Management accounting in supply chains

Management accounting in supply chains (or supply chain controlling, SCC) is part of the supply chain management concept. This necessitates planning, monitoring, management and information about logistics and manufacturing processes throughout the value chain. The goal of management accounting in supply chains is optimizing these processes. This strategy focuses on supporting management.
Overview.
As value chains become more complex due to globalization, supply chain management (SCM) has become increasingly relevant in theory and practice. SCM encompasses extensive management-control tasks. This range of subjects is summarized by the definition of supply-chain controlling. The transfer of existing management control systems (MCM) to the SCM is insufficient because these primarily aim at internal (company) needs. Beyond past-oriented, financial figures there must also be future-oriented measurement; a number of approaches exist in the literature.
Definition.
Supply-chain management (SCM) has become increasingly relevant in theory and practice in light of more-complex supply chains. The SCM performs extensive operational tasks, including supply-chain controlling. Seuring transfers the three main concepts of German supply chain-controlling literature into the specific demands of SCM:
The rationality-oriented approach of supply-chain controlling coordinates all participants in the supply chain to improve performance. Common management systems and instruments for performance measurement are developed, enabling guidance for individual companies and the entire supply chain. The coordination-oriented approach supports the supply-chain leadership. Organizational objectives include the selection of strategic partners, the distribution of tasks among companies, process management and ensuring the provision of information to all participants. The information-oriented supply-chain controlling concept emphasizes providing partners with relevant information for decision-making. An efficient reporting structure must be implemented, including strategic and operative organizations in the system and their technical aspects.
Requirements.
A requirement for the supply chain is the support of cooperating companies, ensuring future cooperation; companies must focus on common tools and targets. For this, an understanding of processes within the participating companies is indispensable. Information exchange (including sensitive data) within a supply chain is necessary to ensure its control, with coordination among in-house information systems. The requirements for management accounting in supply chains are significantly higher than the provision of key figures, but this is a fundamental task.
Tasks and functions.
The tasks and functions of controlling may be transferred to management accounting in supply chains, supplemented by a cross-company approach. However, the past-oriented aspects of the traditional concept are inappropriate. Due to the strategic importance of supply-chain management, forward-looking control requirements must be taken into account. Because of the complexity of a supply chain, a focus on interface management is necessary. In the literature, several tasks and functions are defined. Management accounting in supply chains has the following features:
Aims.
Because of different controlling directions, in management accounting of supply chains different aims are pursued and influence each other. Again, the challenge is the cross-company factor. Independent companies must agree on a common strategy for the SCM and define common aims. Two types of aims exist: direct and indirect.
Direct.
Direct aims relate to the support of SCM and controlling. This ensures logistical processes between parties in a supply chain or the introduction of a common performance-measurement system for verification of lead times.
Indirect.
Company-wide, generalized aims may be pursued with management accounting in supply chains. Examples are competitiveness, expanding cooperation, growth, market development and greater customer orientation.
Instruments.
Management accounting in supply chains draws on modified traditional instruments of managerial accounting to accomplish cross-company objectives. There are two measuring instruments: the supply-chain map and the supply-chain operations reference (SCOR).
Supply-chain scorecard.
The basic model of the balanced scorecard (BSC) was introduced by Kaplan and Norton in 1992. The BSC aims to achieve a balance between non-financial and financial measures. To use the scorecard in a cross-company context, several modifications of content and structure are necessary. The BSC consists of four generic perspectives, which are geared to the individual company. According to this, a generally accepted framework does not exist. From a common strategy, the supply-chain scorecard (SCS) maps cross-company measures. Brewer and Speh note that focusing on the supply chain requires four perspectives:
Independent of perspective, each should include internal and cross-company measures.
Cross-company activity-based costing.
Activity-based costing is a model to assign indirect costs into direct ones. To use this model in the context of supply chains, there must be consistent defined and delimited cost and performance data. Since many companies participate in more than one supply chain, standardization across the sector is beneficial. Compatibility of information technology is important for improved data transfer, so manual entry is limited and high availability guaranteed. Several changes result from cross-company activity-based costing:
Supply-chain performance-measurement system.
A primary task of management accounting in supply chains is performance measurement. The key elements of strategic goals include the measurement of resources, output and flexibility. Efficient resource management is critical to profitability; without an acceptable output, customers will turn to other supply chains. In a changing environment, supply chains must adapt.
Measures for resource performance include total costs, distribution costs, manufacturing costs, measures of inventory and rate of return. Examples of performance measures are numbers of items produced, time required to produce, customer satisfaction and product quality (which is difficult to express numerically). Reductions in back orders, increased customer satisfaction and the ability to accommodate demand variations are advantages associated with flexibility.


2006 FIFA World Cup qualification – CONCACAF second round

This page provides the summaries of the CONCACAF second round matches for the 2006 FIFA World Cup qualification. The 14 top-ranked teams from the FIFA ranking for CONCACAF in May 2007 competed, along with the 10 winning teams from the first round.
There were 94 goals scored in 24 matches, for an average of 3.92 goals per match.
Format.
In this round 12 of the remaining 24 teams would be eliminated. There were 12 ties and the winners advanced to the next round. All games were scheduled to be played in home and away format.
Matches.
United States won 6–2 on aggregate and advanced to the third round.
El Salvador won 4–3 on aggregate and advanced to the third round.
Jamaica won 4–1 on aggregate and advanced to the third round.
Panama won 7–0 on aggregate and advanced to the third round.
Costa Rica won on the away goals rule after drawing 3–3 on aggregate and advanced to the third round.
Guatemala won 4–2 on aggregate and advanced to the third round.
Honduras won 6–1 on aggregate and advanced to the third round.
Canada won 8–0 on aggregate and advanced to the third round.
Mexico won 18–0 on aggregate and advanced to the third round.
Saint Kitts and Nevis won 5–2 on aggregate and advanced to the third round.
Trinidad & Tobago won 6–0 on aggregate and advanced to the third round.
Saint Vincent and the Grenadines won 6–3 on aggregate and advanced to the third round.


Phönix C.I

The Phönix C.I, given serial numbers in the Phönix 121 range, was an Austro-Hungarian First World War reconnaissance and general-purpose Biplane built by Phönix and Lloyd.
Development.
The Phönix C.I was the first original design developed by the Phönix Flugzeug-Werke It was based on the Hansa-Brandenburg C.II that Phönix was building under licence. A conventional biplane with a rear fuselage/tailplane similar to aircraft designed by Ernst Heinkel. The C.I had a fixed tail-skid landing gear and was powered by a Hiero 6-cylinder inline piston engine, it had two tandem open cockpits for the pilot and observer/gunner. The company built 110 C.Is and then entered service with the KuKLFT in early 1918. After the First World War 30 aircraft were built by the Swedish Army engineering department fitted with Benz Bz.IV inline engines.
Designations and serials.
Phönix C.I aircraft built by Phönix were serialled from Phönix C.I 121.01 to Phönix C.I 121.160 and Phönix C.I aircraft ordered from Lloyd ("Ungarische Lloyd Flugzeug und Motorenfabrik AG") were allocated serials from Phönix C.I(Ll) 49.01 to Phönix C.I(Ll) 49.100. Some 80 aircraft ordered from UFAG were not assigned serial nos, probably due to production being interrupted by the Armistice and 225 more were ordered but not built.


