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

Cost component, Identify the individual cost components and the total cost ...

Identify the individual cost components and the total cost of delivering the product from supplier to retailer.   Identify each cost in terms of the incremental addition to the pro

Cvp for multiple products, CVP for Multiple Products What number of bus...

CVP for Multiple Products What number of businesses sells only one manufactured goods? The reality is that firms usually give us the diverse product line, and the individual pr

Estimate the debt and assets ratio, 1. Wrangle Corporation stock sells at a...

1. Wrangle Corporation stock sells at a price of $80 a share and the riskless rate is 7%. Calculate the price of a 9-month call option on Wrangle stock with an exercise price of $7

Can fca help compare opening a new landfill, Q. Can FCA Help Compare Openin...

Q. Can FCA Help Compare Opening A New Landfill Versus Building A Wasteto-Energy Incinerator? Ans. Yes. The principles of FCA are precisely the same no matter how you relat

Use the high-low method to determine variable cost per unit, The following ...

The following data is available regarding costs and units: Observation Machine-hours Total Operating Costs January 4,000 $45,900 February 5,000 52,500 March 3,400 44,025 April 4,40

Absorption and marginal costing, company XY produces a single product ''XY1...

company XY produces a single product ''XY1" selling price per unit 15, direct materials per unit 4 direct labour per unit 3 variable overhead per unit 2 fixed overhead incurred 12

Calculate the re-negotiate the part-time trainers cost, a.    If you could ...

a.    If you could pick a single source of cash for your business, what would it be? Why? b.    How can a business earn large profits but have a small balance in Retained Earnin

cost classification, Explain the value attached to this common exercise un...

Explain the value attached to this common exercise undertaken by Accountants.

What was the cost of supplies cal farm, Cal Farms reported a supplies expen...

Cal Farms reported a supplies expense of $2,000,000 a year. The supplies amount decreased by 200,000 during the year to an ending balance of $400,000. What was the cost of supplies

Trypanosoma, Place a prepared slide of Trypunosoma under tlic microscope an...

Place a prepared slide of Trypunosoma under tlic microscope and focus it under low power, You will observe large number of tiny spindle-shaped trypanosomes lying in the plasma alll

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