P5价值管理考官文章

1、Value managementby Mark Lee Inman01 Nov 1998The purpose of this article is to give you an introductory insight into value added, value analysis, value chain and value engineering. Definitions Value added Sales value less the cost of purchased materials and services. This represents the worth of an a

2、lteration in form, location or availability of a product or service. Value analysisA systematic interdisciplinary examination of factors affecting the cost of a product or service, in order to devise means of achieving a specified purpose most economically at the required standard of quality and rel

3、iability. (BS3138) Value chainThe sequence of business activities by which, in the perspective of the end user, value is added to the products or services produced by an organisation. Value engineeringAn activity which helps to design products which meet customer needs at the lowest cost while assur

4、ing the required standard of quality and reliability. Value addedValue added analysis is applied to activities to see if they add value to a product or service. By adding value we mean a cost that will increase the price of the good/service, but one that the customer is prepared to pay for. Innes an

5、d Mitchell give an interesting classification of costs which may or may not add value (see Table 1). They stress that many of the activities listed as not adding value are those which arise because of faults within the system. The faults can be eliminated if goods are produced right first time. Obvi

6、ous examples are: suppliers must deliver on time and to specification; purchase orders must be placed correctly and unambiguously; customer orders should be completed on time to avoid expensive crash programmes to achieve contract delivery dates; orders must be completed to customer specification to

7、 avoid rejection and costly warranty work. An efficient and cost effective operation will try to dispense with these and other wasteful activities. However, there is an important rider: will the organisation continue to function as effectively if these ancillary activities are removed? An obvious ex

8、ample is storage. Maintaining stores is costly in terms of space, extra working capital, extra staff and the movement of materials and it is an obvious target for elimination. However, situations can arise where there might be a stock out, or special supplies cannot be delivered on time. As a result

9、, there is a case for holding some levels of stock. However, to avoid the non-value added situation, ABC costing of stores operations would ensure that the cost is passed onto the customer. The price must include not just an apportioned allowance for any inventory holding overhead, but the cost of h

10、olding items of stock for that particular order. Another way to categorise value-adding activities has been suggested by Bellis-Jones and Hand. They identify: core work, support work, and diversionary work. Taking the sales function as an example, contact with customers and potential customers ( get

11、ting the work in) is obviously core work. Travelling time spent visiting customers and potential customers might be support work. Dealing with sales order processing errors is definitely diversionary work. If cost cutting is the object of the exercise, Bellis-Jones and Hand argue that the latter two

12、 categories often account for most of the activities and it is in these areas where the cuts can be most effectively made. Obviously, there must be travel to clients or customers. However, better planning aimed at grouping customers together makes for better use of time and resources. The overall im

13、plication in controlling non-value added costs is to move the emphasis from supplier to user of service. This alters the traditional approach so that the user makes the demands and takes what is needed. Chalos suggests identifying the cost driver, and then also using a market price basis for control

14、. He advocates this approach to data processing, consulting and distribution, while other costs could be better apportioned if not allocated on the basis of the cost driver. One that is close to any accountancy student is accounts payable. What drives the cost of such a function is invoices paid, he

15、terogeneity of suppliers, number of discounts taken and number of requisitions verified. Considerable cost savings could be achieved if this was reduced. The payroll function is another obvious example. It is not just the function of number of employees, but how they are paid, when they are paid and

16、 by what method. Traditionally, payroll is part of the non-conversion allocation, and regarded as a fixed cost, but if it is broken down as suggested by Chalos, then each department can see what employing its staff is really costing and look to see how savings might be made. An obvious example is th

17、e traditional manufacturing environment a blue collar worker is paid weekly in cash, while a white collar worker is paid monthly by credit transfer. Cash payments require the extremely costly exercise of drawing cash from the bank, shipping it in, making up and distributing wages, as well as the ine

18、vitable security risks. This cost could be substantially reduced, if not eliminated entirely, if employees were paid fortnightly by cheque or credit transfer. Chalos reinforces his argument with a case study from Allied Signal. The initial problem was that 65% of the cost structure was overheads. De

