Managerial Accounting Practices Essay Example | Topics and Well Written Essays - 1250 words

Managerial Accounting Practices - Essay Example financial reports focus on what has happened in the past – whereas what you are looking for is improvement – improvement in all sectors (manufacturing, sales, accounting, customer relations) at present and in future. Inventory is a necessary current asset that represents a significant investment at any given time. Just-In-Time represents a new paradigm of business strategy shifting from traditional inventory management to web-based supply chain management that increases inventory turnover and reduces inventory holding. JIT is an ideal for repetitive manufacturing processes (like Claire’s Antiques) in which the same products and components are produced over and over again.1 profitability†.2 With the objective of producing the right quantity of products in the right place at the right time, JIT perfectly blends the fundamentals of minimizing cost and maximizing profits – these fundamentals, Man (Labor), Material and Machines (Equipment) are often called the 3Ms of manufacturing and inventory operations. JIT (also known as ‘lean production’ or ‘stockless production’)3 produces the following benefits. You will note that most, if not all of them are lacking in Claire’s Antiques organization at this moment. Inventory levels at all levels are reduced, inventory investment is minimized by having only work-in-process (WIP) inventory with no need for safety stocks(2); inventory turnover rate (velocity) is increased. There is a balanced flow of materials throughout the entire production process, as underutilized (excess) capacity is used instead of buffer inventories. This has been a major problem of the present bedroom furniture line of Claire’s Antiques. Product quality is improved by focusing on zero-defect production processes. JIT involves utilization of more productive equipment and disposition of less productive equipment. Faulty production methods that create products requiring subsequent rework are identified and eliminated. The data that