COST and MANAGEMENT ACCOUNTING as a key enabler of SUSTAINABLE COMPETITIVE BUSINESS

1. COST and MANAGEMENT ACCOUNTING as a key enabler ofSUSTAINABLE COMPETITIVE BUSINESS A.N.Raman Member TCM Working Group Member PAIB Committee of the IFAC Past President South Asian Federation of Accountants

2. IFAC view of Sustainability Sustainable development and the sustainability of organizations have become mainstream issues for politicians, consumers, and business leaders. From an economic, as well as an environmental and social perspective, sustainability issues are transforming the competitive landscape, forcing organizations to change the way they think about products and services, technologies, processes, and business models.

3. Competent and Versatile Drivers of Sustainable Organizational Success Customer and Stakeholder Focus Effective Leadership and Strategy Integrated Governance, Risk and Control Innovation and Adaptability Sustainable Organizational Success Financial Management People and Talent Management Operational Excellence Effective and Transparent Communication

6. TIME SLICES IN MA EVOLUTION Eye ball control Simple cost data on production Prior to 1825 Scale advantages Capacity centric MA concepts Process cost per unit IE based standard costing Between 1825 to 1925 External reporting, Regulations, Income taxes, Levies, etc Between 1925 to 1975

7. TIME SLICES IN MA EVOLUTION After 1975 Value revolution Life cycle concept Strategy evaluation and control Brand management Distribution and channel management Service sector evolution Efficiency evaluation tools

8. A Battle on Two Fronts ROI (1) Strategy choose the right ones ….. … and align the cost structure Strategic MA (2) Efficiency & Utilization take waste and unused capacity out of the organization Value creation Operational MA Management Accounting

9. STRATEGIC AND OPERATIONAL TOOLS STRATEGIC TOOLS Balanced Scorecard, Strategic Cost management, Target Cost Analysis, Customer Profitability and Customer value Measurement. OPERATIONAL TOOLS Cost of Quality, Kaizen Costing, Parametric Cost Control Activity Based Costing and Budgeting, Activity Management Vendor Cost Analysis, Statistical Quality and Cost Control, Six sigma costing, Service Process Costing, Non Financial Performance Measures, Benchmarking, Process Mapping. THE ABOVE TO BE IT SUPPORTED OR EVEN WEB BASED

10. DIMENSIONS OF CHANGE IN MA • OWNERSHIP • CONTENT • FREQUENCY OF USAGE • LIFE CYCLE ORIENTATION • PROCESS ORIENTATION • NEW TOOLS AND TECHNIQUES • INTEGRATION WITH IT

11. Business Model FOR A MA ACCN STRATEGY DEFINITION METHODOLOGIES TIME PROJECT ACCOUNTING, PROGRAM MANAGEMENT Expenses General ledger MINIMIZE $$s hours UNUSED (AVAILABLE) CAPACITY CUSTOMERS, MARKETS OPERATIONAL PERFORMANCE - PRODUCTIVITY & EFFICIENCY - BENCHMARKING - UTILIZATION/YIELD - TOTAL QUALITY MANAGEMENT (Cost of Quality) STRATEGY REALIZATION SUPPLY / INVEST STRATEGY RESOURCES SUPPLY CHAIN MANAGEMENT ACTIVITIES (ABC/M) PROCESS MANAGEMENT DEMAND VOLUME & MIX FORECAST ACTIVITY DRIVERS MAXIMIZE Alignment of cost structure to strategy Asset management PRODUCTS, CHANNELS & CUSTOMERS DEMAND STRATEGY PROFITABILITY ANALYSIS What-if Planning? PRODUCT & SERVICES REVENUES SHAREHOLDER WEALTH [VBM] PERFORMANCE MEASUREMENT SCORECARDS MAXIMIZE KEY PERFORMANCE INDICATORS (KPIs) versus ACTUALS

12. COST AND MANAGEMENT ACCOUNTING

13. Competent and Versatile CMA as a key enabler of Sustainable Organizational Success Customer and Stakeholder Focus CP and LCC Cost Deployment Effective Leadership and Strategy Info Risk Mitigate Integrated Governance, Risk and Control Target Costing Innovation and Adaptability Financial Management Product Profits People and Talent Management Cost Competency Operational Excellence Op cost manage Effective and Transparent Communication Cost Reporting