2. EMBA 8021 Nothing in the world can take the place of PERSISTENCE. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded it's almost a proverb. Education will not; the world is filled with educated derelicts. PERSISTENCE and DETERMINATION alone are omnipotent. _Calvin Coolidge Today’s Quote

3. EMBA 8022 Agenda Today Refine some points from last Wednesday Review examples of the results of your homework assignment Make some observations Clarify our views of the activity paradigm Discuss efficiency & effectiveness Talk about standard costs of activities

4. EMBA 8023 Your Activity Examples

5. EMBA 8024 Point of the Exercise Defining activities can be difficult, particularly in service and creative work. Even when we can define an activity, it can be difficult to separate measures of activity level from measures of output. It is simpler to focus on outputs, which is what the text tends to do in places. But defining the activities right is crucial

6. EMBA 8025 Outputs Inputs Basic Activity View

7. EMBA 8026 Activities Activities are about actions, effort, work done, not the consequences of the work or effort. Metrics or measures are the ways we are going to quantify the volume of activity during a time period. Different activities require different metrics.

8. EMBA 8027 Activity Terminology Statistics represent the numeric values assigned to the metrics for a period. Data sources are the primary or secondary sources of the statistics.

9. EMBA 8028 Thinking About Activities InputsActivitiesOutputs  Labor  Making  Products  Material  Processing  Intermediate  Parts  Moving products  Facilities  Operating  Services  Services  Providing  Internal  Holding services

10. EMBA 8029 Example A shipping company had trouble determining how much it should cost to ship from Ohio to a point near the Atlantic ocean. In spite of numerous trips within the Great Lakes area, the company still found it difficult to predict costs. What do you suppose was making cost estimation difficult?

11. EMBA 80210 Related Terminology What does it mean to be efficient? What does it mean to be effective?

12. EMBA 80211 Efficiency Efficiency is a general concept that relates to entities ranging from individuals performing a single task to entire economies. Measures of efficiency nearly always compare the inputs to an activity or process with its outputs. The greater the output per unit of input, the more efficient. The fewer the units of input required to make one unit of output, the greater the efficiency.

13. EMBA 80212 Efficiency Since the productivity of labor has been so key to the wealth of a society, we continue to focus on the productivity of people. Sales per person, gross margin per person, and physical output per person, are measures of efficiency as well as measures of productivity. Cost per sales dollar, or cost per unit of output are the most common measures of efficiency used in managerial accounting.

14. EMBA 80213 Efficiency in Accounting In accounting we use cost standards, flexible budgets and profitability measures to evaluate efficiency. These standards relate the work done to the cost incurred to achieve that work. Physical measures are useful, but the ultimate measures include profitability. We may measure other operating variables because we believe they relate to profitability in the longer run.

15. EMBA 80214 Just in time Basic Activity View Outputs INPUTS Input/Output

16. EMBA 80215 Input/Output Relationships INPUTSOUTPUTS Yield or Productivity Efficiency

17. EMBA 80216 Basic Activity View Outputs INPUTS Input/Output Utilization Rates Productivity

18. EMBA 80217 Effectiveness Effectiveness is concerned with the achievement of objectives. Making a sales goal, achieving a target market share, completing a project on schedule, satisfying customers, and retaining employees--which may or may not change productivity. So effectiveness is a separate issue: Did we achieve the goal?

19. EMBA 80218 Effectiveness Measures Percent of the goal achieved. Percent variance from goal. Improvement from past experience Percent of the goal achieved compared with last period. Percent variance from goal compared with last period. Examples from your experience?

20. EMBA 80219 Effectiveness Measures Headcount, cycle time, customer satisfaction, and other measures are believed to lead to greater profitability. But they are not measures of efficiency per se.

21. EMBA 80220 Operational (Technical) Control Provides feedback to employees and their managers about the efficiency of activities being performed. Measures of effectiveness might include cycle times, spoilage rates, lost units, late shipments, etc.

22. EMBA 80221 Break for it!

23. EMBA 80222