To survive, companies must rethink many of their old institutions and management methods. Probably no institution is more entrenched and difficult to change than the institution of cost accounting. If companies are going to compete successfully, they will need to change the way they report and manage costs. They will have to replace old institutions of cost accounting and inventory valuation with new and meaningful methods. Integrative Activity Costing & Leadershipsm is a proprietary methodology and tool kit developed by GDI Consulting & Training Company. The heart of the tool kit is a “connect-the-dots” methodology for rapidly implementing Activity Based Cost Accounting (ABCA) and Activity Based Leadership (ABL) in virtually any manufacturing and distribution company. The term “integrative” means the methodology was modularly designed from the outset to be modified and integrated into any environment. ABCA & ABL are not just new cost accounting “systems” or industrial engineering methodologies which can be "plugged-in-and-turned-on.” ABCA & ABL require:
Why You Should Attend This Special 2-Day Workshop
To survive, companies must rethink many of their old institutions and management methods. Probably no institution is more entrenched and difficult to change than the institution of cost accounting. If companies are going to compete successfully, they will need to change the way they report and manage costs. They will have to replace old institutions of cost accounting and inventory valuation with new and meaningful methods.
Integrative Activity Costing & Leadershipsm is a proprietary methodology and tool kit developed by GDI Consulting & Training Company. The heart of the tool kit is a “connect-the-dots” methodology for rapidly implementing Activity Based Cost Accounting (ABCA) and Activity Based Leadership (ABL) in virtually any manufacturing and distribution company. The term “integrative” means the methodology was modularly designed from the outset to be modified and integrated into any environment. ABCA & ABL are not just new cost accounting “systems” or industrial engineering methodologies which can be "plugged-in-and-turned-on.” ABCA & ABL require:
- A commitment to eliminate all cost accounting distortions and product cost “subsidies.”
- To be willing to know the cash contribution of every product and/or service.
- A commitment to eliminate all non-value adding activities and begin the Business Process Reengineering journey.
- A willingness to implement a culture of “waste hounds” throughout the organization.
ABCA is a managerial cost accounting system which determines the cost of activities without distortion and provides management with relevant and timely information. It does not represent just a new set of overhead allocation rules or techniques to value inventory. ABCA represents a new way to look at operating costs and provides methods to dissect the underlying activities which cause costs to exist. Once the underlying reasons for product cost are precisely determined, then and only then can the costs be eliminated.
ABL describes the processes that leaders aggressively use to drive the waste that ABCA identified out of the organization. Activity Based Leadership seeks to build a process that drives every employee to focus some part of every day on waste elimination. ABL is the execution of activities rationalized by the ABCA accounting system.
This 2-day intense Manufacturing Executive Institute "Special Series" Workshop provides all you need to know to begin your ABCA & ABL implementation project. Participants will learn specific actions needed to effectively implement and use ABCA & ABL techniques. Though some theory is presented, the bulk of the program is devoted to demonstrating how ABCA & ABL can be quickly and economically implemented. Participants should prepare themselves for a unique learning experience which is designed to achieve quick and sustainable results. There should be no technical impediments to achieving ABCA & ABL success after attending this program!
