Real Numbers
Page 15
Just because a machine will produce 1000 widgets at a lower cost per unit, does not mean producing 1000 widgets is the best decision. Perhaps a smaller machine that produces the quantity needed when it is needed will reduce your future costs more than the big machine. Also, as accountants, this principle can help us remember that putting focus on the future outcome of the business may be more productive than looking backward.
5) Accounting transactions are not the only source of information.
Data needed on the shop floor can be created there and remain on the shop floor. For example, units produced each day for a specific line can be tracked and utilized on that line. If it is not necessary for others to know, and is not needed in accounting reports, leave it out of the reporting system. Attendance data may not be needed in the accounting systems either.
6) Once and be done.
Rework is the most expensive work. This is true not only on the shop floor but especially so in the office. Take the time to enter original data (orders, specifications, drawings, etc.) correctly and ensure its accuracy before passing it on through the business process.
7) “Accounting said” is not a reason.
Frequently business processes are created to meet an “accounting need.” Always ask the follow-up question in order to understand why a task needs to be performed and to know whether it will serve the company’s needs.
8) Financial statements should be usable by non-accountants.
The purpose of financial statements is to aid managers in making decisions. One should not need an accounting degree to get that information.
9) You are what you measure.
Measurements affect behavior. Deciding which performance measures to use for your organization can mean the difference between real productivity gains and dysfunctional behavior.
10) Financial engineering will not yield productivity gains.
11) A dollar is more valuable in flexible capacity than in inventory.
12) In costs accounting, the less allocation the better. Allocations, by their nature, involve choices between methods and estimates and are not actionable.
List of Figures
Figure 2.1
Accounting Transformation Triangles
Figure 2.2
Example of a Company’s Cash & Profit
Figure 2.3
The Four Columns of Accounting
Figure 3.1
Representation of Return on Investment
Figure 3.2
Output to Input Relationship
Figure 3.3
Seven Sins of Waste
Figure 3.x
Performance Measures Examples
Figure 4.1
Visual Control Cubicle
Figure 4.2
Accounting Work Flow Example
Figure 5.1
Fixed Life-Cycle Costs
Figure 5.2
The Conflict in Product Costs
Figure 5.3
Reducing Product Lead Time
Figure 5.4
Batch to One-Piece Flow
Figure 5.5
Lead Time Versus Standard Time
Figure 6.1
Standard Cost Profit & Loss Statement
Figure 6.2
Alternative Profit & Loss Statement
Figure 7.1
Financial Statement Cost Calculation
Figure 7.2
Non-Value Add Waste Activities
Figure 9.1
Inventory Reductions Finance Growth
Figure 9.2
Acquisition Target Example
Figure 9.3
Acquisition Target Traditional View
Figure 9.4
Traditional Assumptions: Acquisition
Figure 9.5
Analysis of a Lean Practitioner
Figure 9.6
Lean Assumptions: Acquisition
Figure 9.7
Lean Applied to Acquisition, 1 year
Figure 9.8
Lean Applied to Acquisition, 5 year
Figure 10.1
Intervention: Break Behavior Patterns