Lean Production is an innovative production technique of Japanese origin that aims at bring efficiency in production. The system comprises of various different techniques, all focusing on ensuring best quality and maximum levels outputs in minimum inputs. Minimum inputs here, not only refer to minimum in terms of materials, but also in terms of time and cost thus ensuring minimum wastage (Stevensons, 2008). Methods that are part of Lean Production include Kaizen, Kanban, Cell Production, Just In Time, and Total Quality Management.
Another thing that differentiated companies practicing Lean Production methods is the way they adhere to accounting principles. Also referred to as 'Lean Accounting' this method of cost accounting and managerial accounting allows accountants to efficiently divide their costs in processes and get accurate results rather than crude estimates. One of the pioneers in Lean Production and Lean Accounting System is the renowned automotive company, Toyota Motors.
A major and critical part of the decision making for any organization occurs, when the organization has to decide on its future investments. This may be any kind of investment decision such as buying a new machinery, new property, or investing in stocks. The decision is complicated because there are various factors that may influence the accuracy of investing in a certain project. Ignoring even one of the factors may result in a wrong investment decision, which might lead to heavy losses for the organization. In order to prevent any inaccurate decision making firms draw forecasted plans pertaining to the investment decision that lay ahead of them. These plans are known as Capital Budgeting. As the name suggests Capital Budgeting or Capital Redemption techniques refer to budget and evaluate the costs and return pertaining to making a capital investment. It is, in simple terms a cost benefit analysis that helps in determining the feasibility of a project.
Quality Control
The Toyota Motors is very particular about the quality assurance in the business, whether in terms of goods and services or in terms of performance of overall business operations. The Company adheres to strict Total Quality Management practices, where constant check and balance is maintained on every stage of business operation that is from receiving supplies to final delivery to customer (Waters, 1999). Being a large business, The Toyota Motors have a separate quality control department. However, the management still sets strict benchmarks and standards and ensures that the business is up to the mark. The business uses techniques such as lead time stock management system and cost efficient capacity management systems that ensures avoiding of over stocking and under stocking and inventories are maintained at acceptable levels (Houle, 2007).
It does have a separate quality control department amd the management of the company used Total Quality Management (TQM) practices in order to ensure consistency in quality. This is done by setting standards for each level of business operation and then maintaining quality checks to ensure that performance at that level is up to the standard. The Toyota Motors keeps uses simple quality management tools such as the Pareto chart, check sheets and check lists.
The quality control department is responsible for checking every morning that all the supplies are fresh and are up to the mark and in required quantity. Any shortages or flawed supplies are reported and arrangements are made to rectify it. Supplies such as defected raw materials are rejected and fresh supplies are arranged for. One person from the management makes surprise inspection visits to the manufacturing site in order to make sure that the quality reports which the quality control department submits is in compliance with the required standards. The inspector personally checks and inspects the operations for quality management.
The inspection personnel are required to maintain check sheets in which they record all their observation that is the consistencies and lacking that are in the company and that needs to be addressed these records are then charted on the Pareto chart (Houle 2007). This helps in addressing the root cause of the problem, in case one arises and eliminating it at that stage so that consistency in quality can be maintained.
How Capital Budgeting is Done?
When any firm makes an investment in a project, its objective is to maximize the returns that it will be gaining from the investment it will make. However, the case is not as simple as it sounds. There are two major factors...
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