19、tailed analysis revealed that ten activities accounted for half of the product cost found in the overhead. Five of these activities were non-value added, (viz., unscheduled maintenance, defective parts, area maintenance, parts inspection, and excessive material removal). These five activities amount

20、ed to almost 30% of the costs and were costing in excess of $6 million per annum. Clearly there was scope for changes and improvements in procedures that would provide considerable cost savings. Value analysis and value chain analysis Although separate definitions are provided for these terms, there

21、 appears in the literature on the subject to be some commonality of use. Innes and Mitchell only discuss the value chain, as do Glad and Becker. Yoshikawa and Innes discuss both separately, while Peter Chalos only discusses value chain analysis. Starting with Yoshikawa and Innes we find that it is a

22、ssociated with functional analysis i.e., identifying the functions within an organisation which add value to the product or service. Equally, the component functions of a product can be analysed to see which add value, and given the position in the market, customers are prepared to either pay extra

23、for, or expect to have within the product as standard. By contrast, Value Chain Analysis moves along the product/service linking the value-creating activities from raw material sourcing to the final product. The analysis is best performed by breaking down the activities in order to understand the be

24、haviour of costs and the sources of differentiation. A three step approach has been identified. Step 1Under this heading it is necessary to: construct the industry value chain; identify the various activities within the value chain; relate operating costs, revenues, and assets to individual value ac

25、tivities. Step 2Determine the cost drivers which affect costs in each value activity. This is taking ABC methodology beyond simple cost allocation in place of traditional cost apportionment. A much more intense look at cost drivers is required. Shank and Govindarajan place cost drivers under two hea

26、dings structural and executional. Under the heading structural they place: scale (the size of the operation, length of production run etc.,) scope (degree of vertical integration), experience, technology and complexity (diversity of product range). Executional cost drivers relate to an organisations

27、 ability to deliver the product/service successfully to the customer. This is a vital area, because no matter how technically good a product might be, failures in this area can be very close to the customer and can prejudice repeat orders. Under this heading we find: employee participation, TQM, cap

28、acity utilisation, plant layout efficiency, product configuration and links with suppliers and customers. Chalos adds some important detail to the last heading. Supplier linkages involve delivery, quality and inspection, the latter two being intimately associated with adherence to specification. As

29、to customer links, these cover advertising, warranty and distribution. Glad and Becker add a further item to this list service. This includes providing finance to buy the product, after sales service and support and customer care. Step 3Develop sustainable competitive advantage. This can be achieved

30、 by reducing costs while maintaining value or sales, or increase sales value while maintaining costs. A combination of the two may be required. Glad and Becker provide a useful example of the use and implementation of value chain analysis. A company manufactures wooden pallets. It buys its raw mater

31、ial in the form of logs, cuts the logs into timber of the appropriate thickness, selling off the surplus timber to chipboard manufacturers. The biggest cost in such an operation is, in fact, transport. A bulky, awkward to carry, low value product can be expensive to transport. This cost is increased

32、 further by the low volumes that can be moved, and the proportion of waste material that is being carried. A more cost effective alternative is for the timber supplier to cut the logs into square beams. He sells beams to the pallet maker and the surplus wood to the chipboard maker. Obviously, beams

33、are more expensive but the timber merchant has added value to them. However, the trade off for the customer is that one truck can be more effectively loaded Glad and Becker show 32 beams to a truck or railway car compared with 15 logs, so transport costs are reduced. In addition, the raw materials c

34、ome better prepared and the hassle of waste disposal is removed. One objection might be that the timber merchant may not have a cutting facility. It is likely that he has, or his equipment can be adapted easily to cope. Logs have to be cut so that they can be transported safely by road or rail, so s

35、ome cutting facility must exist. Thus the timber merchant is enhancing a facility and improving value added. Value engineering Value engineering is closely associated with Target Costing. Target costs of a product/service are achieved using value engineering techniques among other things. Chalos dra

