Mac 3703 Topic 1 Modern developments and approaches for the changing business environment.

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Presentation transcript:

Mac 3703 Topic 1 Modern developments and approaches for the changing business environment

Topics covered in mac 3703 Modern developments and approaches for the changing business environment Modern manufacturing and business environment Modern costing techniques Continuous quality management Optimising throughput and contribution More externally-focused management approaches for competitive advantage Techniques for forecasting in uncertain condition Pricing decisions and pricing strategies Construction contract Developments in reporting introduction Developments in financial reporting Developments in non-financial reporting Project management introduction Basic project management concepts Project life cycle and planning Implementing the project Documentation, completion and control

Focuses on quality, cost and timelines Modern developments and approaches for the changing business environment main objectives of topic 1 is: to learn about internally oriented modern approaches that the organisations use to plan and manage their operations in the changing business environment Introduction to modern management accounting approaches and techniques ( costing approaches) Note: in multiple and common sense questions you may be asked about the changing business environment – this includes IT orientated changes that influence global trading etc Questions may also require you to advise therefore common knowledge of the business environment is critically (not necessary textbook based), you basically need an opinion do understanding is tested more Focuses on quality, cost and timelines

Unit 1 Modern manufacturing and business environment the changing business environment In the past there was minimum completion in some sectors, such as government owned monopolies, this meant that there was no expectation of improvements in quality and efficiency. Change in regulation introduced intense competition and increased the product range which required cost management and management accounting information systems Allow service organisations to assess the costs and profitability of services, customers and markets Competitive advantage Technological innovation Increasingly discriminating and sophisticated customer demands Uncertainty of product life cycle

Unit 1 Modern manufacturing and business environment Changing product life cycles A product life cycle is the period which begins with the initial product specification and ends with the withdrawal of the product from the market (research, development, introduction, maturity, decline and abandonment) There is a continues redesigning of products and therefore a shorter time for introduction Note: the design stage of a product is important as that is were most of the product life cycle costs are determined. Changing customer requirements Due to the competitive environment, customer satisfaction is a priority and concentrate on key factors (Cost efficiency, Quality (TQM), Time, innovation) and new management approaches (continuous improvements, employee empowerment and total value chain analysis) Changing manufacturing systems The nature of the production process influences the system used which has a few broad groups Jobbing industries – items are produced individually (usually for a specific customer) Batch processing – produced standard gods in batches Mass or flow production - involves a continuous production of standard items from a sequence of continuous or repetitive operations Group technology (new) – involves a flexible or cellular arrangement of machines which manufacture groups of products having similar manufacturing requirements A dedicated cell layout merges the flexibility of the functional layout with the speed and productivity of the product layout using a u-shaped flow.

Unit 1 Modern manufacturing and business environment Cost reduction and value analysis Cost reduction is a planned and positive approach to reduce expenditure (reduce costs and not cut spending levels) Value analysis is an example of cost reduction technique – it reviews the material composition of a product and the products design so that modifications and improvements can be made which do not reduce the value of the product to the customer or user Part of cost reduction may include elimination of waste.

Unit 1 Modern manufacturing and business environment Advanced manufacturing technology (AMT) AMT is a a general expression encompassing computer- aided design (CAD), computer- aided manufacturing (CAM), flexibile manufacturing systems (FMS) and a wide array of innovative computer equipment. computer- aided design (CAD) : allows new products to be designed and old ones modified on a pc and involves: Changing product specifications Assessing designs in terms of cost and simplicity Using databases to mark requirements computer- aided manufacturing (CAM): the control of the physical production process by pc and aims to have a set-up time of zero Roborts Computer numerically controlled machines Automated guided vehicles flexible manufacturing systems (FM: an integrated, computer-controlled production system which is capable of producing any of a range of parts and of switching quickly and economically between them Highly- automated manufacturing systems Characterized by small batch production (change quickly from 1 job to another) Can include JIT sytems, computer-intergrated manufacturing, computerised materials handling systems and automated storage and retrieval systems Electronic data interchange communication between an organisation and its customers and suppliers by electronic transfer of information

