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    Contemporary Developments Affecting Management Accounting

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    Karen Sing Balibalos
    Contemporary developments are affecting management accounting in several ways. These include a focus on customers, continuous improvement efforts, quality management techniques, just-in-time manufacturing, global competition, shorter product life cycles, cost management systems, information technology, and changing organizational structures. Management accountants must adapt to provide relevant information that supports priorities like customer satisfaction, quality, efficiency and innovation in a competitive global business environment.

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    Contemporary Developments Affecting Management Accounting

    Uploaded by

    Karen Sing Balibalos
    24 views16 pages
    Contemporary developments are affecting management accounting in several ways. These include a focus on customers, continuous improvement efforts, quality management techniques, just-in-time manufacturing, global competition, shorter product life cycles, cost management systems, information technology, and changing organizational structures. Management accountants must adapt to provide relevant information that supports priorities like customer satisfaction, quality, efficiency and innovation in a competitive global business environment.

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    Contemporary Developments

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    Contemporary developments are affecting management accounting in several ways. These include a focus on customers, continuous improvement efforts, quality management techniques, just-in-time manufacturing, global competition, shorter product life cycles, cost management systems, information technology, and changing organizational structures. Management accountants must adapt to provide relevant information that supports priorities like customer satisfaction, quality, efficiency and innovation in a competitive global business environment.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    24 views16 pages

    Contemporary Developments Affecting Management Accounting

    Uploaded by

    Karen Sing Balibalos
    Contemporary developments are affecting management accounting in several ways. These include a focus on customers, continuous improvement efforts, quality management techniques, just-in-time manufacturing, global competition, shorter product life cycles, cost management systems, information technology, and changing organizational structures. Management accountants must adapt to provide relevant information that supports priorities like customer satisfaction, quality, efficiency and innovation in a competitive global business environment.

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    CONTEMPORARY DEVELOPMENTS

    AFFECTING MANAGEMENT
    ACCOUNTING
    COVERAGE
    1. Focus on the customer
    2. Continuous improvement
    3. Total quality management
    4. Computer-integrated manufacturing
    5. Just-in-time manufacturing
    6. Cross-functional teams
    7. Changing product life cycles
    8. Global competition
    9. Time-based competition
    10. Cost management system
    11. Information technology
    12. Changes in organization structure
    FOCUS ON THE CUSTOMER
    Customer satisfaction: 1st priority
    Customers are pivotal to org. success
    More org. aiming to be customer-driven
    Customers demanding improved performance
    levels on key success factors:
    Cost
    Quality
    Time
    Innovation
    CONTINUOUS IMPROVEMENT
    Competitive pressures create never-ending
    search for better performance levels
    Applicable phrases:
    A journey with no end.
    Were running harder just to stand still.
    If youre not going forward, youre going
    backward.
    Theres always a better way.
    TOTAL QUALITY MANAGEMENT (TQM)
    All business functions involved in continuous
    quality improvement
    Goal: customer satisfaction
    Customer-oriented
    High-quality products/services
    Timely delivery
    Emphasis: design & build quality in; do it right
    the first time
    Impact on mgrl. acctg.: measurement &
    evaluation of product/service quality
    COMPUTER-INTEGRATED
    MANUFACTURING
    Factorys automated & controlled by
    computer
    Computers set up & run equipment, monitor
    the product, & control the process
    Full CIM: mfg. labor restricted to
    programming, engg support & machinery
    maintenance
    CIM investments give rise to capital budgeting
    complexities
    JUST-IN-TIME (JIT) MANUFACTURING
    Emphasizes timing, efficiency, quality
    Employs pull mfg.: need for finished unit pulls
    parts along
    Benefits: lower lead times, inventories, inventory
    costs
    Uses mfg. cells: small clusters of machinery &
    workers; adjacent work stations
    Employs multi-skilled workers
    Flexible mfg.: setup time of few minutes; quick
    customer order response time
    Total quality control: zero defects
    CROSS-FUNCTIONAL TEAMS
    Made up of same-level employees but from
    different work areas
    They come together to do a task
    Examples: task forces & committees
    Effective means for people from diverse areas
    to exchange info, develop new ideas & solve
    problems, coordinate complex projects
    Mgt. accountants are team members
    CHANGING PRODUCT LIFE CYCLES
    Product life cycle: time from initial
    expenditure on R & D to withdrawal of
    support from customers
    Theres dramatic decline in product life cycles
    New product intro to market is speeded up
    Need for mgt. acctg.: greater emphasis on
    providing info at design stage (for better cost
    mgt.)
    GLOBAL COMPETITION
    Caused by tariff reductions, removal of trade
    barriers, improvements in transport systems,
    & sophistication in international markets
    Easier for firms to expand outside of home
    markets
    Also driven by advent of internet & e-
    commerce
    Implication for mgrl. acctg.: difficult for firm to
    be world class with a 2nd-class mgt. acctg.
    system
    TIME-BASED COMPETITION
    Firms able to meet customer needs faster,
    grow faster & are more profitable
    Time: emerging as powerful competitive
    weapon & mgt. tool
    Begins w/ strategy & ends w/process re-
    engineering
    COST MANAGEMENT SYSTEM
    Reducing costs: critical success factor in a competitive
    environment
    Cost mgt.: focuses on cost reduction
    - tends to be applied on ad hoc basis when opportunity
    arises
    - some actions prioritized using info from acctg. system
    - applicable approaches: life-cycle costing, target
    costing, kaizen costing, activity-based mgt, business
    process re-engineering
    - Kaizen: Japanese word meaning continuous improvement
    - kaizen costing: the maintenance of present cost levels for
    products currently being manufactured via systematic
    efforts to achieve the desired cost level.
    INFORMATION TECHNOLOGY
    IT is changing the face of business
    2 major developments:
    Enterprise resource planning systems
    E-commerce
    Enterprise Resource Planning Systems
    -Integrate financial, manufacturing & human resource
    functions on a single computer system
    -Changed the nature of mgt. acctg. work: more
    emphasis on business support rather than routine info
    gathering
    -Acctg. info is more dispersed throughout org. & more
    INFORMATION TECHNOLOGY
    E-Commerce
    - More companies w/ business presence on the
    web
    - Mgt. accountants must know:
    - co. strategy & how internet fits into co. business
    - how acctg. software can be integrated
    CHANGES IN ORG. STRUCTURE
    New org. context implies:
    Flat structures
    Use of cross-functional teams
    Flat Structures
    - Less layers
    - PROS:
    - Promote task ownership
    - More responsive to change
    - Facilitate creativity & innovation
    - Put people closer to customers
    - Streamline processes
    CHANGES IN ORG. STRUCTURE
    CONS:
    Fewer opportunities for advancement
    Put more responsibility & stress upon individuals
    Require skilled, experienced employees
    Reduce independent checks, balances, controls
    Info-based org. would have to adopt a flat
    structure

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