Unit 8 Operational Efficiency and Business Process

Performance

8.1 Just In Time and Lean Manufacturing

1. Just In Case (JIC)

This is the traditional/conventional system for production (used before 1960’s), which is based in
the forecast/predictions made by the firm. This process is a Push System or Forecast-Driven
System or Production Based System.
The process starts by the firm ordering Raw Materials based on the forecasted units to be
produced throughout the year. The firm purchases the raw material on small intervals (ex-
purchasing the RM twice a year not for every order), which is why they also have warehouses to
store the purchased raw materials.
Then the production starts where each department works alone and at the end of the production,
there is the Quality Inspection. Finally, the Finished Goods are either sent to the warehouse or
showrooms.

NOTES
❖ The production is based on the forecasted amounts, not the demands of the customer
❖ Large quantity of Raw Materials is set aside (idle assets, where capital of firm is tied up)
❖ Raw Materials must be counted (use time) and inspected (reports) Non-Value Adding
❖ Require storage facility which increases costs (rent, security, counting the raw material)
❖ Higher production, setup and maintenance costs
❖ Some purchased parts and components may not be used in the production (idle asset)
❖ Massive Inventory production may result in Mask Production Problems (issues when
production that are recovered in the quality inspection stage, considered as a loss)
❖ Quality Inspection (non-adding value to the customer)
❖ Higher carrying costs (ex- warehouse, security, insurance, taxes, etc.)
❖ Risk of obsolescence (the products become old or deteriorate)
❖ Push system doesn’t meet the customer’s demand

1|Page
 2. Just In Time (JIT)
This method is favored by the modern inventory planning, it views the inventory as a liability
and limits the output to the demands of the subsequent operations. The process starts when the
customer makes an order. Also called as Push System or Demand-Driven System or Back
Flush Costing System. Under JIT, it is a reaction the trends of global and competition and rapid
technological improvements resulting in a shorter product life cycle and greater product diversity
(variety) for the customer. EDI (Electronic Data Interchange) is utilized that allows the supplier
to access the buyer (firm) online inventory system.

Objectives of JIT
Higher Productivity, lower order costs as well as carrying costs. Faster and cheaper setups,
shorter manufacturing cycle times. Enhanced Quality and more flexible processes. The main goal
is to increase competitiveness and higher profits

Features of JIT
JIT is a pull system; items are pull through production by current demand. Demand-Driven
Production allows inventory levels to be minimized, reducing the non-value adding. Decrease
in suppliers and be dependent on a specific supplier. Buyer supplier relation is facilitated by EDI.
The electronic message reduces the paper-work and there is a coordination in the production
schedules.

2|Page
Effects of JIT on the Operations
Lower inventory levels and elimination of internal controls. Frequent receipts of deliveries mean
that there is a less need for sophisticated inventories. The JIT may also eliminate receiving areas
and hardcopy reports and storage areas of Raw Materials. Furthermore, manufacturing lead time
is also reduced because of on-time deliveries. The quality of parts is verified by using a statistical
control rather than inspection of each item.

Implementation of JIT
In order to implement a JIT inventory system, the manufacturing is reorganized around the
manufacturing cells. In the traditional system, each department is specialized into one task,
however, with the new system, a cellular layout is implemented, and each cell is grouped into a
U shape OR semi-circle that produces a given product. Each worker must multi-task, otherwise
workers will be in idle. The organization must operate as effective teams, so employee’s
empowerment (delegation) is vital, to achieve continuous improvements and zero defects.

Advantages of JIT
✓ Production is based on the customer demands
✓ There must be a close relationship with the supplier, the supplier must be reliable and
should be chosen carefully. The number of suppliers must also be limited
✓ Raw Materials arrive exactly at the right time (JIT)
✓ Receiving areas and warehouses for Raw Materials are eliminated as it is directly loaded
in the production line
✓ No counting or inspection of Raw Materials when they arrive
✓ Factory/Production Line must be organized perfectly U shaped
✓ Only what is needed by the next order is produced (no over-production or backup) just
what is required
✓ Lower costs to setup machines and machine break-downs (break for machine)
✓ Each worker is in a cell (area) and must multi-task as in being able to operate all
machines, perform support tasks (ex- setup, maintenance, move WIP and quality
inspection)

