The total quality management and its relationship with cost accounting
The total quality management and its relationship with the cost accounting. Total quality management what is total quality management ? The primary elements of TQM. Evolution of TQM. Quality / process improvements tools list. Cost accounting. what is cost accounting cost accounting. Comparison of Cost Accounting , Management Accounting and Financial Accounting. Managament Accounting. Cost Accounting systems. Job order costing . Process costing . Traditional costing system . Activity based costing . Accounting importance in business. The successes and failures of total quality management. Figure Strategic Management Model. Figure The Five P’s Module. The Role of Managerial Accounts in the Successful Implementation of TQM. Potential Reasons for Failure.
Accounting is important for determining if a company's earnings reports are accurate, making it important for stockholders and regulators.
Lack of Management Commitment and Involvement;
It has been indicated that the organization must be viewed as a system of interrelating parts if its implementation of TQM is to be successful. Otherwise, sub-systems might be “improved” to the detriment of the overall organizational system. Is has been indicated that 85% of the problems experienced by an organization are the result of systems causes of problems which must be solved by management. It is thought that organizations as systems should not encompass only internal operations. Rather, they should include internal and external customers, suppliers and competitors.
Cost accountants tend to be system thinkers and the move toward quality require those who think in terms of overall processes and how they impact one another. Thus, management accountants can play a critical role in systematic improvement efforts.
A significant obstacle to quality improvement is the lack of top commitment and involvement. Senior management commitment requires the communication of the company’s philosophy from the top down through actions and deeds. Top management must be involved in all aspects and have a continuous visible presence. While authority for actions can be delegated, responsibility for results can not. Therefore, delegating responsibility for quality to min-level managers or outside consultants is not an effective implementation strategy. The cost accountants, as part of senior management team should be actively in the quality movement within an organization.
In spite of spending millions of Euros annually for quality improvement training, many organizations fail to see bottom-line improvements. Training can be irrelevant and employees are often left wondering how to incorporate the training into their everyday work practice. Cost accountants can help to focus the training efforts by indentifying the need for knowledge, especially related to cost analysis, and by aiding employees in applying the knowledge to appropriate situations and uses. They can act as an internal consultant to provide just-in-time training or reinforcement as the need arises. Helping to identify the company’s methodology for analysis will help to eliminate unnecessary training.
The use of erroneous indicators or having no indicators at all to measure the performance of quality improvements can also contribute to failure. In addition, there is a tendency to use process-oriented measures in place of performance-oriented ones. For example, measuring the hours of training or the number of teams may not be the most appropriate measures for quality improvement. The management accountant understands the logical approach to problem solving and how to identify and record key indicators. Improvement measures which provide the correct feedback in all areas of the organization are a missing necessity which the cost accountant can provide.
Activity-based management (ABM) uses activity-based costing information to focus attention on improving cost, time and quality. ABM works best in an environment of TQM and employee empowerment, where work teams and group processes are already in place to focus on work team effort. ABM provides work teams with a mechanism to prioritize, justify and define the initiatives that should be undertaken. Cost accountants can help the organization identify the real costs of work processes by looking at cost based on activities rather than using older cost-center or labor-hour methods. This allows a costing and pricing tool based on actual circumstances, knowledge that is crucial for financial prosperity.