Japanese Management Accounting 2
JapaneseManagement Accounting (Activity Based Costing (ABC), Toyotaproduction system(TPS), Kaizen, etc.)
Itdoes not matter if your business is a shop, a medical facility, or anindustry full of information workers, so as to impact results, Kaizenmust be an essential piece of every employee’s day-to-day work.Applying Kaizen Software hints to the organization that dailyenhancement is required and that the leadership team is aggressivelymanaging and anticipating results. Unfortunately, most companies areshort-sighted and only focused on short-term profits.
Itsphilosophies drive Toyota`s success and business decisions. Theconsistency of rationale explains why there is a slow and steadymovement forward yearly.
Thecentral idea of TPS is to generate the type of units required, at themoment it is needed and in the quantities wanted. The primary goalfor all this is cost reduction. Toyota achieves this by using fourmain concepts: Just-In-Time production (i.e. pull-based production),Jidoka (Autonomous defect control), Shojinka (flexible workforce) andSoikufu (Creative Thinking-Capitalising on workers’ suggestions).At the heart of TPS is Kaizen, which is the everyday enhancement thatemployees and their managers make to their working practices andtools. The Toyota Way is constituted of four broad principles namelylong-term philosophy, the correct process, developing the masses andconstantly solving core problems. TPS, then, is the product ofefforts to direct all actions and activities to maintain the goal offirm survival through embracing a lean culture that minimizeswastage.
Successand competitive advantage enjoyed by Toyota may be attributed to itstop of the mind awareness. It may be easy to lose focus and sight ofthe broader goals and objectives of the organization when faced withthe day to day obstacles natural in business activities. Kaizenpractice helps prevent this by making it lucid where there isinherent progress, and where there is none so that leaders can stayon target by delivering advancements and making sure opportunitiesare utilized fully.
Systemssuch as Kanbam promotes collaboration among employees by maintainingall improvement messages and credentials in a central location,sending messages and notifications to inform employees of the rightinformation at the precise time, and improving accountability andvisibility such that everyone is aware of what is happening.
TheToyota Production System operates on an early warning system wherebyit alerts management of possible problems and hindrances beforedevelopment tasks stall. It is, therefore, simpler and easier toidentify when an employee is overwhelmed and requires assistance orwhen leaders should assign activities better, which departments andregions of the organization are under pressure to improve, and whatimprovements are delayed.
ABCis an approach to cost accounting that tracks costs according to theprocesses and activities that go into making a product. Unliketraditional cost-accounting methods, which allocate overheadaccording to such factors as labour costs, ABC calculates these costsaccording to the resources each product requires.
Variousobstacles obstruct the implementation of ABC managers and executivesface coercion to their job security as well as their proceedsespecially those whose overall performance and earnings link directlyto the ABC numbers. Moreover, the conversion to these numbers may berelatively intrusive.
Trackingcosts based on the activities necessitates one to understand eachprocess that goes into the production of a vehicle. To make theprocess work, one has to interview each person in the productionplant finding out the type of work they do and their performance onthe work.Employeesalso need convincing that ABC is worth the effort. Each company needsa carefully worked out plan that takes into consideration theprevailing culture and operating processes so as to win overemployees.
Finally,other previously existent systems should be refurbished to make surethat employees incorporate the ABC system fully. The previousaccounting structure has to be discarded as soon as possible. Thesingle greatest hindrance to adopting the ABC system and the mainreason why many attempts have not succeeded is employee resistance.
Thesechallenges faced by ABC may not confront TPS due various sociologicalfactors. Kaizen system, unlike the ABC system, does not focus ondeveloping a forecast nor maximize fixed costs utilization but ratherfocus on providing value for customers.
Manymanagers believe that the benefits of maintaining or developing ABCsystems are outweighed by the costs associated with the same. ABCsystems being top-down systems controlled by central staff are notappropriate for operational control and improvement unlike in TPSwhere it is the personnel who do the work.
Finally,ABC and other financial measures of performance are not the reasonsbehind continuous improvement efforts at companies using TPS methods.The ABC system of costing sends messages to managers and employeesthat go contrary to the principles of the TPS system used bylean-oriented companies. For example, If the driver of cost was setuptime, ABC does not drive behaviour that says, ‘Let’s cut thesetup time.’ It drives behaviour that says, ‘Let’s cut somesetups.’ It, therefore, advocates for the production of biggerbatches of material.