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Thrif-Tee Shirt Co

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Seth Mangels

on 6 May 2014

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Transcript of Thrif-Tee Shirt Co

What is a workflow?
"Workflow is the flow of information and control in a nonmanufacturing process. These applications vary from simple processing of expense reports to complex loan processing applications." Institute of Managerial Accountants, 2000.
Thrif-Tee Shirt Co Workflow Trial Run
Methods for Improvement
Activity-Based Costing
Theory of Constraints
Kaizen
Six Sigma
Hybrid
Business Functions Influenced by Workflows
Accounting
Finance
Administration
Information Technology


Impacts to the Business
Purpose of a Business
Effective vs. Efficient
Consequences of Business Workflow Innovation
Business Workflow Innovation
Activity Based Costing
DMAIC
DMEDI
Difference
DMAIC - find common use to improve existing processes to meet customer needs.
DMEDI - help in establishing new processes or changing processes after defining customer needs relative to a product or service.
Lean management
Six Sigma
Interrelation
Steps
Select activities for improvement
Determine root causes for the activity performance as it exists
Discover and implement modifications
Assess the impact of the changes
Six Sigma + Theory of Constraints
Uses throughput measurements to implement a cost accounting system that is conducive to system optimization and also allows for increased product quality and process integrity.
Cash Collection Process
Internal Auditing
Period End closing entries
Accounts Reconciliations
Human Resources/ Hiring
Budgeting/Forecasting
Copying/faxing
Scheduling appointments
Relaying information
Same as last year
EVERYONE is guilty!
SALY kills Innovation
Focuses on current situation rather than future possibilities.
IMA "Workflows... directly affect individuals and their perceived control over their work -their work identities- It may be perceived as a mixed blessing at best. Gaining acceptance for workflow initiations begins with empowering people to help design, test and develop the applications. It requires ongoing participation and a flexibility and willingness to change on the part of mangement and the design team."
No one improvement process is better, but rather a system of analysis and review of current system is necessary for continuous improvement
Accounting and Finance
Administration
Information Technology
Information is needed in every business for every business decision.

Impacts of SALY
"Corporations have a responsibility, first of all to make available to the public quality goods and services at fair prices, thereby earning a profit that attracts investment to continue and enhance the enterprise, provide jobs, and build the economy." -Business Roundtable trade group 1981
Purpose of Businesses
"Social responsibility of business is to increase its profits." - Milton Friedman, 1970

American Economist
30 year Professor at University of Chicago
1976 Nobel Prize in Economic Science
Purpose of Businesses
No SALY = More Change
Six Sigma
Theory of Constraints
Hybrid Method
In Class Discussion
What types of workflows have you been involved with?
Were there some areas that you believe could have been improve?
Unnecessary Workflows
Example of Human Resources Workflow
Submit Resume and Cover Letter
Employment Application
Screening Process
Interviews
Screening Process
In-Office Interview
Offer Letters
Employment forms (W-4's I-9's)
On boarding Process
Application of Knowledge
Time Period B
Effecient Workflows
Increased Productivity
Reduced Cost
Increased Bottomline
Effective: successful in producing a desired or intended result.

Efficient: achieving maximum productivity with minimum wasted effort or expense.
Effective Vs. Efficient
Income Inequality
How technology wrecked the Middle Class
This article discusses the manufacturing process of a business.

"Computerization (Automation) has therefore fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations"



What is the goal?
What happens when you implement effective workflows?
Simplification of Process
Decrease in Autonomy
Decreased in Sense of Community
Loss of Employee Moral
2008 Top 0.1% are 140,000 families making over $1.7 Million
2008 Top 0.01% are 15,000 families making over $23 Million
Washington Post Article
IBM example
1980's to today 10 fold ROI
10,000 jobs in 80's to 700 employees today
Hard to compare with the number of changes from 1980's to today
Effective doesn't mean efficient.
Efficient doesn't mean effective.

Goals of Managerial Accountants
Achieve effectiveness and increase effeciency.

