Making the Numbers Count-The Accountant as Change Agent on the World-Class Team

246 Pages·2009·56.591 MB·\246

by  Brian H. Maskell (Author)

MAKING the
NUMBERS C O U N T
Second Edition
The Accountant as Change Agent
on the World Class Team

MAKING the
NUMBERS C O U N T
Second Edition
The Accountant as Change Agent
on the World Class Team
BRIAN H. MASKELL
Boca Raton London New York
CRC Press is an imprint of the
Taylor & Francis Group, an informa business
A PRODUCTIVITY PRESS BOOK
First published 2009 by Productivity Press
Published 2018 by CRC Press
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ISBN 13: 978-1-4200-9060-4 (hbk)
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Library of Congress Cataloging-in-Publication Data
Maskell, Brian H.
Making the numbers count : the accountant as change agent on the world-class
team / Brian H. Maskell. --2nd ed.
p.cm.
Includes bibliographical references and index.
ISBN 978-1-4200-9060-4 (hardcover: alk. paper)
1. Managerial accounting. 2. Accountants. 3. Industrial management. I. Title.
HF5657.4.M375 2009
658.15'11--dc22 2009013222
Contents
Preface to the First Edition......................................................................xiii
Preface to the Second Edition..................................................................xvii
Chapter 1 The Proactive Accountant.......................................................1
Manufacturing in the Twenty-First Century...........................2
Criticism of Accountants and Controllers...............................3
The Proactive Accountant..........................................................4
Attributes of a World-Class Management Accountant...........5
Tools and Techniques..................................................................7
The Role of the Management Accountant................................8
Summary.....................................................................................11
Questions....................................................................................11
Chapter 2 Shortcomings of Traditional Accounting Methods.......13
History of Management Accounting.......................................15
Problems with Management Accounting...............................17
Lack of Relevance............................................................17
Cost Distortion................................................................19
Inflexibility.......................................................................22
Incompatibility with Lean Principles..........................23
Inappropriate Links to the Financial Accounts..........29
Summary.....................................................................................30
Questions....................................................................................31
Chapter 3 Lean Manufacturing..............................................................33
What Is Real Manufacturing?..................................................34
The Five Critical Issues of Lean Manufacturing....................34
Issue 1: Quality................................................................36
Issue 2: Just-in-Time Manufacturing...........................38
Shop-Floor Layout and Cellular
Manufacturing....................................39
v
vi • Contents
Setup Time Reduction.......................................41
Synchronized Manufacturing...........................41
Inventory Pull....................................................42
Total Productive Maintenance........................44
5S Industrial Housekeeping.............................45
Visual Management..........................................45
Vendor Relationships.......................................46
Issue 3: World-Class People..........................................48
Education and Training...................................48
Cross-Training...................................................50
Transfer of Responsibilities..............................50
Teamwork...........................................................52
Participation.......................................................54
Issue 4: Flexibility............................................................55
Product Mix and Volume.................................56
Short Lead Times and Make-to-Order
Production..........................................57
New Product Introduction...............................58
Issue 5: Value to the Customer......................................59
Agile Manufacturing.................................................................61
Enriching the Customer.................................................61
Cooperating to Enhance Competitiveness..................62
Mastering Change and Uncertainty............................64
Leveraging People and Information.............................65
Summary.....................................................................................66
Questions....................................................................................68
Chapter 4 Simplification of Accounting Systems...............................69
Aspects of Traditional Accounting Systems...........................69
Why Are Complex Systems Needed?......................................71
The Lean Manufacturer.............................................................72
New Accounting Goals.............................................................75
A Four-Stage Approach to Simplification...............................76
Stage 1..............................................................................76
Eliminate Labor Reporting...............................76
Eliminate Variance Reporting..........................78
Reduce Cost Centers.........................................79
Contents • vii
Stage 2 ..............................................................................80
Eliminate Detailed Job-Step Reporting.........80
Eliminate WIP Inventory Reporting...............81
Establish Backflushing......................................82
Stage 3 ..............................................................................83
Eliminate Work Orders.....................................83
Eliminate Month-End Reporting....................85
Eliminate Integration with the Financial
Accounts..............................................86
Eliminate Budgeting..........................................87
Stage 4 ..............................................................................89
Eliminate Traditional Cost Accounting.........90
Eliminate Inventory Tracking.........................90
Eliminate the Accounts Payable Three-
Way Match...........................................92
Use Electronic Funds Transfer.........................93
Summary.....................................................................................93
Questions....................................................................................94
Chapter 5 Value-Stream Accounting.....................................................95
How Does Value-Stream Accounting Work?........................97
Labor Costs......................................................................97
Material Costs..................................................................97
Machine Costs.................................................................99
Outside Process Costs..................................................100
Facilities Costs...............................................................101
Other Costs....................................................................101
Plain-English Income Statements..........................................101
Closing the Books.........................................................102
