1. Emerging Management Practices
Cost Accounting
Traditions and Innovations
Barfield, Raiborn, Kinney
Chapter 17
Emerging Management Practices

2. Learning Objectives (1 of 2)
Explain how business process reengineering affects the way that firms operate
Describe the competitive forces that encourage downsizing and restructuring
Explain why operations are becoming more diverse
Describe how diverse operations affect the accounting system

3. Learning Objectives (2 of 2)
List the benefits of adopting enterprise resource planning systems
Explain why firms are forming strategic alliances
Describe how open-book management changes accounting methods and practices
List three generic approaches used to control environmental costs

4. The Changing Workplace
Business Process Reengineering
Downsizing and Restructuring
Workforce Diversity

5. Business Process Reengineering
Examine processes to identify and then eliminate, reduce, or replace functions and processes that add little customer value to products or services
Handling or storing materials and components
Issuing checks
Preparing finished goods for shipment to customers
Recording journal entries

6. Business Process Reengineering
Associated with
radical change
employee layoffs
outsourcing
technology acquisitions
Enabled by
advanced technology
pursuit of increased quality
increase in price competition due to globalization

7. Business Process Reengineering
Creativity
Define objectives of the project
Identify processes to reengineer
Determine how to measure success
Identify technology levers (innovation, increased quality, increased output, decreased costs)
Develop prototype of the reengineered process and then refine it

8. Business Process Reengineering
Aggressive
Objectives
Top
Management
Support
Pilot
Project
Involve
Customers and
Suppliers
Specific
Person
Responsible

9. Downsizing and Restructuring
Automate to replace manual technologies
Employees produce more output
Fewer employees are needed

10. Risks of Downsizing Deplete in-house talent pool
Loss of workforce knowledge
Loss of organizational memory
Loss of feeder pools for future top management
Diminished worker morale, loss of trust, and lessened communication
Negative impact on corporate culture
where lifetime employment was the norm
where environment was perceived as nurturing

11. Business Process Reengineering Monetary Costs
Restructuring - one-time loss caused by sale of unprofitable assets
Downsizing - severance costs for employee layoffs

12. Workforce Diversity Worldwide marketing and manufacturing Diverse
religions
races
values
work habits
cultures
political ideologies
education levels
Accounting
Provides an
International
Technical
Language

13. Global Business Challenges
Currency values
Labor practices
Political risks
Tax rates
Commercial laws
Infrastructure (ports, airports, highways)

14. Why Diversify? Legal requirements
Business initiatives to employ minorities
Organization self-interest
diverse workforce connects to diverse markets
increased diversity leads to lower employee turnover
heterogeneous groups are more creative
diverse employee pool yields more management talent
need large employee pools for future workers

15. Enterprise Resource Planning
Automate and integrate business processes
Share common data and practices across the entire enterprise
Produce and access information real-time
Links the customer end of the supply chain through production and delivery to the supplier

16. Traditional System A/P G/L A/R HR Fixed Assets Pur- chasing Manu-
facturing
Mar-
keting
Silos of data that are not integrated

17. Enterprise Resource Planning
Warehouse
Management
G/L
Payroll
ERP
Human
Resources
Treasury
Management
Production
Planning
Project
Management
Fixed Assets

18. Enterprise Resource Planning
Impact on the finance function
Help to select and install software
Analyze the data repository to support management decisions
Maintain the integrity of the data

19. Strategic Alliances
An agreement, involving two or more firms with complementary core competencies, to jointly contribute to the supply chain
Joint ventures
Equity investments
Joint R&D arrangements
Technology swaps
Licensing
Exclusive and buyer/seller agreements

20. Strategic Alliances Typical strategic alliances exploit technology
have partners with access to different markets
share risks and rewards

21. Forming a Strategic Alliance
Determine contributions from parent organizations (cash, human capital, technology, patents, supply contracts)
Establish a governing board
Agree to profit and loss sharing
Align interests of the parent organizations with the new entity

22. Cause workers to understand how their actions affect costs and revenue
Open-Book Management
Cause workers to understand how their actions affect costs and revenue
Employees can adopt or change work practices to increase revenues or decrease costs
Employees understand how their actions affect achievement of the overall corporate objectives

23. Open-Book Management Disclose financial information to all employees
Train employees to interpret and use financial information
Empower employees to make decisions
Tie a portion of employee pay to the company’s bottom line
Financial
Results

24. Common Principles of Open-Book Management
Turn management of the business into a game employees can win
Open the books and share information
Teach employees to understand financial information
Show employees how their work influences financial results
Link nonfinancial measures to financial results

25. Common Principles of Open-Book Management
Target priority areas and empower employees to make improvements
Review results together; keep employees accountable
Post results and celebrate successes
Distribute bonus awards
Share ownership of the company (ESOP)

26. Open-Book Management Implementation Challenges
Overcome history of guarding financial information
Convey information in understandable way
Teach workers to interpret and use information
Develop performance measures that employees understand
Integrate program across segments and functional areas

27. Environmental Issues
Measure business performance with regard to environmental issues and management of environmental costs
Span the entire value chain
amount of scrap and by-products produced
materials used - recyclable or not
actions of suppliers who produce inputs
customer habits in consuming and disposing of products and packaging

28. Environmental Management Systems
End-of-pipe strategy
produce waste and then find a way to clean it
Process improvements
recycle wastes internally, reduce or eliminate wastes
Pollution prevention
avoid pollution by not producing any pollutants

29. Environmental Issues
Relationship between quality costs and environmental costs
Does an increase in quality reduce environmental costs???
Quality

30. Questions
How does business process reengineering affect the way that firms execute processes?
What are the benefits of adopting enterprise resource planning systems?
Why are firms forming strategic alliances?