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Continuous Improvement
Steps of TQM
↓
↓ ↓ ↓ ↓
Customer → Customer Expect’n → Prdt Utilities → Comparison/
Groups Benchmarking
↓
Customer Feedback
↓
Improvement Opportunities
CA FINAL - AMA CA SANKALP K
Commitment
Culture
Continuous Improvement
Cooperation
Control
Customer Requirement
CA FINAL - AMA CA SANKALP K
TQM by Deming
“Father of Quality Control”
↓
Deming Prize (Year 1951)
↓
Philosophy of Deming
↓
↓ ↓
15% 85%
Workers Process/ System/
Poor Management
↓
Correct System problems
Create an Environment
that promotes Quality
Deming 14 points: ( Top 12 points)
- Long term Planning
- Institute Leadership
- On the job Training
- Single Supplier for 1 Item
- Be ready to Adopt New Philosophy
- Education and Self Improvement
- Involve Everyone (transformation is everyone’s job)
- Drive out Fear
- Education and self-improvement
- Leadership
- Improve Constantly
CA FINAL - AMA CA SANKALP K
PlanPl
plan
*Formulation of Basic
Policy Planning
act do
*Review Policy CONTINUAL ACTIVITIES *Practice through
*Corrective Action
operations
*Educate
check
*Awareness
*Survey
*Assessment
CA FINAL - AMA CA SANKALP K
six sigma
(Bill Smith , Motorola 1986)
G.E. Whirlpool
↓ m Measure
Continuous Improvement
a Analyse
↓
Organisational Culture i Improve
↓
c Central
6 5 4 3 2 1
3.4 233 6120 66,807 3,08,537 6,90,000
CA FINAL - AMA CA SANKALP K
benefits of 6 sigma
target costing
Origin Japan is 1960’s (Genka Kikan)
Production
Profit Margin
Target cost
(Target SP – Required profit margin)
Differentiate
↓ ↓ ↓ ↓
(Product to be (Sales/ Profits (Sales increase) (Drop in sales)
Launched) rise)
↓ ↓ ↓ ↓
Profit Non- Competition Declining rate Cheaper better
existent Enters substitutes avl.
↓ ↓ ↓ ↓
(R&D, Design, (Manufacturing (Product Support (Scarp)
Promotional & Product Costs) Costs)
Costs)
CA FINAL - AMA CA SANKALP K
Primary Support
[Directly involved in Transforming (Which support primary activities,
Inputs into outputs] handled by organizations staff
Functions]
6 Business Functions
R&D ↑ Customer Satisfaction
Design
Pdt’n
Mktg
Distn’
Customer Manage Costs
Steps of VCA
just in time
Assistance
Inform system
Direct Delivery
a) Production reporting
b) Scrap reporting
c) Inventory accuracy
CA FINAL - AMA CA SANKALP K
Uniform costing
Like A.S.
Objectives
Willingness of firms
Uniformity of:
Produces methods
A/c methods, principles & procedures.
Advantages
Advantages
reporting
Requisites
firm Comparison)
Programmes 4-Return on
Capital
employed
CA FINAL - AMA CA SANKALP K
profitability analysis
Portfolio Profitable products. Profitability
in retail sector
Involves attribution of
format:
SALES XXX
(-) COGS (XXX)
GROSS MARGIN XXX
(-) DIRECT PRODUCT COSTS (XXX)
(W/H, TRANSPORTATION,
STORES ETC.)
DIRECT PRODUCT PROFIT XXX
CA FINAL - AMA CA SANKALP K
benefits of cpa
Helps to have a constructive dialogue between
buyer and seller.
Customers Eroding Profit.
Effective Cost Reporting.
CA FINAL - AMA CA SANKALP K
Implementing strategy
financial perspective
(To succeed financially law should a company
Appear to its stakeholders. Eg. Quartertly sales Growth)
Finance
Customer
Internal Business
Operating Profit
PRICE RECOVERY
Revenue: (SP in CY – SP in LY) x Actual sales in CY
Cost: (Input price CY – Input price in LY) x units of input required to
produce C.Y. output is LY
Productivity
(Act units of o/p to produce CY output – units of input required to produce
CY output in CY)