“Our Corporate People Need the Traditional
Statement”.........................................................104
Box Score: The Income Statement Is Not Enough.... 104
Financial Benefits of Lean Improvement..............................107
Another Way to Look at the Potential Benefits of
Lean Change.....................................................109
Decision Making without a Standard Cost: A
Case Study.........................................................110
viii • Contents
Product Costing.......................................................................113
Summary...................................................................................116
Questions..................................................................................117
Chapter 6 Value-Added Management..................................................119
What Is a Process?...................................................................120
Value-Added Analysis....................................... 122
Definitions of Value-Added Activities.......................123
Uses of Value-Added Analysis....................................125
Process Mapping......................................................................125
Basic Method of Process Mapping..............................127
Basic Steps to Process Mapping..................................128
Analyzing a Process Map.............................................131
Root-Cause Analysis...............................................................132
Process Improvement and Reengineering............................134
Summary...................................................................................137
Questions..................................................................................138
Chapter 7 Performance Measurement..................................................139
Characteristics of the New Performance Measures.............140
What You Measure Should Relate Directly to
Business Strategy..............................................140
Use Nonfinancial Measures.........................................141
Measure the Process Rather Than the Outcome......142
Make Sure Measures Are Visually Presented
Where the Work Is Done................................142
Vary Measures to Suit Locations.................................143
Change Measures over Time.......................................143
Make Measures Simple and Easy to Use....................144
Ensure Fast Feedback of Information........................144
Foster Improvement Rather Than Merely
Monitoring........................................................145
Examples of New Performance Measures at Work.............145
Measuring Delivery Performance and Customer
Service...............................................................146
Measuring Process Time..............................................146
Contents • ix
Measuring Innovation..................................................148
Measuring Productivity................................................149
Measuring Flexibility....................................................149
Measuring Quality........................................................150
Measuring Financial Performance..............................151
Measuring Social Issues...............................................152
Implementing New Performance Measurements................153
Step 1: Write a Strategy.................................................154
Step 2: Set Goals and Objectives for Each
Strategic Issue...................................................154
Step 3: List the Critical Success Factors.....................155
Step 4: Validate the Critical Success Factors..............155
Step 5: Link the CSFs to Value Streams and
Other Key Processes........................................156
Step 6: Develop Key Measures.....................................156
Step 7: Pilot the New Performance Measures............159
Step 8: Expand the Measures to the Whole Plant
or Company......................................................159
Summary...................................................................................159
Questions..................................................................................160
Chapter 8 A New Approach to Product Design.................................161
What Is Wrong with the Traditional Design Approach?.... 162
Concurrent Engineering.........................................................164
How Concurrent Engineering Improves on
Traditional Design...........................................164
Methods of Concurrent Engineering.........................166
Cross-Functional Teams.................................166
Integrated Approach........................................166
Detailed Analysis.............................................166
Customer-Focused Design.............................166
Tough-to-Reach Targets..................................167
Role of the Accountant in Product Design................167
Target Costing..........................................................................168
Value Engineering...................................................................170
Life-Cycle Costing...................................................................171
Including Usage Costs in Life-Cycle Costing............173
x • Contents
Calculating Life-Cycle Costs.......................................173
Quality Function Deployment...............................................176
Variety Effectiveness Analysis................................................178
Role of the Accountant in Variety Effectiveness......179
Continuous Improvement......................................................180
Summary...................................................................................181
Questions..................................................................................182
Chapter 9 Implementing the New Approach to Accounting.........183
Making the Changes................................................................184
Read Widely...................................................................185
Cultivate a Global View................................................186
Create a Team................................................................187
Learn about Lean Methods..........................................187
Process-Map Your Departments Activities...............188
Get Actively Involved in Lean Manufacturing..........189
Visit Other Companies.................................................190
Implementing the Accounting Changes...............................190
Step 1: Training in Lean Accounting..........................191
Step 2: Kaizen Event Style Methods for
Performance Measurements and Value
Stream Costing.................................................191
Step 3: Kaizen for Box Scores and Decision
Making..............................................................192
Step 4: Kaizen for Transaction Elimination and
Inventory Valuation.........................................192
Step 5: Full Implementation of Lean Accounting....194
Step 6: Sales, Operations, and Financial Planning.... 194
Step 7: Target Costing...................................................195
What’s an Accountant to Do?.................................................197
Define Roles of the Accounting Department............197
Cross-Train....................................................................197
Apply Lean Thinking in Your Own Processes...........198
Eliminate Reports.........................................................199
Measure Your Departments Performance................200
Introduce a 5S Program into Accounting.................200
Move Accountants into the Value Streams................201