What are the Changing role of management accounting
1. Focus on customer scarification: customer satisfactions are continuously gaining high priority in management thinking it is pivotal to the success of an organization. The number of organizations branded to be customer driven is continuously increasing. It is also said that customer satisfaction is priority one.
2. Key success factors: customers are enlightened these days and they demand even improving levels of performance with reference to:
a. Cost: organizations these days are under continuous pressure to reduce cost of products and service to the customers.
b. Quality: customers these days demand strict conformity to pre-specified standards. Improvement in quality is being used as competitive weapon against the competitors. Quality ensures fitness for use the degree to which a product conforms to design specifications and engineering requirements. All quality related costs preventive costs appraisal costs internal failure costs and external failure costs are analyzed in detailed to cause marked improvement in quality of product or service to the customer. Management accountant plays key role identifying and matching relevant cost and benefits of quality improvement.
c. Time: time considerations are extremely important in today's world of acute competition. It involves time taken to develop and bring new products to market the speed at which the companies respond to customer requests and changes in customer's preferences. Organizations are under pressure to complete activities faster and to meet promised the dates more reliably than in the past in order to increase customer satisfaction.
d. Innovation: these days it is being increasingly recognized that continuous flow of innovative products and services is a prerequisite for ongoing success of an organization.
3. Total value chain analysis: all business functions such as research and development design of products services or processes production marketing customer satisfaction are essential and value contributor. In an extended value chain analysis all business functions related to product or service are properly appraised from cradle to grave (womb to tomb). Efforts are then made to improve the value of product or service to the customer.
4. Focus on internal and external environment: the focus on internal environment means focus on physical human beings and information aspect related to different business functions. The external environmental includes customers' competitors' suppliers and government bodies. Successful organizations have to be extremely sensitive both to their internal and external environment.
5. Continuous improvement: continuous improvement by competitors creates an ever ending search for higher level of performance within many organizations. In management it is being realized that if an organization is not going forward it is going backward. Commitment to progress is essential for survival in international competition.