1. Effective = Depends on your "desired or intended result."
2. Efficient = Minimize "wasted effort or expense."
Ideas for improvement
Read a thought-provoking business book
Have cross functional interaction
Share articles and information
Review earnings or investor conference presentations
Spend one hour perusing the IMA website
Set aside 15 minutes to think "Big Picture"
A key objective of workflow automation is to increase the percentage of process time and resources dedicated to value-adding activities.
The percentage of time and resources that are value-adding is between 5-15 percent while the amount of transfer and queue time is roughly 60-85 percent.
Value Added Workflows
Audit Program Guidelines
Cash Collections Process
Account Reconciliation: a report that assesses the
validity, correctness, or appropriateness of an account balance at a specific point in time—documented by relevant calculations, clear and complete explanations, and copies of supporting documentation—and that is consistent with the company’s policies and procedures.
Kaizen
Origins
:
Manufacturing Industry
Are your Account Reconcilations Accurate
Management Accountant Role
:
Implementation
Detailed knowledge of current costing systems
Select proper assignment of costs to activities and cost objects
"The management accountant plays an important role in both the design and effectiveness of the information system—a role that requires an understanding of IT Material Weaknesses and the effect of those Material Weaknesses on firm profitability. We have presented evidence that IT material control weaknesses are associated with additional IT MWs, higher audit fees, and lower firm performance."
IT Control Weakness Undermines the Information Value Chain
Ultimately
:
Improve workflows through inefficiency data that can be traced directly to products, services, and specific work.
Helps to calculate costs of activities within a workflow and determine where inefficiencies need to be improved.
Map out procedures included in workflow
Flow of information and outputs
Deliverables:
Obtain support from management team
Define expected outcomes
Create project charter
Begin to train project personnel
Define
Assigning numerical values to begin determining relationships between the measured element and other elements of the process.
Financial and Operational analyses
Goal:
Analyze elements of workflow.
Assess relevance.
Rank based upon relevance.
Measure
Green Belts and Black Belts look at the data and determine where improvements can be made.
Deliverable: establish baseline, upper and lower limit for each measurement.
Tools:
Fishbone diagram - cause and effect
5 Whys
Pareto Principle/Chart - 80/20 rule
Analyze
Find the most relevant facets of the workflow and make changes necessary to improve that portion.
No tool to fix all ills.
Possible tools:
Lean improvement methods.
5S tool: housekeeping, workplace organization, cleanup, cleanliness, discipline
Brainstorming
Error-proofing/Poka-Yoke
Kaizen
A3 reporting: One page document of all necessary information
JIT
Improve
Main point: maintain the gains that were achieved during the previous Six Sigma steps.
Four ways to maintain gains:
Policy changes to reflect "new and improved" enhancements.
Procedural modifications to help ensure that control systems are being maintained statistically.
Revised accounting systems that are up to date with new initiatives
Revised info systems to help derive more relevant data to help keep improvements under statistical control.
Control
DMAIC
DMEDI
Difference
DMAIC - find common use to improve existing processes to meet customer needs.
DMEDI - help in establishing new processes or changing processes after defining customer needs relative to a product or service.
Define and Measure (again)
DMAIC
DMEDI
Difference
DMAIC - find common use to improve existing processes to meet customer needs.
DMEDI - help in establishing new processes or changing processes after defining customer needs relative to a product or service.
Explore
DMAIC
DMEDI
Difference
DMAIC - find common use to improve existing processes to meet customer needs.
DMEDI - help in establishing new processes or changing processes after defining customer needs relative to a product or service.
Develop
DMAIC
DMEDI
Difference
DMAIC - find common use to improve existing processes to meet customer needs.
DMEDI - help in establishing new processes or changing processes after defining customer needs relative to a product or service.
Implement
Time Period A
Process 16 sales orders successfully

Open packets and read discription (3 minutes)
Complete 3 sample orders with our assistance
Six Sigma/TOC
Accounting metrics:
Operating profit before tax and interest:
Net profit (NP) = T-OE
ROI
NP/I
Productivity
T/OE
Inventory Turns
T/I
Constraint measures:
Throughput per constraint unit:
T/Units
Constraint utilization:
Actual prod. time/Available prod. time
Six Sigma/TOC
Aim of Six Sigma: decrease internal and external failure costs, ultimately contributing to increased customer satisfaction.
TOC, throughput accounting metrics:
Throughput (T): the rate at which a system generates money through sales.
Revenue - Variable costs
Inventory (I): Money invested in things for sale
Operating Expense (OE): all the money spent on turning investments into throughput
Basically: Increase T while reducing I and OE.
Theory of Constraints
Aim
: Emphasize performance within the company's constraints for existing product offerings and processes.

Throughput
: Revenue earned through sales.

Repeatable
: As one constraint is optimized, may no longer be system's constraint. Allows for continuous improvement through optimization of current constraint.

Evidence
: Avery Dennisson, General Motors, National Semiconductor, United Airlines, Boeing, USAF Logistics Command, US Navy Transportation Core.

Mgmt Accountant role
: Data liason. Identify, analyze, and report key events and opportunities affecting the process. Facilitate the integration of data into the TOC implementation and application.
Full transcript