Build to order

Build to Order (BTO: sometimes referred to as Make to Order or Made to Order (MTO)) is a production approach where products are not built until a confirmed order for products is received. Thus, the end consumer determines the time and number of produced products. The ordered product is customized, meeting the design requirements of an individual, organization or business. Such production orders can be generated manually, or through inventory/production management programs. BTO is the oldest style of order fulfillment and is the most appropriate approach used for "highly customized" or "low volume" products. Industries with expensive inventory use this production approach. Moreover, "Made to order" products are common in the food service industry, such as at restaurants.
BTO can be considered a Just in Time (JIT) production system, as components or products are only delivered just in time when demanded, in order to reduce wasted time and increase efficiency.
Implementation.
This approach is considered good for highly configured products, e.g. automobiles, bicycles, computer servers, or for products where holding inventories is very expensive, e.g. aircraft. In general, the BTO approach has become more popular in the last few years ever since high-tech companies such as Dell, BMW, Compaq and Gateway successfully implemented the system into their business operations.
BTO in the automotive industry.
In an automotive context, BTO is a demand driven production approach where a product is scheduled and built in response to a confirmed order received for it from a final customer. The final customer refers to a known individual owner and excludes all orders by the original equipment manufacturer (OEM), national sales companies (NSC), dealers or point of sales, bulk orders or other intermediaries in the supply chain. BTO excludes the order amendment function, whereby forecast orders in the pipeline are amended to customer requirements, as this is seen as another level of sophistication for a build to stock (BTS) system (also known as build to forecast (BTF)).
BTS is the dominant approach used today across many industries and refers to products that are built before a final purchaser has been identified, with production volume driven by historical demand information. This high stock level, endemic across the auto industry allows some dealers to find an exact or very close match to the customer's desired vehicle within the dealer networks and supplier parks. The vehicle can then be delivered as soon as transport can be arranged. This has been used to justify stock levels. Whilst providing a rapid response to customer demand, the approach is expensive, mainly in terms of stock, but also transportation as finished goods are rarely where they are required. Holding stock of such a high cash value as finished goods is a key driver of the current crisis in the automotive industry - a crisis that could be eased by implementation of a BTO system.
A BTO system does not mean that all suppliers in the supplier chain should be producing only when a customer order has been confirmed. Clearly, it would not make economic sense for a manufacturer of low value high volume parts to employ BTO. It is appropriate that these should be identified and built to a supplier order, effectively BTS. Part of the challenge in a BTO supplier network is in the identification of which suppliers should be BTO and which BTS. The point in the supply chain when this change occurs is called the ‘decoupling point’. Currently, the majority of automotive supply chains lack a decoupling point and the dominant BTS approach has resulted in billions of dollars of capital being tied up in stock in the supply chain.
Some firms build all their products to order while others practice (BTS). Given the widespread proliferation of products, there are a number of manufacturers taking a combined approach, where some items are BTS and others are BTO, which is commonly referred to as "hybrid BTO".
Advantages.
The main advantages of the BTO approach in environments of high product variety is the ability to supply the customer with the exact product specification required, the reduction in sales discounts and finished good inventory, as well a reduction in stock obsolescence risk.
Additionally, flexibility and customer lead time are improved to a match changes in consumer demand. Moreover, a business’ cash flow can be increased with BTO.
Disadvantages.
The main disadvantage of BTO is manufacturers are susceptible to market demand fluctuations leading to a reduced capacity utilization in manufacturing. Hence, to ensure an effective use of production resources, a BTO approach should be coupled with proactive demand management. Finding the correct and appropriate balance of BTO and BTS to maintain stock levels appropriate to both the market requirement and operational stability is a current area of academic research. In Retail, an occurring problem may be customers choosing an alternative product that is available at that time and place, as they are not willing to wait for the BTO product to arrive.
Moreover, compared to mass production, customization of products implies higher costs. Thus, price-conscious customers may be turned away, as they do not feel a strong need for customized products and would therefore choose a more standardized product instead.
Related approaches.
Related approaches to BTO include the following:
Engineer to Order (ETO) approach.
In ETO, after an order is received, a part of or the whole design starts to be developed. Construction by general contractors and plant construction by engineering companies are categorized as ETO.
Assemble to Order (ATO) approach.
This strategy requires that basic parts of the product are already manufactured, however not yet assembled. Once a customer's order has been received, the parts of the product are quickly being assembled and sent out.
Together with the BTS approach, these strategies form the spectrum of order fulfillment strategies a firm can adopt.


Order fulfillment

Order fulfillment (in British English: order fulfilment) is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes, it describes the more narrow act of distribution or the logistics function. In the broader sense, it refers to the way firms respond to customer orders.
Classification.
The first research towards defining order fulfillment strategies was published by Hans Wortmann, and was continued by Hal Mather in his discussion of the P:D ratio, whereby P is defined as the production lead time, i.e. how long it takes to manufacture a product, and D is the demand lead time. D can be viewed as:
Based on comparing P and D, a firm has several basic strategic order fulfillment options:
Processes.
In the broader sense, the possible processes in a logistic-production system are:
Strategic importance.
The order fulfillment strategy also determines the de-coupling point in the supply chain, which describes the point in the system where the "push" (or forecast-driven) and "pull" (or demand-driven see Demand chain management) elements of the supply chain meet. The decoupling point always is an inventory buffer that is needed to cater for the discrepancy between the sales forecast and the actual demand (i.e. the forecast error). Typically, the higher the P:D ratio, the more the firm relies on forecasts and inventories. Hal Mather suggests three ways to tackle this "planning dilemma":
It has become increasingly necessary to move the de-coupling point in the supply chain to minimize the dependence on the forecast and to maximize the reactionary or demand-driven supply chain elements. This initiative in the distribution elements of the supply chain corresponds to the Just-in-time initiatives pioneered by Toyota.
The order fulfillment strategy has also strong implications on how firms customize their products and deal with product variety. Strategies that can be used to mitigate the impact of product variety include modularity, option bundling, late configuration, and build to order (BTO) strategies—all of which are generally referred as mass customization strategies. The decoupling point can place a much stronger emphasis on the supply chain based on the process as well as the nature of supply chain configurations.