36、ws his illustrations from Japan, pointing to cost reduction exercises in pre-production, production and post-production areas, with the emphasis on conversion costs, research and development and distribution. Where there are highly sophisticated automated operations, computer software becomes a majo

37、r factor and may prove to be a promising area for cost reduction. It also seems to work best in a worker involvement and participation culture rather than the traditional autocratic top down environment. You should see that the executional strategy alluded to above by Shank and Govindarajan identifi

38、es employee participation. Glad and Becker provide a useful illustration using a simple electric kettle. First of all, a product will have hard attributes tangible and measurable characteristics. In the case of a kettle, it is its size and the time it takes to boil water. In addition there are soft

39、or subjective attributes the colour and ease of pouring from a kettle. The costs associated with these attributes is calculated and compared with an evaluated customer perspective. This comparison, called a value index provides a means whereby attributes can be ranked with a view to possible elimina

40、tion or expansion. The index is calculated as follows: In the case of a kettle, we can construct the following table, see Table 3. Obviously, colour is important, and customers like a number of options. In contrast, size is not important as most kettles are roughly the same size. Producing a variety

41、 of sizes will increase costs but not generate many benefits. This analysis can be taken further by identifying the cost variability element. This takes us back to basic cost behaviour patterns. There are four basic elements: a. unit variable costs vary in direct proportion to volume changes of the

42、product and will include material and assembly time; b. batch variable costs relate to the number of batches or production run. This is particularly important where the batches are of an uneven quantity or there are significant set-up costs. In the case of a kettle colour will have an impact, change

43、s of colour, special colours, special paints; c. product variable costs relate to product variations involving any redesigns or specification changes; d. facility costs vary with capacity settings. The 22 cost can now be re-analysed as in Table 4. You will see an obvious advantage to this approach.

44、Costs can be better used for decision making by readily identifying those costs which have caused volume or batch changes and which support the product or the facilities. Think of the analysis in terms of automobile production, an obvious example might be a sun roof. Cars fitted with sun-roofs will

45、cost more. The question is will the customer pay the extra? Since such an item will effect the batch numbers, product variation costs and possibly even facilities cost, is the answer to put the sun roof in as standard on all models? In that way, batches of standard bodies are increased, reducing the

46、 unit cost there, and there is no costly variation in tooling or facility. If choice is still important, then provide the differential between a manual, hand cranked sun roof for the lower end of the range, and where there might be central locking, electric windows, security systems and other electr

47、onic gadgets, make the sun roof electric and charge more for a higher specification. Two things should become immediately apparent to you. Firstly, the different approach to looking at the costs. Secondly, identifying more accurately what drives the costs and perhaps the need to look at things diffe

48、rently. In the case of the sun-roof, simple cost analysis might argue for its elimination to cut costs, and certainly in northern Europe a strong case could be made. However, given that some sectors of the market want this attribute, inclusion but with variation on control may be the better option.

49、Since many students may be involved with service or even the catering sector a further example from that area might be helpful. Professor Bromwich has produced a strategic cost analysis table suited to the fast food industry (See Table 5). Since the consumer perceives the benefits as important, then

50、 the cost of providing them and the payback in terms of price charged will be important. As with the kettle illustration above: product/volume costs are the material, preparation and delivery labour and variable overheads; activity related includes material handling and transport (delivery), quality

51、 control, monitoring quality and service, and site and facilities maintenance; capacity related costs include land and building occupancy costs, deprecation and any leasing charges; decision related costs are those involved with product and site design and engineering, quality improvement, marketing

52、, advertising, personnel and administration. Concluding remarks Hopefully, this article will have given you a useful introduction to the topics discussed. However, two other important points need to be considered. Firstly, a fresh approach to costing and cost information is needed. Too often a narro

53、w, negative approach is taken. This results in an over emphasis on cost cutting, frequently with dysfunctional results. Some of the illustrations quoted above have either: aimed to get better value out of existing costs; allowed for a cost increase that has resulted in a better, more positive tradeoff elsewhere. When reviewin