3|Page
 ✓ Units are inspected for quality during the production phase, so any defects are fixed
immediately
✓ Zero defects
✓ No storage, inventory, taxes or obsolescence risk as products go straight to the customer
✓ Units are produced and delivered JIT as per the customer’s requests
✓ No WIP at the end of the year

Disadvantages of JIT
❖ JIT is an expensive system as employees must be trained to multi-task and it is based on a
lot of machines
❖ Stock-out cost risk which means that any defect will result in the products arriving late to
the customer, and the firm may lose the customer, losing the sale
❖ This system is not suitable for producing complex products with high mix environment,
so products must be similar. Dis-similar products such as fuel factories is quite difficult
to implement such system

4|Page
 3. Lean Manufacturing
Also called as Lean Process. It is a part of JIT and its main focus is accomplishing more with less
resources and providing customers with what they want and meeting their expectations. There
are 5 principles of lean manufacturing:
1) Value- identifying the feature of the product or service that the customer values
2) Value Stream- examining every process, identifying the processes that add value and
eliminate the processes that do not have value
3) Flow and Pull- designing a system that is capable of pulling the demand from customers
and maximizing the flow of product
4) Empowerment- provide each worker the knowledge and authority to make timely
decisions to increase value and eliminate waste
5) Perfection- focus on constant improvements

4. Role of Kanban
Kanban means ticket, this ticket controls the flow of
production or parts so that they are produced at a needed
amount at a needed time. This system includes:
a. Stating the quantity to be process
b. Stating the output
c. What, how much, where and when to deliver
When the worker sees the card/ticket, it acts as an
authorization to release the next step. Workers cannot
move from a stage to the other until the Kanban indicates
it being ready for the next stage.

Rule

JIT JIC

Inventory Turnover High Low

Inventory % Low (no inventory) High

5|Page
8.2 Enterprise Resource Planning and Outsourcing

1. Master Production Schedule

It is a short range (tactical or operational) plan that must be
converted into specific production targets for finished goods. The
raw materials required in the production must be delivered at
specific times. The plan is broken down from yearly to quarterly
to monthly to daily. The style of finished goods is based on
forecasted demand which is why it is a push system (JIC). The
operational plan must be converted to specific dates of
completion and shipped to the customer.

2. Material Resource Planning (MRP)

The MRP system enables the firm to fulfill the requirements of the MPS efficiently by
coordinating the manufacturing components (raw materials) and finished goods. The arrival of
the raw materials is vital to create the immediate components.
MRP joins the MPS system into one single system. There are 3
overriding goals of MRP:
a. Right Parts
b. Right Quantity
c. Right Time
The MRP is a push system, which means that production is based
on forecasted demands, programmed into the computer. This
system also creates schedules of the required items of inventory
needed in the production process. In case there is no inventory for
production, the system automatically generates a purchase order
with consider to lead times (time between initiating and
completion of a product). The timing is crucial to avoid inventory
delays of pileup of inventory.
The MRP system also consults Bill of Material (BOM), which is a record of which and how
many sub-assemblies to turn raw materials into finished goods.
Benefits of the MRP system include, reduced idle time, lower setup costs, and lower inventory
carrying costs and enhanced flexibility in responding to changes in market.

6|Page
 3. Manufacturing Resource Planning (MRP II)
This is more advanced system than the MRP. It is a closed loop (automatically controlled system
than gives feedback) that integrates business process including production, sales, inventories,
schedules, and cash flows. The same system is used for financial reporting and managing
operations. MRP is a component of MRP II.

4. Traditional Enterprise Resource Planning (ERP)

ERP system helps the business to determine the hiring decisions needed or investing in a new
capital asset. The traditional ERP shares data and coordinates activities. ERP is intended to
integrate enterprise information and all database in the company (ex- when receiving an order,
automatically a check is done for the inventory levels)
The Traditional ERP system is internal for the business, called as back-office functions, so all
information produced is required mainly by managers.

7|Page
ERP system connects all functional financial and non-financial sub-systems and also connects
the organization with the supplier and the customer. The organization may also utilize the
business process reengineering, which is recreating the business process to improve quality and
reduce costs.
The main drawback of the traditional ERP system is that it is very complex, so customizing the
software to fit the business process may be difficult.

