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TARGET Q1 - Coggle Diagram
TARGET Q1
Inventory Management System
Just-in-Time (JIT)
Definition:
An inventory management strategy that reduces waste and increases efficiency by receiving inventory only as they are needed for production, not ahead of time.
Focus of JIT
Purchase raw materials JIT for production
Delivery of finish goods JIT
Characteristic
Practices a pull system
Shortened setup times
Shortened manufacturing cycle times
Emphasis on quality
Primary goals:
eliminate production process/operation that does not add value to product/service
reduction in the total cost of production/performance while increasing quality
continuous improvement in production/performance efficiency
Steps in JIT production
Receive customer orders
Schedule production
Receive materials JIT for production
Complete parts JIT for assembly into products
Complete products JIT to ship to customers
Benefits of JIT
Reduced inventory costs
Reduced waste
Higher quality product
Greater customer satisfaction
Accounting System Changes in Response to JIT
For control purposes, performance measures should coincide with the goals of JIT
Significantly reduced the number of accounting transactions
There is less need to worry about valuing work in process
Importance of JIT
Due to intensity of competition
To increase efficiency (flexibility, delivery performance)
To increase effectiveness
Customer responsiveness
To improve company performance
Conditions to Implement JIT
Changes of production process
Quick and economic setups
Flexible employees
Suppliers long-term relationship
Quality control and improvement
Disadvantages of JIT
Resistance from suppliers to give cooperation
Require high investments
Employees' resistance and low commitment from management
Strategic Management Accounting Technique
Benchmarking
Steps/Stages of Benchmarking Process
Selection of a process improvement team
Prepare a project description
Identification of benchmarking partners
Adopt a suitable benchmarking process model
Carry out benchmarking
Definition
A process of studying and adapting the best practices of other organizations to improve the firms own performance and establish a point of reference by which other internal performance can be measured
Types of Benchmarking
Primary types:
1. Internal benchmarking
comparison of practices and performance between teams, individuals or groups within an organization
2. External benchmarking
comparison of organisational performance to industry peers or across industries
3. Process Benchmarking
Demonstrate how top performing companies accomplish the specific process in question.
Benchmarking collected via research, surveys/interviews, site visits
4. Performance Benchmarking
.
Usually determined via a detailed and carefully analyzed survey or interviews
E.g. measures financial ratio, productivity ratio, customer related result, operating result, HR measure, quality measure and market share
5. Strategic Benchmarking
Identify the fundamental lessons and winning strategies that enabled high performing companies to be successful in their marketplaces.
Examine how companies compete
Ideal for corporations with a long-term perspective
Aimed at strategic action and organisational change
6. Functional Benchmarking
involves comparing a function with the practices of an organisation known to excel in that area