Article Abstract:
Many US manufacturers are modifying production processes and management styles to remain competitive in the global market. Six major trends visible among US manufacturing companies are: higher quality, lower inventory, flexible flow lines, automation, product line organization, and more effective use of information in the production environment. These innovations have several implications for management accountants. Traditional methods of determination and allocation must be reassessed or discarded. Decreased labor in production means that accountants will have to shift from labor efficiency performance measures and use other overall process control methods. Traditionally non-financial areas of manufacturing performance must be identified and addressed. Capital investments are now more expensive and complex.
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Article Abstract:
Innovations in manufacturing technology over the past 20 years have changed capital investment decision-making. Investments have become more expensive, more technically complex, and must be justified over a longer period of time. The capital investment model is still useful for making investment decisions, but certain modifications are required when analyzing operating cash flows, terminal values, and discount rates. A 'moving baseline' model is introduced for analyzing the costs of not making an investment.
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Article Abstract:
Management reports in manufacturing firms have not kept up with the rapid pace of technological change at US manufacturing companies. Management reports are often irrelevant and repetitive, and hinder the efforts that manufacturers make to upgrade operations. Reports should be tailored to the needs of each of three levels within an organization: operations, business unit, and corporate. Operating and financial measures needed at each organizational level are discussed.
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