5. Current Generation of ERP System

The current system of ERP II has added a front-office functions which assists the organization
with interaction with external parties and the business processes. The following items interact
with the back-office functions:
1) Supply Chain
2) Customer Relationship
3) Partner Relationship

6. Outsourcing
Outsourcing- the management of day to day execution of an entire business by a third-party
provider. Outsourced services can be on or off premises, in the same country or separate country.
Outsourcing enables the company to focus on the core business rather than being concerned with
the marginal activities.
Benefits of Outsourcing include- Reliable services at a reduced cost, as well as, avoiding the risk
of obsolescence and access to technology.
Limitations of Outsourcing include- Dependence on outside party and loss of control over a
necessary function.
Insourcing- the transfer of an outsourced function to an internal department of a company to be
managed by employees only. (Transfers the employee from a department to the other with the
transfer of knowledge as well)

8|Page
8.3 Theory of Constraints

The idea of theory of constraint (TOC) is improving any process by focusing on the slowest part
of the process not max efficiency of all other process. The slowest part of the system is called
constraint or bottleneck. Constraint causes Backup of WIP and vacancy for the next process,
as the other processes need to wait for the constraint part. Increasing efficiency of processes that
are not constraint creates backup of WIP in the system.

The steps of TOC analysis are as follows:

1) Analyze and Identify the Constraint
2) Determine the most profitable product mix in light of the constraint
3) Maximize the flow within the constraint
4) Increase capacity at the constraint
5) Redesign the manufacturing process for greater flexibility and speed

1. Analyze and Identify the Constraint

The bottleneck/constraint operation can be identified as the one with WIP backed up. A
sophisticated approach is to analyze the resources available (ex- number and skill of employees,
inventory levels, time spend in other phases) and then determine which phase has a negative
slack time; the phase where they are not enough resources to keep up.

9|Page
 2. Determine the most profitable product mix in light of the
constraint
This is a short run phase (temporary solution), that requires maximizing the contribution margin
within the constraint, known as throughput margin.
Sales Revenue
- (Direct Materials)
Throughput Margin

Throughput costing is sometimes called as super-variable costing, as it recognizes only the

direct materials as product costs and the rest is considered period costs. All other manufacturing
costs must be ignored.

NOTE
For external reporting, absorption costing is used. Therefore, an adjusting entry is required to
restate the inventory. Different costing method can result in different cost per unit, which can
affect the ending inventory.

10 | P a g e
 3. Maximize the flow within the constraint
This is a short run stage, the aim is to keep up with the current situation. The production flow is
managed using the drum-buffer-rope (DBR) system. The previous department before the
constraint must be studied as the issue maybe from the previous department as it produces a lot.
Drum- it’s the bottleneck operations
Buffer- the minimum amount of WIP to keep the drum maintained
Rope- the sequence of activities before and including the bottleneck operation that must be
coordinated to avoid inventory backing up.

11 | P a g e
 4. Increase capacity at the constraint
In the short run, TOC encourages managers to make the best use of the bottleneck operation. The
medium-term step for improvement is increase the bottleneck operation (ex- increase machines,
hire or train more staff, convert to automated machines)

5. Redesign the manufacturing process for greater flexibility and

speed
The long-term solution is to re-engineer the entire process, the firm must use new technological
advancements, unnecessary efforts must be eliminated. The firm must focus on the value adding
activities that increase the customer satisfaction, as well as eliminate non-value adding activities.
Value engineering (value adding and non-value adding) is useful as it explicitly balances the
product costs and needs of customers.

12 | P a g e
8.4 Capacity Management

1. Capacity Levels
Theoretical (ideal) Capacity- is the optimal level of output that can be completed with zero
downtime (no maintenance) and zero waste. This capacity is not recommended as it is not
reasonable
Practical Capacity- is the highest level of output that can be reasonably attained assuming
planned and unplanned downtime (ex- setup costs, maintenance, and breakdowns) and expected
waste. This is the closest to the market needs.
Normal Capacity- is the average level of output that can be completed over a period of time, it
is also the closest to the market.

2. Capacity Planning
Capacity Planning is an element of strategic planning and is closely related to capital budgeting
(fixed assets). In order to maximize the capacity, an understanding of the nature and resources of
the firm is required. Effective capacity cost requires:
1) Investment Analysis

a. In the short run, the current investments must be used in order to upgrade to the
higher capacity (question- is the current capacity fully utilized?).
b. Minimize the requirement for future investment (question do we really need to but
this new machinery?)
c. Useful costing information must be provided on the current capacity compared to
the future ones.

