Page 355 - Accounting Information Systems

326 PART II Transaction Cycles and Business Processes

FI GU RE
7-18 VALUE STREAM MAP

Pick
Receive RM from Produce Ship
Order Product Product
Warehouse
OT = 0% OT = 10% OT = 0% OT = 16%
FTE = Varies FTE = 5.2 FTE = 2.5 FTE = 4.0
Shifts = 1 Shifts = 1 Shifts = 2 Shifts = 1
Uptime = Varies Uptime = 80% Uptime = 50% Uptime = 85%
Errors = 5% Errors = 5% Errors = 1% Errors = 7%

6 hrs 24 hrs 8 hrs
5 min 20 min 4 hrs 2 hrs
OBT = .5 hrs OBT = 2 hrs OBT = 4 hrs
TT = 0 hrs TT = 21 hrs TT = .1 hrs
IQT = 5.5 hrs IQT = 1 hr IQT = 3.9 hrs

FTE = Full-Time Equivalent
IQT = Inbound Queue Time
OBT = Outbound Batch Time
OT = Overtime
TT = Transit Time

Accounting in a Lean Manufacturing Environment

The lean manufacturing environment carries profound implications for accounting. Traditional informa-
tion produced under conventional accounting techniques does not adequately support the needs of lean
companies. They require new accounting methods and new information that:
1. Shows what matters to its customers (such as quality and service).
2. Identifies profitable products.
3. Identifies profitable customers.
4. Identifies opportunities for improvement in operations and products.
5. Encourages the adoption of value-added activities and processes within the organization and identi-
fies those that do not add value.
6. Efficiently supports multiple users with both financial and nonfinancial information.
In this section, we examine the nature of the accounting changes under way. The discussion reviews
the problems associated with standard cost accounting and outlines two alternative approaches: (1) activ-
ity-based costing and (2) value stream accounting.

WHAT’S WRONG WITH TRADITIONAL
ACCOUNTING INFORMATION?
Traditional standard costing techniques emphasize financial performance rather than manufacturing per-
formance. The techniques and conventions used in traditional manufacturing do not support the