This is a fast-paced program that is comprehensive and detailed in its examples, methodologies and discussions. The course content includes:
Welcome & Course Introduction
Section One ABCA & ABL: Background & Definitions
- How the need was created for better cost accounting
- How to compare traditional and activity based cost reports
- Macro level Activity Based Cost Accounting
- Micro level Activity Based Cost Accounting
- Reasons for cost accounting and ABCA
- Elements of financial costing, competitive costing and managerial costing New P&L formats
- How to use Activity Based Cost Accounting to support Activity Based Leadership
- The importance of data integrity
Section Two 22 Principles of ABCA & ABL
- Important principles of ABCA
- How not to take a good idea too far
- ABL: a systematic approach to eliminate waste
Section Three How To Implement ABCA & ABL… A Nine Phase Plan
- The best way to approach an ABCA/ABL implementation
- The importance of mobilizing employees early in the process
Phase 1 - Preparing the company for ABCA/ABL
- Defining ABCA/ABL mission
- Determining the technical, organizational, cultural and external impediments to implementing ABCA
- Determining training requirements
- Developing innovative cost reports including contribution focused product line P&Ls
- Identifying accounting rules
- Identifying regulatory, statutory, FASB and GAAP conflicts
Phase 2 - Organizing to implement ABCA
- Developing a reasonable implementation plan
- Determining the necessary resources for implementing ABCA/ABL
- Organizing a cross-functional implementation team
- Analyzing why some ABCA/ABL implementations fail and how your company can succeed
Phase 3 - Developing a data integrity process
- Impact of poor data in any cost model
- How to develop a formal data integrity process
- Using Missing Data reports
- Using Cyclic Data Certificate reports
- Executive data integrity monitoring
- Leadership benefits from solving the data integrity problem
Phase 4 - Determining the real sources of product cost
- How to define activity centers
- How to identify and differentiate Production Activity Centers (PAC’s) and Support Activity Centers (SAC’s)
- How to segment SAC’s into Factory Support Activity Centers (FSAC’s) and Business Support Activity Centers (BSAC’s)
- How to replace cost center, work center, profit center, and department definitions with new activity center definitions
- How to create the necessary general ledger accounts and interfaces
Phase 5 - Describing the activities performed in each activity center
- How to determine each activity center’s resources and create a ‘resource schedule’
- How to identify and document significant activities performed in each activity center
- How to develop activity center specific definitions of ‘value-adding’ (VA), ‘non-value-adding’ (NVA) and ‘non value-adding-required’ (NVAR)
- How to determine each activity center’s ‘customers’
- How to determine and document the level of effort required to support each internal ‘customer’
- How to use the ‘resource schedule’ and ‘activity analysis’ to immediately begin reducing costs
- How to rank and select waste elimination projects using the 2242matrix
- How to mobilize employees to eliminate non-value-added activities themselves
Phase 6 - Determining the relationships of cost sources
- How to describe the relationships between production and support activity centers
- How to allocate individual cost partitions (instead of total activity center costs)
- How to develop a cost flow map
Phase 7 - Developing an ‘Activity Center Performance & Cost Diagnostic’ (ACP&CD) tool to describe the total costs of each activity center
- How to develop and use cost diagnostic tools
- How to define the sequence of activity centers to analyze
- How to link diagnostic tools and invent new allocation rules
- How support costs can be automatically allocated via an activity model
- How to test diagnostic values by performing a ‘slice’ analysis
Phase 8 - Calculating other allocation values
- How to develop a Material Acquisition Burden (MAB) diagnostic tool
- How to develop a Product Line Support Overhead (PLSO) diagnostic tool
- How to develop an Un-modeled Overhead (UO) diagnostic tool
Phase 9 - Using Activity Based Cost Accounting to make decisions
- How to ‘roll up’ material, labor, burden and overhead into an activity based product line P&L
- How to use ABCA within the confines of an existing database
- How to flow cost data into segmented P&Ls
- How to develop a Product Cost Portfolio Report
- How to replace financial reporting with causal metrics
Section Four Beyond ABCA & ABL… Extending ABL into Predictive Cost Modeling
- Defining Predictive Cost Modeling (PCM)
- Understanding the comprehensive cost management database
- Using ABCA to predict product line costs
- Using ABCA to understand all sides of any business decision
- Extending the Product Cost Portfolio Report into PCM... turning ABCA into a powerful decision tool
- Creating a simulation tool for predicting cost changes which result from multiple and concurrent cost parameter changes
Workshop Instructor: Alan G. Dunn, President of GDI Consulting & Training Company.
Come to this MEI "Special Series" live workshop and learn specific techniques, methods and implementation procedures that can differentiate your company's performance from competitors. Learn from MEI's expert instructors more than just facts. Learn how to implement ideas presented in these programs and learn how to achieve benefits within the shortest possible time frame!
All learning materials, breaks and lunch are included in the single low price. See the side bar for pricing and group discount information.
The Manufacturing Executive Institute presents numerous workshops and webinars each month. To see listings and schedule of upcoming programs, go to www.mfgexecutive.com or call (951) 736-2114.
About MEI's "Special Series" Workshops
MEI offers a number of special live workshops that are repeated one or more times each year. These programs are regularly updated and new programs are periodically added. Most of these programs are multi-day training programs and are designed to present detailed solutions AND detailed implementation strategies. Click here to view a list of upcoming MEI "Special Series" Workshops.