“the essence of the business is to seek maximum sales and minimize costs.”
This sentence breaks down the survival codes of all companies -- like steel-wire dancers, who need to keep their performance "left hand" strong enough and cost-effective "right hand" in order to balance the firm's robustness in the market。
In reality, however, many businesses are caught in a “difficult”:
Either the profit is consumed by costs in order to rush the performance blind; or the opportunity for growth is missed in order to sidestep costs. The inter-departmental “wall” adds to the tension - sales shouted, “how to get orders without input”, production complained, “cost pressure cannot guarantee quality”, and finance stares at the statements and groans, “money never knows where it is spent”。
The value of the ameba business accounting system (aos) was then highlighted. It is not simply a bookkeeping tool, but a business language that allows every department, every employee, to understand “where money comes from, where it goes”: it allows both a line of “fires” to hear the market and reverses the accurate growth of sales with data; and it allows every link to become a “cost-keeper” and to fine-tune without sacrificing value. In the end, what it wants to activate is the internal dynamic of business, from “minority worry” to “full-time work,” so that “receiving” and “saving” is no longer the opposite, but rather the normal business of living together。
Business management accounting is first and foremost an organizational concept
The amiba business places great emphasis on organizational management, and in order for it to operate, the corresponding amiba organization needs to be built. In doing so, the following principles should be adhered to。
01 independent accounting includes a complete business chain
With the expansion of the enterprise, traditional functional organizations have become increasingly incompetent, highlighted by the lack of clear responsibilities between the sector and the sector, the persistence of responsibilities, the lack of quality or timeliness of materials produced to complain about procurement, the lack of quality of sales to complain about production products, and the fact that the production to complain about sales take over orders regardless of the customer。
Why? Because sales are made on the basis of an order to complete the contract amount, it is a matter of production, and the production sector, on the other hand, certainly wishes to make the product easily by using quality raw materials. The customer's requirements should not be too stringent. The essence of dialysis is self-interest, not altruism。
To include as much as possible the full business chain, “complete” in this context refers to the redefinition of the responsibilities of the various subjects and the establishment of a market-oriented internal customer system, such as the marketing sector as the customer of the production system, the supplier as the procurement department, and the internal simulation of the market, so that each amiba is a profit centre with a marketing function。
02 operations management system is simple and efficient
Operating management systems are not directly value-creating and the more streamlined they are, the better they are, provided they meet the needs. In the early stages of enterprise development, and even in the case of a single business management department, it is crucial that management functions are robust and that, as the enterprise grows, it can gradually shift from a functional fragmentation to a sector。
Operating management systems exist not only at group headquarters but also within the ministry of enterprise and the grass-roots amiba, resulting in vertically integrated systems. This requires clear vertical regulatory relationships, indicator relationships and data logic。
In the practice of kyoto, the costs of operating the management system as a whole are allocated to amiba, which is the centre of profits and which, by bearing the costs of operating the management system, makes corresponding demands on the management services of the system and discourages the tendency to operate a swollen and bureaucratic management system。
03 establishment of multidimensional dynamic amiba
Amiba's establishment, which can be a zone, a type of customer, a business, a process, etc., is centred on a simulation of marketable procurement, production and marketing behaviour, whereby thousands of amibas may be present in the enterprise, creating a market-based collaboration mechanism between them。
The establishment of amiba requires consideration of the situation of the amiba leadership, which does not exist because of the combination of a human organization and an organization based on events。
In short, the effective division and design of amiba is an organizational guarantee for amiba operations。
How to establish an operational accounting system
Amiba emphasized “maximizing sales and minimizing costs”, for which a complete business accounting system was needed。
01 “maximizing sales and minimizing costs”
In our usual understanding, maximizing sales is incompatible with minimizing costs, as the growth in sales requires more investment. If such a mentality were adopted, there would be no strong will to control costs。
Amiba's idea is not that. Amiba's business believes that a truly good enterprise can effectively maximize sales and minimize costs。
The amiba business has returned to a pristine thinking that profits = sales revenue-cost costs, and that enterprises need to “maximize their sales and minimize their costs” if they are to achieve higher levels of profits, and that excellent firms are often able to effectively address this seemingly contradictory management proposition。
Maximizing sales forces firms to think about how to obtain higher sales without increasing costs or less. Can sales of high-value-added products be increased, or can they be targeted at customers with greater capacity to pay and greater willingness to pay
Minimizing costs, forcing firms to think: can less sophisticated equipment produce products of the same quality? Can cheap raw materials replace products of the same quality? Can cost reductions be achieved through optimal design
