Management accounting within world class manufacturing: a case study |
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| Institution: | 1. School of Accounting and Commercial Law, Victoria University of Wellington, Wellington, New Zealand;2. Dixon School of Accounting, University of Central Florida Orlando, Fl, United States;3. School of Management, University of Tampere, Tampere, Finland;1. Department of Agricultural Economics and Rural Development, Georg-August-University of Goettingen, Goettingen, Platz der Goettinger Sieben 5, 37073, Goettingen, Germany;2. University of Jambi, Pusat Pengembangan Agrobisnis Dan Laboratorium Terpadu, Jln Raya Jambi-Ma.Bulian KM 15 Mendalo Darat Kode Pos, 36361, Jambi, Indonesia;3. Center of Biodiversity and Sustainable Land Use, Georg-August-University of Goettingen, Germany;1. School of Mechanical Engineering, KIIT Deemed to be University, Bhubaneswar 751024, Odisha, India;2. Department of Mechanical Engineering, National Institute of Technology, Rourkela 769008, Odisha, India;1. Graduate School of Business Administration, Kobe University, Rokko, Kobe 657-8501, Japan;2. Faculty of Business Administration, Hosei University, 2-17-1 Fujimi, Chiyoda, Tokyo 102-8160, Japan;1. Dipartimento di Ingegneria Civile e Industriale, Università di Pisa, Largo Lucio Lazzarino 2, 56122, Pisa, Italy;2. Dipartimento di Ingegneria Chimica, dei Materiali e della Produzione Industriale, Università Degli Studi di Napoli “Federico II”, Piazzale V. Tecchio 80, 80125, Napoli, Italy |
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| Abstract: | This is a case study of a U.K. chemical company implementing World Class Manufacturing (WCM). In the late 1980s the company encountered serious problems due to the rapid contraction of major customers. It embarked on a programme of improving manufacturing introducing, inter alia, new quality programmes and computerized production controls including MRPII. Whilst these programmes were successful they failed to produce the turnaround sought. Faced with impending extinction, the managers sought external advice from consultants during a WCM workshop organized by government development agencies. Following this the company embarked on a benchmarking and strategic assessment exercise which diagnosed the company as unduly manufacturing oriented, poor on new product development and marketing, and insufficiently responsive to consumer needs. They adopted WCM principles embracing six broad objectives: customer responsiveness, employee involvement, quality, reduced lead-times, continuous improvement, and shop floor training for flexibility and problem solving skills. The implementation of WCM was successful: there was objective recorded evidence of improved performance against targets set in the WCM programme. Management accounting superficially appeared unaffected by WCM. The budgetary control system run by the accounting department remained intact. Product costing systems were not changed to incorporate Activity-Based drivers, as predicted in the literature. However, there was a marked decline in the influence of the accounting department, partly due to the cost module within MRPII. The accountant became dependent on production for cost data. Whilst his responsibilities continued to include the preparation of financial accounts and periodic budgets, cost management in terms of cost reduction, target setting, diagnosis and problem-solving came to lie with production. The suggestion of the case is that financial improvement may lie more with programmes of employee development and involvement, making the company more quality conscious, flexible and adaptive rather than in any redesign of costing systems. The implications of the research upon management accounting change debates are discussed in the concluding section. |
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