2) Capacity Assessment

a. The firm must close any gaps between the market demands and the firm’s
capabilities (the firm may have excess capacities or shortages, these include
physical, human, technological or financial).
b. The firm must also identify the current cost capacity and the impact on the
business cycle and overall company’s performance
c. Identifying capacity to meet strategic and operational objectives
d. Details about the opportunity costs of unused capacity and suggesting ways to
account for these costs
e. Creating common language and understanding for capacity costs management
f. The capacity costs must be identified from several perspectives, including
subsequent disposal of resources

13 | P a g e
 3) Manufacturing Process Assessment

a. Max value delivered to customers (improve product, rather than increasing

production )
b. Matching current and future opportunities
c. Eliminating waste in short, intermediate and long runs

Capacity Planning is part of the capital budgeting process as an estimation must be done for
future periods regarding acquisition of more capacity or disposal of capacity that is not expected
to be utilized.
Capacity Level affects product costing, pricing decision and financial statements. Excess
capacity has costs, having excess capacity means the firm can charge higher price or report
lower operating income.
Full capacity can also have opportunity cost as the company could generate additional sales if it
had more capacity (ex- if government purchased all units at lower price and then customers
required goods but with higher price).

3. Capacity Expansion
Also referred to as market penetration, as it involves increasing the amounts of existing
product in an existing market. Determining whether the capacity is required to expand is crucial
because once it done, it can’t be reversed. The problem is forecasting long-term demands, market
share and behavior of competitors.
The firm must avoid overcapacity (having capacity that is not utilized). Under capacity in the
short run is not a major issue in a profitable industry.
Over-capacity is also an issue as firms compete on intensity rather than reverse expansion. The
budgeting process also predicts future cash flows related to the expansion eliminating interest
rates and calculating using PV (present values).

14 | P a g e
Porter’s Model of Capacity Expansion (Steps)
1) The firm must identify the options related to its size, type, response of competitor and
degree of vertical integration (become its own supplier or retailer).

2) Forecast demands based on input costs and technological developments. The firm
must also be aware of the technology becoming obsolete or future re-designs.
Furthermore, the expansion news may pressure the firm into higher input costs (as
competitor may increase price because of the news)

3) The firm should analyze the competitor to determine the timing to expand. It’s difficult
to predict the competitor’s behavior and potential. Moreover, industry leaders are the
most influence able.

4) At this stage, the firm predicts the total capacity and market share, these estimates go
along the cash flow and expected demands.

5) Testing inconsistencies
In case the demand uncertainty is low, the firm must adopt a strategy for expansion plans.

15 | P a g e
8.5 Value-Chain Analysis

To remain in the market, the firm’s product must provide value to the
customer and a profit to the seller as well. The customer assigns the
value to the product and the producer can affect the customer’s
perception of the value by differentiating the product or lowering the
price.

A value-added activity increases the value of a product or service to the customer (ex- setting up
the product to the customer after shipment). The value chain financial statement treats value
added activities as product costs (inventoriable costs). A non-value-added activity does not
increase the value delivered to the customer (ex- testing the shipment after production).

The value chain model is the way in which each function of the company adds value to product.
The value chain approach for assessing competitive advantage is an integral part of the strategic
management process. The value chain also shows how the costs and customer value accumulates
along to lead to an end product.

16 | P a g e
 1. Value Chain Analysis
A value chain analysis is a strategic analysis tool that allows the firm to focus on those activities
consistent with the overall strategy. This system allows the firm to decide which parts of the
value chain it wants to occupy and then gain its competitive advantage by adding value to
consumers. This system also improves the firm’s knowledge of its relation to customers,
suppliers and retailers.
Steps to perform Value Chain analysis:
1) Identify the firm’s value creating activity
a. Primary Activities- R&D, Product Design, Manufacturing, Marketing, etc.
b. Secondary Activities- HR, Procurement, IT, etc.

2) Determine how each value can create a competitive advantage

a. Identify competitive advantage so that the firm knows its position (ex- cost
reduction, product differentiation)
b. Identify ways in which the firm can create value activities and generate additional
customer value
c. Identify activities that are candidates for cost reduction or in case it’s not the
firm’s core competency, the firm can outsource, as its lower’s costs and generates
better ideas.
d. Identify ways in which the firm’s activities can be linked with value adding

Value chain analysis offers an excellent opportunity to integrate strategic planning and guide the
firm to survival and growth.

