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Purchasing Performance Measurements: A Roadmap for Excellence
Purchasing Performance Measurements is the first in a series of comprehensive guides to critical areas in Purchasing. Read this book to learn how to maintain your competitive edge and to use measurements to continuously improve. Just the facts. Purchasing Performance Measurements covers the How to implement and why.
Traditional accounting practices fail to pinpoint troubles which are eating away at profit margins and providing an opportunity for the competition to capture market share.
Traditional accounting practices fail to identify recovery opportunities in a company. They also overlook the real (root) causes of waste as well as cost reduction through the elimination of non-value-added activities or the improvement of value-added activities.
Traditional accounting practices favor quick fixes to reduce costs either by reducing labor or by forcing suppliers to cut costs. These actions not only avoid internal issues of waste, continuous improvement, and the identification of true cost drivers and misallocated costs, but can create even more intractable problems via the neglect. Avoidance is a big issue here and it reminds us of weeds in our lawns. Cutting them off at the surface only temporarily hides the problem. To eliminate weeds, you need to get at the roots and pull them out of the ground. Only then can you produce a healthier lawn. The same thing applies to our businesses. We need the tools to get at the roots and we need a cost management system that lets us use these tools to their full advantage. Just-In-Time, Total Quality Management, Statistical Process Control, Set-Up Reduction, Bar Coding, Team Building and Supplier Certification are a few of these new tools. In our consulting work, we have seen them help put companies back on their feet and on their way to prosperity. But, we have also noticed that the greatest success comes when these tools are used in the context of a total cost system which looks to continuously improve performance by eliminating waste and reducing costs. The principal method whereby this happens is to assign each product its true share of activity costs and not to lump all costs which are not directly traceable into overhead which is then inaccurately allocated to products based on direct labor costs. This is the way we used to do product costing, but it is no longer a viable method. Let's take a look at some manufacturing history to see why. The History of Costs in Business Performance Grid.
How to understand the relationship between measurements and Just-In- Time/Total Quality Control
A Total Cost Approach.
How to gain management's commitment and support. Use this book to gain the competitive edge you need to stay ahead of the competition.
Traditional accounting practices fail to pinpoint troubles which are eating away at profit margins and providing an opportunity for the competition to capture market share.
Traditional accounting practices fail to identify recovery opportunities in a company. They also overlook the real (root) causes of waste as well as cost reduction through the elimination of non-value-added activities or the improvement of value-added activities.
Traditional accounting practices favor quick fixes to reduce costs either by reducing labor or by forcing suppliers to cut costs. These actions not only avoid internal issues of waste, continuous improvement, and the identification of true cost drivers and misallocated costs, but can create even more intractable problems via the neglect. Avoidance is a big issue here and it reminds us of weeds in our lawns. Cutting them off at the surface only temporarily hides the problem. To eliminate weeds, you need to get at the roots and pull them out of the ground. Only then can you produce a healthier lawn. The same thing applies to our businesses. We need the tools to get at the roots and we need a cost management system that lets us use these tools to their full advantage. Just-In-Time, Total Quality Management, Statistical Process Control, Set-Up Reduction, Bar Coding, Team Building and Supplier Certification are a few of these new tools. In our consulting work, we have seen them help put companies back on their feet and on their way to prosperity. But, we have also noticed that the greatest success comes when these tools are used in the context of a total cost system which looks to continuously improve performance by eliminating waste and reducing costs. The principal method whereby this happens is to assign each product its true share of activity costs and not to lump all costs which are not directly traceable into overhead which is then inaccurately allocated to products based on direct labor costs. This is the way we used to do product costing, but it is no longer a viable method. Let's take a look at some manufacturing history to see why. The History of Costs in Business Performance Grid.
How to understand the relationship between measurements and Just-In- Time/Total Quality Control
A Total Cost Approach.
How to gain management's commitment and support. Use this book to gain the competitive edge you need to stay ahead of the competition.
100 pages, Paperback
First published February 1, 1996
1 person want to read
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