“maximizing sales and minimizing costs” is not only a goal but also a way of thinking. It is by adhering to this management philosophy that business management continues to generate profits from two perspectives。
02 establish a vertically integrated system of accounting indicators
The so-called integration refers to an indicator decomposition system from the top down, from the general manager to the grass-roots staff, and a bottom up business management information layer aggregation system。
The first is the system of indicators. For example, the indicators for the sale of amiba include sales volumes, refunds, accounts receivable balances and sales management indicators. In particular, stocks of products as an indicator of sales essentially mean that once a sale is placed on an order for production, the corresponding supply must be accepted as an inventory, as is the case with other amibas。
The second is the refinement of the indicators. The indicators are as detailed as possible in order to identify the real factors affecting profits. For example, travel costs include transportation, accommodation and meals. On the basis of disaggregated indicators, it is easy to determine the level of business management behind indicators through comparative analysis of historical data and analysis of the relevance of other indicators. That's in numbers。
The third is the timeliness of indicators. The closer the indicator information is, the better it is, the best it can be done in real time. This, of course, requires the use of the necessary computerization systems and business intelligence systems, and if the information technology systems are not relevant for the time being, a uniform format, well-defined fields, and logically well-connected spreadsheets can also meet immediate needs。
The fourth is that the indicators of the business management accounting system should be readily understandable. Efforts have been made to learn to speak humanly, to be simple, precisely because the osai system covers all employees, with different levels of professional management, and therefore to express it in terms that are understandable to all, as is the case with the “talk-and-talk” and “no thread to the mass”, which are intended to be understandable, and in terms that are not important。
Fifth, the operational accounting system is closely integrated with the operational system. For most chinese enterprises, it is important to recognize that the construction of the accounting system is a gradual process, and that it cannot be done overnight, in keeping with the core concept of amiba's business, and in keeping with the principles of the 28 and 8 principles, keeping pace with the key and gradually supplementing them. What's the key? It is usually a key point for business growth, a key point for business transformation, and a key point for business upgrading. These business critical points are gradually incorporated into the enterprise management accounting system。
The operational accounting system should introduce a time dimension
We always talk about things as “time roses”, and time is a magical variable, and when time is taken into account, many things will be reconstructed。
Chinese enterprises attach great importance to labour efficiency indicators, such as labour productivity = the number of employees whose income is sold. While in practical application, it is also available for the enterprise as a whole because the company's sales revenue is well calculated, it is not possible to calculate it at the sectoral level because there is no way to calculate sales revenue across sectors。
The “unit time accounting system” highlighted in amiba's operations cannot be achieved because of the number of employees who are the denominator and are not precise in terms of working hours, the absence of a distinction between normal working hours and overtime hours, and the failure to calculate working hours for other sectors。
The introduction of the concept of “unit time” enables enterprises to calculate the efficiency of the operations of the organizations, so that they do not seek only an increase in the value added of the economy, but also an increase in the output efficiency of the unit time。
We often see a large number of chinese firms working overtime with their bosses, often working overtime to do the job, because they do not have a complete accounting system to assess the working conditions of the various sectors, but only by “seeing”, and since you want to see it, i will show you that this superficial article is contrary to the purpose of doing business: maximizing sales and minimizing costs。
Market-based pricing mechanisms
In amiba's business, mr. Rice and mr. Kazuo repeatedly emphasized market-based pricing mechanisms, a very challenging subject for businesses to pursue amiba. In conjunction with the practice of kyoto, market-based internal pricing can be considered in several dimensions。
01 order production
Order-made products are often non-standard and unstocked, and prices are usually presented at a single price that cannot be predicted。
Under this model, the marketing sector can be seen as a sales agent in the production sector, which receives only a percentage of the sales commission, and where the change in the price of the product is directly related to the sales income of the production sector, thus bringing the production sector to the attention of its clients and greatly enhancing its client and market awareness。
02 stockpile production
Inventory-based production products are usually standardized products and production plans are based on client demand projections. Because client demand is more predictable, the corresponding product is more predictable。
Under this model, the marketing and production sectors agree on an internal transfer price for the product, which is relatively fixed for a certain period of time and adjusted accordingly when the market situation is clearly adjusted. In this way, market pressures are effectively transmitted to the productive sector。