2. Supply Chain Analysis

The supply chain is the flow of materials and service from their original source to the final
consumer, sometimes involves more than one firm. Firms seek to improve performance and
reduce costs so they must analyze all stages of value chain and supply chain.

17 | P a g e
The decision to purchase is often made by the decision of the Production Control to insourcing
vs. outsourcing (make vs. buy). The choice of vendors depends on the quality, price, delivery,
shipment and credit terms. It is often viewed that the purchaser and vendor are committed to a
partnership involving joint efforts.
Supply Chain analysis and coordination must extend to all parties of the chain, from materials to
retailers. This cooperation is called bullwhip or backlash effect, which occur when there is a
demand variability at each level of the supply chain.
Value chain and Supply chain must meet the demands of the customers for better performance
regarding success factors, including:
a. Cost reduction
b. Efficiency
c. Continuous Quality Improvement
d. Eliminating Defects
e. Constant Innovation
f. Faster Production & Customer Response

3. Value Engineering
It means reaching the targeted cost levels. It’s a systematic approach to assess all aspects of
value chain costs buildup for product. The aim is to reduce costs without sacrificing customer
satisfaction. Value Engineering requires differentiating between cost incurrence and locked-in
costs
a. Cost Incurrence- is the actual use of resources

b. Locked-in (designed in) Costs- they are costs that will result in the use of resources in
the future because of a past decisions. The part of value engineering is controlling the
design costs before they get locked in.

c. Life-cycle costing- is sometimes used as basis for cost planning and product pricing. It
estimates the revenues and expenses over a period of time and sets the suitable price to
cover all costs.

18 | P a g e
8.6 Other Process Improvement Tools

1. Process Analysis
Process Analysis is the means of linking a firm’s internal processes to its overall strategy.
Types of Process include:
a. Continuous- the production runs nonstop (ex- candy bars)
b. Batch- production is runs and stopped at intervals (ex- beer production)
c. Hybrid- it’s a mix of both continuous and batch
d. Make to Stock- (ex- automobiles assembly)
e. Make to Order- (ex- subway sandwiches)

Process Interdependence- is the degree of interdependence among the stages in a process

(called as tightness)
a. Tight Process- a breakdown in one stage will affect the rest of the stages, often found in
continuous production as there is no buffer (protection) to WIP inventory. (ex- purchase
of Raw Material, the production process can’t run without it)

b. Loose Process- a breakdown in one stage will not affect the subsequent stages, often
found in batch production and other extensive WIP inventories (ex- counting and storing
Finished Goods)

Bottleneck- one part of the process of production is always at slowest

Adding capacity to that slowest stage will shift the bottleneck to the next slowest operation. The
bottleneck issue arises when the demand for the firm’s product is sufficient to absorb the output.
When the production line runs at less than the full capacity, the bottleneck is then avoided.

19 | P a g e
 2. Process Value Analysis
It is an understanding of how the organization generates output. It involves determining which
activities use resources that are value-adding, and which are non-value adding, so that we can
eliminate them. The main goal is to add value to the customer.
The linkage of product costing and continuous improvement of processes is activity-based
management (ABM). ABM also improves the use of resources to increase value for customers
and become efficient.
ABM includes the following:
a. Strategic Analysis- explores the way in which a company can create and sustain
(withstand) a competitive advantage
b. Benchmarking- a method that identifies an activity as the standard by which a similar
activity is judged upon
c. Operational Analysis- seeks to identify, measure and improve performance of key
processes
d. Profitability/Pricing Analysis- assists the company in identifying cost benefit analysis
of a product and launching analysis
e. Process Improvement- focuses on identifying the cause of variation, waste and
inefficiency.

Continuous Improvement Process (CIP) - is an ongoing effort to improve products, services or

process involving management and workers. Its purpose is to identify, improve and eliminate
sub-optimal process to become efficient. Evaluation and improvements are continuously done.

Kaizen- is a Japanese for continuous improvement in every aspect of organizational operations.

