Magazine article CMA - the Management Accounting Magazine

Tools and Techniques - a Current Responsibility

Magazine article CMA - the Management Accounting Magazine

Tools and Techniques - a Current Responsibility

Article excerpt

Since the early 1970s dynamic factors have reshaped the competitive marketplace. More than ever before, companies must compete on a global basis and meet world-class standards for quality and performance. World-class competition requires continuous improvement (kaizen in Japanese). Continuous improvement efforts focus on improving quality, reducing cycle time, and providing increased customer satisfaction as the means for achieving the lowest overall business cost.

Managers responsible for continuous improvement require information about the quality, cycle time, customer satisfaction and cost for critical business processes and key activities. This is necessary to evaluate how well they manage and control all aspects of a business--from initial customer contact through final customer satisfaction. Relevant information prepared by financial and administrative staff to plan, direct, and manage an organization's activities and operations is essential. It is also essential to understand the new and current techniques and technologies for work simplification, measurement, training, suggesting and rewarding employees, and teaming. These are used to achieve continuous improvement and Total Quality Management (TQM).

This new column (Quality and Productivity) is directed towards people who are responsible for cost management, financial and performance measurement, and management reporting systems. It seems appropriate to first address the orientation of financial and performance measurement, cost management, and reporting in a continuous improvement environment.

Whether an organization produces a product or provides a service, whether it subscribes to the Deming, Crosby or Juran philosophies of quality, whether it follows the Goldratt philosophies of JIT or the TQM methodologies, one principle is common - continuous improvement of business processes and activities. Each has a horizontal orientation toward the way work flows through the organization. Cost management, viewed within a philosophy of continuous improvement, would be defined using active verbs: to plan, manage, control and direct the activities of a business to improve processes and products, eliminate waste, and execute business operations and strategies. Linking cost management and reporting with continuous improvement broadens the definition and interpretation and drives a change in an organization's mindset from managing costs to managing activities as the focal point of cost management. …

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