theory of Constraints (TOC)
Emphasizes the importance of managing the organization’s constraints or barriers or empede progress toward an objective
Theory of Constraints (TOC)
Basic sequential steps followed in applying TOC:
- Analyze all factors of production
- Identify weakest link— constraints
- Focus improvements efforts strengthen weakest
- If improvements effort successful, weakest link will improve to the point where it is no longer the weakest link
- A new weakest link (new constraints) must be identified
Is a management technique to identify and monitor the costs of product throughout the cycle
Life Cycle Costing
It consists the all steps from product design and purchase of raw materials to delivery and service of finished products
Life Cycle Costing
Steps of Life Cycle Costing
- Research and development
- Product design (e.g prototyping, target costing and testing)
- Manufacturing, inspecting, packing and warehousing
- Marketing, promotion and distribution
- Sales and service
TRUE OR FALSE
Management Accountants should strategically manage the product’s full life cycle of costs including upstream and downstream costs as well as manufacturing costs.
TRUE
Involves the determination of the desired cost for a product
Target Costing
Statement 1. Target Cost-Management accounting -Desired profit
Statement 2. Target Cost-Management determined price-Desired profit
STATEMENT 1
Used to respond to changing consumer tastes quickly
Customer-aided Design and Manufacturing
Use of computers in product development, analysis, and design modification to improve the quality and performance of the product
Customer-aided Design (CAD)
Use of computers to plan, implement, and control production
Customer-aided Manufacturing (CAM)
involves and requires a relatively large investment in computers, computer programming, machines and equipment
Automation
Two integration approaches of Automation
- Flexible manufacturing system (FMS)
- Computer-intergrated Manufacturing (CIM)
is a manufacturing system that totally integrates all office and factory functions within a company via a computer-based information network to allow hour-by-hour manufacturing management
Computer-intergrated Manufacturing (CIM)
Is a computerized network of automated equipment that produces one or more groups of parts or variations of a product in a flexible manner.
Uses robots and computer-controlled materials handling
Flexible manufacturing system (FMS)
Major characteristics of modern manufacturing companies adopting FMS and CIM are:
- production of high-quality products and services
- low inventories
- high degrees of automation
- quick cycle time
- increased flexibility
- advance information technology
Business model adopted by Amazon.com and eBay
E-commerce
Has important advantages over more conventional marketplace for some kinds of transaction such as Mortgage banking
Internet (E-commerce)
Is an analysis tool that firms use to identify the specific steps required to provide a product or service to the customer; how activities contributes to the firm’s competitivenes and profits
The Value Chain
Firm’s value chain helps management discover, what?
- steps or activities are not competitive
- costs can be reduced
- activity should be outsourced
- how to increase value for the customer at one or more steps of value chain
Approaches to implement Value Chain:
✓ enhance quality
✓ reduce cost
✓ increased output
✓ eliminate delays in responding to customers
is an integral part of most firm’s organizational structure
Accounting System
Is a key focus that businesses of all types must be considered with. The system should be able to measure various attributes of customer value; produce information about both realization and sacrifice
Customer Value
Cost information plays as important part in a process called
Strategic Cost Management
refers to the sequence of business functions in which usefulness is added to the products and services
Value Chain
is the set of activities required to design, develop, produce, market, deliver products or services to customers
Internal value Chain
is the linked set of value-creating activities from basic raw materials to the disposal of final product by the end-use customer
Industrial Value Chain
are relationships among activities that are performed within firm’s industrial value chain
Internal linkages
are activity relationship between firm and firm’s supplier customer
External linkages
involves determination and implemention of a set of policies, procedures and approaches to business that produces long-term success.
Competitive Strategy
Is a constant effort eliminate waste, reduce response time, simplify the design both products and processes, improve quality and customer services
Continues Improvement
Causes of Global Competitions:
- reductions in tariffs, quotas and other barriers to free trade
- improvements to global transportation system
- increasing to sophistication to international markets
is very significant element in many companies’ strategies for success
Time
Managers must have timely information about production costs and other products characteristics in order to respond quickly and more effectively to the competition
Product life Cycles and Diversity
fully automated, with computers controlling the entire production process
Computer-intergrated Manufacturing
working together creates value for the organization by meeting the customer’s needs in the most effective way possible
Cross-functional Teams