(Ex- budgets prepared by Kaizen)
Feature of Kaizen: (change for better)
a. Improvements are based on small changes rather than radical (major) changes
b. Ideas come from workers themselves, to be easier to implement
c. Small improvements require fewer capital investments
d. The ideas come from the talent of current workers as opposed to using R&D
e. All employees including the management should continuously seek way to improve their
own performance
f. Workers are encouraged to take ownership of their work and enhance teamwork and
therefore motivation for workers (feel like owners)

20 | P a g e
Activity Analysis- determines what is done, by whom, what costs and resources needed by each
activity.
a. Value Added Activities- are necessary to remain in the
business
b. Non-Value-Added Activities- unnecessary and should
be eliminated

Financial and Non-financial measure of activity performance

address efficiency, quality and time. The purpose is to assess how well activities meet customer
demands. Satisfying customer needs and wants and produce defect free output.

3. Business Process Reengineering (BRP)

It’s a complete rethinking of how business functions are performed to provide value to
customers, using major innovations instead of simple improvements. Technological advances
have increased the popularity of business process reengineering. Reengineering is process
innovation and core process redesign. Most BPR techniques assume that humans will be
motivated to work actively in improving operations when they are full participating in the
process. (Feedback is taken from bottom to top)

To implement BPR, the management must determine,

1) Cost to Re-engineer
2) Expected Savings

21 | P a g e
 4. Benchmarking
Involves continuously evaluating he practices of the best-in
class organizations and adapting company process to adopt
these practices. It focus on financial performance and all
aspects of the business. Firms can compare themselves with
firms in different sectors, not only competitor.
It analyzes and measures the key outputs of a business
process against the best and identifying the key actions and root causes that result in these
performance differences. It is an ongoing process that compares quantitative and qualitative
between the company’s performance and best in the world.

Steps in Benchmarking Process:

1) Planning and Organizing Teams

• The firm must select and prioritize benchmarking projects. (Department and
Process)
• Understand the organization’s critical success factor (Good Practices)
• Identify the key business process of benchmarking (Process A and Process B)
• Select the criteria and parameter for benchmarking (Time)
• Organize the teams by knowledge, communication skills, teamwork skill,
problem solving and project management

22 | P a g e
 2) Record and Document the internal process

• The benchmarking team must investigate and document the internal process that
are subject for benchmarking

3) Identify and Search for best in class performance

• Setting up databases
• Choosing information gathering methods (internal and external sources)
• Formatting questionnaires
• Selecting benchmarking partners

4) Making Gaps Assessment and root causes analysis reports

• Data analysis phase requires identifying performance gaps

• Understanding the reason why gaps exist
• Prioritizing activities that will assist in the process of change and implement the
benchmarking study performance

5) Execute and Evaluate

5. Cost of Quality
There are 4 categories of costs of quality, they are prevention, appraisal, internal failure and
external failure. The organization must minimize total costs of quality.
Quality Conformance Costs include both Prevention and Appraisal (are both in financial
measures of internal performance).
1) Prevention Costs- attempts to avoid defective output, costs include maintenance,
employee training, equipment redesign and evaluation of supplier

2) Appraisal (analysis) Costs- activities such as statistical quality control programs,

inspection and testing.

23 | P a g e
Non-Conformance Costs include internal failure (measure of internal performance) and external
failure (measure of customer satisfaction)
1) Internal Failure- costs of defective units before shipment (ex- scrap, rework, downtime,
tool changing, re-inspection, lost learning opportunities, researching and correcting
problems)

2) External Failure (lost opportunity)- lost profits from declining market share, as
dissatisfied of customers make no purchases, return products or cancel orders (ex-
rejection, return, repair, recall and complaints). The best solution for external failures is
to provide all employees with training about the importance of quality to customers.
Environmental costs are also external failure (ex- fines, loss of customer goodwill)

6. Efficient Accounting Process

Improving accounting processes can boosts the company’s ability to minimized costs and
maximize usefulness. Methods that can be used are as follows:
a. Process Walk-Throughs- following a transaction from initial stage and
observing every step in the financial reporting system. This helps to correctly
record and catch errors
b. Process Training- enables personnel to learn how to do their jobs more
efficiently and eliminate unnecessary transactions, freeing up employees for more
urgent issues
c. Identification of Waste and Over-Capacity- leads to more efficient accounting
operations by eliminating the unnecessary transactions
d. Identifying the root cause of errors- it uncovers issues related to accounting
systems, errors by workers and errors by organizational procedures.
e. Reducing the accounting close cycle (fast close) - done by identifying roots and
correcting problems to speed up the system and reducing completion times.
f. Shared Services- makes operations more efficient by having one department in a
region and easily track costs across a company.
24 | P a g e