ACCOUNTING FOR MANAGERS

Accounting for Managers

Accounting for Managers

Introduction

Japanese managers typically take a more long-term interest in their firms than do their American counterparts, partly a result of the lifetime employment and seniority systems. In the United States, managers are typically compensated on the basis of their divisions' performance. (Mroczkowski 1998) This bonus system is not used for Japanese managers, as it is considered detrimental to a long-term perspective and an interest in the firm as a whole.

A key architect of the Toyota management style was Taiichi Ohno, who developed the Toyota Production System. Ohno summed up his theory behind the management of Toyota thus: "I feel strongly that the word 'work' refers to the production of perfect goods only. If a machine is not producing perfect goods, it is not 'working'." (McMillan 2004)

On that philosophy the Toyota Production System was built, in which sensors halted machines when they started to malfunction. (Herbig 2003) Those machines were operated by the workforce who could likewise halt the production line when imperfections occurred.

The Production System adhered to the Toyota corporate strategy of cutting waste, listing specific advice such as: “Cut down on the distance that things move throughout the plant.” (Harukiyo 1998)Another example of this advice, representative of Toyota strategic management and its attitude towards its workforce, is: “Utilise the inherent talent of your workers.” (Dirks 1999)

Toyota business strategies include the development of hybrid cars. (Tuckman 1994) Part of Toyota strategic planning is developing a premium position in hybrids in tune with present consumer values.

Seisei Kato of Toyota summed up a further example of the Toyota leadership model by saying: "Never fail to reward merit, but never let a fault go unremarked." (Watanabe 2006)

Techniques/Key terms in Japanese Management

Just In Time: (JIT)

Just-In-Time is a process broadly aimed at increasing value-added and eliminating waste; a production scheduling and inventory control technique that calls for any item needed at a production operation - whether raw material, finished item, or anything in between, to be produced and available precisely when needed, neither a moment earlier nor a moment later. (Odagiri 1992 ) JIT was designed at Toyota specifically to cut waste in production. JIT can be developed by considering the main elements that are attributed to successful JIT systems. These elements can be separated into two broad categories including attitude and practice. (Koike 2005 )While the elements of attitude can be adopted by any organization, the elements of practice are mainly applicable to companies involved in repetitive manufacturing. From an accounting viewpoint, these are companies that would normally use the process cost accumulation method. (Kearney 1994)



A JIT system requires an attitude that places emphasis on the following:

Cooperation with a value chain perspective

Respect for people at all levels

Quality at the source

Simplification or just enough resources

Continuous improvement and

A long term perspective. (Kanji 2003)



A JIT system also incorporates the following practices:

Just-in-time purchasing,

Focused factories,

Cellular manufacturing,

Just-in-time production,

Just-in-time distribution,

Simplified accounting and

Process oriented performance measurements. (Hasegawa 1986)

Components of JIT

Production Leveling

Pull System

Kamban (label or signboard) system

Good Housekeeping

Small Lot Production

Setup ...