A Road of Discovery.pptVIP

Management Accounting: A Road of Discovery Management Accounting: A Road of Discovery Chapter 11How do we begin the improvement process? Total quality management and continuous improvement Key Learning Objectives The Objective of Good Management The objective is to maintain and add value to the enterprise. As competition increases, we can increase value by decreasing our costs or differentiating products to add greater customer value. The only truly sustainable competitive advantage is the ability to learn and improve faster than the competition. We want to do things that add value for the marketplace and do these things as efficiently as possible. Quality of Design Quality of design is the fit between the customers wants and the goods or services we provide. This means we design products with customers in mind. For example, both the Geo and the Mercedes are quality products but they may not both be quality designs for the same customer. Total Quality Management (TQM) This is a philosophy that focuses on Better product quality (Quality of Conformance). Commitment to customer service (Service). Minimize total costs (Cost). Linking Value to Operational Conformance Quality of Conformance means the product meets its specifications. It has the characteristics the company promises. Service means the company does what it’s supposed to do for the customer. Cost for the customer means all costs incurred by the product throughout the customer’s value chain. A value-focused strategy must consider all three because only current costs and revenues are measured. Value is determined by both current and future cashflows. Nonfinancial measures are lead indicators of future cashflows Management Accounting’s Role in TQM Influence change by measuring the costs of current quality activities. Determine the activities adding value to our products (or services) AND THOSE NOT ADDING VALUE. Provide relevant cost information for proposed changes. Monitor and report the financial impact o