Business process re-engineering help to improve the profits, Cost Accounting

Assignment Help:

MLC, which was established in year 1998, manufactures a range of garden sheds and summerhouses using timber purchased from a various suppliers.The recently appointed managing director has expressed increasing concern about the falling in sales volumes, rising costs and hence declining profits over the last two years. 

Discuss how business process re-engineering could help to improve the profits of MLC.

Business process re-engineering involves examining business processes and making substantial changes to the way in which an organisation operates in a manner. It requires the redesign of how work is actually done through activities. A business process is a series of activities that are linked together in certain manner to achieve the desired objective. E.g - material procurement might be viewed as a business process which could impact on the separate activities of production scheduling, storing materials, processing purchase orders, inspecting materials & payingsuppliers.

Main aim of business process re-engineering is to enhance organisational performance by achieving the improvements in business processes by focusing on simplification, improved quality, enhanced customer satisfaction & cost reduction. 
 
What MLC needs is to be able to reduce its selling prices in order to compete in the market. This selling price reduction can only be sustained by a reduction in the MLC’s unit costs, however such a reduction must not be achieved by compromising on quality of product.
 
Business Process re-engineering can be applied not only to the manufacturing processes but,also to an extensive range of administrative activities. In the case of material handling of MLC might re-engineer the activity of processing purchase orders by collaboration with suppliers of timber & other components for their products by integration of their production planning system with  suppliers. This would help to enable purchase orders to be sent directly to their suppliers thereby obviating the need for any intermediate administrative activity. 
 
Additionally scheduled orders might be agreed with suppliers which would reduce the need to hold inventories of timber & other components. In circumstances where suppliers are working in close collaboration with MLC, it may be possible to roll the quality back down the supply chain and agree quality control procedures with suppliers which would reduce the need to inspect incoming deliveries of timber and components. Thus savings in material handling costs could be achieved via reduced storage, processing and inspection costs. It must be recognised that such costs do not add value to the final product and thus are of no benefit to the customer. 
 
In conclusion business process re-engineering may be useful to MLC because they should may enable them to identify cost savings that do not directly affect their products and so would not have any effect on their customers View of the quality or value of the products.


Related Discussions:- Business process re-engineering help to improve the profits

What are the dimensions of the box with the minimum cost, A manufacturing c...

A manufacturing company wants to package its product in a rectangular box with a square base and a volume of 32 cubic inches. The cost of the material used for the top is $.05 squa

Briefly decribe the benefits of a cash budget, You are provided with the su...

You are provided with the subsequent information relating to Cello Ltd. The accountant is currently preparing the budget for the next three months ending 30 June 2010.

Break even analysis, B REAK EVEN ANALYSIS Break even analysis is a bro...

B REAK EVEN ANALYSIS Break even analysis is a broadly used technique to study cost-volume-profit relationship.  It can be explained as - 'a system for determination of that le

Overhead variances, Overhead Variances This explains how the variable ...

Overhead Variances This explains how the variable overhead total variance and the fixed overhead total variances calculated. You can recall the overheads refer to production c

The cost cycle - double entry system, entries to be entered into a ledger a...

entries to be entered into a ledger account for the month of July 2009 & prepare an incoem statement. balances at 1/7/2009 Materials control $6150 Labour control (accrued wages)

Assessment item 2, QUESTION 1 Job costing Create a spreadsheet solution to...

QUESTION 1 Job costing Create a spreadsheet solution to the following problem. Follow the template provided. Play the Job cost podcasts and work through the example problem in tho

Cost, what is traditional costing system

what is traditional costing system

Contingent liabilities, These should be distinguished from estimated liabil...

These should be distinguished from estimated liabilities. Estimated liabilities are identified liabilities where the amount is uncertain. Contingent liabilities conversely are not

Cash flow statement, Keyser Beverage Company reported the following items i...

Keyser Beverage Company reported the following items in the most recent year. Net income $40,630 Dividends paid 5,390 Increase in accounts receivable 12,130 Increase i

Compute the cost of goods - periodic inventory method, Beginning inventory ...

Beginning inventory on March 1 consisted of 2,000  units each costing $11.20 . During March, the following was purchased for inventory: Date Purchase

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd