An analytical study of the use of the value stream costing approach in implementation of lean strategy (A Case Study)

shaheen, mohamed 


Abstract


Introduction: Global competition has prompted many companies to adopt new manufacturing approaches such as lean manufacturing in order to be more competitive. Lean manufacturing can be defined as an extension of just-in-time (JIT) or the Toyota production system (TPS), first described in English by Sugimori et al. (1977). One feature of such system is its focus on the elimination of waste or muda (in Japanese) – anything that does not add value to a product – by means of continuous improvement activities. Lean manufacturing places emphasis on the flow of materials from when a product begins to be manufactured until it is completed. According to Womack and Jones (1996), processes are seen as value streams and wasteful activities keep products from flowing down the value stream. A tool used to monitor flow and spot ways to remove waste, is value stream mapping (VSM). Maps show the flow of materials and information through all manufacturing operations and they give information on cycle time, downtime, inventories, and so on. After four decades of research, the operational benefits of implementing lean manufacturing practices are clear. Operational excellence and the elimination of waste should lead to an improvement in efficiency, a reduction in cost and eventually an increase in net profit. But this is not the case and many firms find that their accounting methods clash with their lean manufacturing initiatives and this may discourage the adoption of lean manufacturing . Some alternative costing techniques have been developed. One of them, called value stream costing (VSC), recommended for mature lean companies ,will be studied in this paper. Research problem: Transformation of companies in the light of modern manufacturing environment to be of major trend is based on customer service and focus on delivering high quality products at competitive prices companies. Therefore, this study focused on how to deal with a group of industrial companies that are re-organized structure to meet the needs and requirements of customers in a way and that there are many obstacles and barriers that make it difficult process of transition and transformation in these companies towards adopting modern manufacturing methods and processes to deal with the concept of rationalization. One of the most important of these obstacles has been that characterized it did not take enough attention is the cost currently applicable in these companies, which are that it does not help to provide sufficient information for organizations to manage the transition to this new strategy and to help provide for the needs of new and different information management under accounting systems adoption application rationalization strategy. It is important to look at own cost accounting and management accounting as an integral part of for the implementation of rationalization strategy of the organization operations part systems, so this research result will contribute to help managers in determining the appropriate style most of the methods and systems costs a way that contributes to the optimization of own companies from the application rationalization strategy. And this is the main question posed by this research: Do you contribute to the proposed entrance to the measurement and control of costs depending on the style of value flows in the elimination of the traditional systems of the costs and problems of providing information needs of users in a direction to adopt the application and activating the rationalization strategy? In order to answer this question properly, it is possible that this is the main question is divided into sub-groups of the following questions: 1. What are the principles and foundations of the rationalization strategy entails the trend to a new method for measuring and controlling cost? 2. What are the changes that occur in both the philosophy and principles of accounting associated with the process of applying the rationalization strategy in the companies? 3. What is the basic concept and philosophy upon which the entrance to the private costs measure the flows of value and what are the possible uses of this model? 4. What are the steps that are being followed in the light of this approach in order to provide access to appropriate to support the direction of the administration to shift to the application of the thought and philosophy of rationalization info? Research Objectives : The main objective of this research in the evaluation of research on the entrance measuring costs based on the value flows and test its applicability in practice for companies, will be to achieve this goal based on a series of incremental steps as follows: 1. Determine the principles and foundations which is characterized by rationalization strategy, which must be integrated with the style and method of measuring the costs within this strategy. 2. The model is intended to determine your costs measure the flows of value and possible uses of this model. 3. compile and summarize previous studies in order to facilitate the task of researchers interested in knowing the ways and models appropriate to measure the costs under the application rationalization strategy. 4. Analysis of the current situation of accounting-related studies and research in order to identify the extent to which to him these studies and research on appropriate cost system implemented with the adoption of rationalization strategy. 5. conduct an objective assessment of the writings of your own model costs flows value, including an objective assessment of all the contradictions and conflicts intellectual in these writings, with the introduction of a range of potential and concerning the application of the subject in the future of modern intellectual trends. 6. demonstrate how practical and applied that could use your intellect by measuring the costs on the basis of value flows in the practical study of a company in order to identify the information that can be obtained from the application of this approach. Results and recommendations: Some companies have moved to the application of the entrance costs measure on the basis of activity because it is one of the systems that had been designed properly allocate indirect costs manner that takes into account the causal relationships and helps to disclose activities that do not add value, and is characterized by measuring systems activity-based costing accuracy but require the availability of many details of information and more resources to be applied. With the onset of rationalization strategy, many of the studies and research accounting have discussed the need for a set of amendments and changes in accounting systems and cost which led to pave the way for the emergence of accounting under the rationalization Among the most important tools of measuring technique of costs on the basis of the value flows, which is considered as a convenient and innovative approach to measure the costs associated with the flow rate through the value path. During this research, the researcher analyzed previous studies and research regarding the basis of measurement of costs on the basis of the value flows have initial of this analysis, the results were that this foundation shown theoretically lined up while the practical application of it is still in its initial stages and that has been a growing interest to find out more information on the practical application for this basis, and in addition to the above, there are some studies to compare the costs of the entrance to the measurement on the basis of activity and the basis of measurement of costs on the basis of value flows. After the examination and analysis of previous studies and research regarding the basis of the private costs of measuring flows value the researcher recommends that the concept of accounting under the rationalization express "service system corporate governance is based on the thought of rationalization and consists of a variety of financial instruments and operational methods and performance measures that aim to support the efforts continuous improvement and control of cells and flows of value, is the interaction between these components and tools to make the systems more cost-efficient to capture images of the improvements induced by the application of rationalization strategy. " Also, the findings of the researcher through previous studies analyzing the cost measure on the basis of the value flows method among the methods that fall under the accounting umbrella under the rationalization was presented the technique at the beginning of 2000, citing the concept flows value to confront the problems that result from group reliance on traditional cost systems in order to inventory and assembly costs of raw materials, labor and other costs and allocation of resources to a specific path for value without or with the use of a few procedures for the allocation of costs as well as to help provide credible cost information at the right time for continuous improvement efforts and linked to a range of non-financial indicators to measure performance.


Other data

Keywords lean accounting - lean cost accounting- value stream costing
Issue Date Jul-2015
Publisher مجلة الفكر المحاسبي، قسم المحاسبة والمراجعة جامعة عين شمس.
Journal مجلة الفكر المحاسبي، قسم المحاسبة والمراجعة جامعة عين شمس، العدد الثاني (الجزء الثاني)، السنة التاسعة عشر، يوليو 2015. 
URI http://research.asu.edu.eg/handle/123456789/1723


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