Unit 1 Modern manufacturing and business environment Production management strategies and resource planning systems Traditional approach: determining material requirements by monitoring the level of inventories constantly and re-order when the reach the ‘present’ level. Problem ; relationships between different inventory lines are ignored whereas in reality the demand is independent Material requirements planning (MRP): a system that converts a production schedule into a listing of materials and components required to ensure adequate stock levels are maintained and items are available when needed. It is a computerised information, planning and control system (used in traditional and amt system) Basic requirements: master production schedule, bill of materials and inventory file It aims to minimise inventory levels, avoid the high costs of rush orders and minimise disruption to production Manufacturing Resource planning (MRP II): an expansion of material requirements planning to gove a broader approach that mrp to the planning and scheduling to resources, embracing arears such as finance, logistics, engineering and marketing. Plans production jobs and also calculates resource needs such as labour and machine hours Management system intergrates planning of material, capacity, shopfloor, managing accounting, purchasing and marketing. Primary criticism = by modelling the reality of manufacturing plants, it builds in all the bad habits

Unit 1 Modern manufacturing and business environment Production management strategies and resource planning systems Enterprise resource planning (ERP): accounting-orientated information systems for identifying and planning the enterprise-wide resources needed to take, make, distribute and account for customer order Computer Integrated Manufacturing( CIM): a system that uses computers to control the entire production process Supply chain management: aims to integrate the flow of information between the various companies on a supply chain ( to allow them to have confidence in each other) Lean Manufacturing: aims to improve efficiency, eliminate product backlogs and synchronizing production to customer demand rather that a long-term forecast Optimised production technology (OPT): required detailed information about levels, product structure, routines, set-up times and operation times for each product. Seeks to optimise the use of bottlenech resources 3 criteria’s to evaluate progress of manufacturing: throughput (maximise) Inventory (maintain and decrease) Operating expenses (maintain and decrease) Exam alert: Learn the acronyms (FMS,EDI,MRP,MRP II, ERP etc

Unit 1 Modern manufacturing and business environment Just-In-Time systems VS Synchronous manufacturing The objective is to produce products or components as and when required by the customer for use rather than for stock * Jit uses a pull system – responds to demand * JIT Production: a system which is driven by demand for finished products whereby each component on a production line is produced only when needed for the next stage JIT Purchasing: a system in which material purchases are contracted so that the receipt and usage of the material, to the maximum extent possible, coincide. Elements of JIT: jit purchasing, close relationship with suppliers, uniform loading, set-up time reduction, machine cells, quality, pull system, preventative maintenance, employee involvement Value Add: non-value added costs are eliminated with JIT, value added costs are incurred for an activity that cannot be eliminated without the customers perceiving a deterioration in the performance, function, or other quality of a product Problems of JIT: it is not always easy to predict patterns of demand Makes organisation vulnerable to distribution in the supply chain Wide geographic spread of stakeholders makes JIT difficult Modern VS Traditional inventory controls: in some industries such as hospitals and restaurants the traditional approach would work better than a JIT system Standard costing VS JIT: traditional variance analysis is ‘unhelpful’ and potentially misleading in the modern organisation (efficiency and material variances prove this)

Unit 1 Modern manufacturing and business environment Just-In-Time systems VS Synchronous manufacturing Synchronous manufacturing requires managers to focus on areas of operations which offer the greatest possibilities for global improvements It is a manufacturing philosophy which aims to ensure that all operations within an organisation are performed for the common good of the organisation and that nothing is done unless it improves the bottom line (regards JIT as unfocused) Attempts to detect problems before they happen in the production process and hence throughput are unaffected. Aims to develop a production schedule that takes account of the constraints within the processing systems.

Unit 1 Modern manufacturing and business environment Wold Class Manufacturing(WCM): A WCM is a manufacture of high-quality products that reach customersquickly at a low cost to provide high performance and customer satisfaction A position of international manufacturing excellence, achived by developing a culture based on factors such as continuous improvements, problem prevention, zero defects tolerance, customer- driven JIT-based production and total quality management. 4 Key Elemnts of WCM A new approach to product quality JIT manufacturing Managing people Flexibility approach to customer requirements clear manufacturing strategy aimed at issues such as quality and reliability, short-lead times, flexibility and customer satisfaction Clear understanding of the relationship between all ofvthe factors which add value to an organisation on the value chain.