Benchmarking And Management Accounting Essay

2282 words - 10 pages

• Hiram Phillips could have used benchmarking to assist in his cost reduction efforts by following the five stages of benchmarking. Initially, an internal study and preliminary competitive analysis should have been conducted to determine how it currently performs on its dimensions. Some of these activities are labor cost, delivery of shipments, customer service time spent on the phone, and cost of commissions on sales to employees. Using the company internal data and preliminary external competitive analysis, using industry comparisons of quality from reliable consumer reports, would determine the scope and significance of the study for each area.

• In the second stage, a benchmarking ...view middle of the document...

In Hiram’s case, selecting a wide variety would not be bad for the company because it shows a commitment to process improvement. Ensuring that the degree of trust between the benchmarking partners and Rainbarrel provide accurate information in a timely manner is key to both company improving their process.

• In the fourth stage, the type of information Rainbarrel collect is important to their cost reduction efforts as there are three broad classes of information that will be useful to Hiram and his benchmarking team. The three classes are, functional and strategic benchmarking and in Rianbarrel’s case, functional and strategic benchmarking information would be valuable to the company. Functional benchmarking would have been useful for Rainbarrel’s shipping process because functional is the study of other organizations’ practices and cost with respect to functions or processes, such as assembly or distribution. Strategically benchmarking information would help Rainbarrel with labor costs, customer service time spent on the phone and cost of commissions on sales to employees because strategic benchmarking study other organizations’ strategies and strategic decisions, such as why organizations choose one particular strategy over another. Cooperative benchmarking would have been a great way for the company to partner up with another successful company to voluntarily share information through mutual agreement.

• Once all of the appropriate steps have been taken, step five, which is the last step would involve the organization taking action and beginning to change as a result of the benchmarking initiative. Implementing and the change process would most likely be the most difficult process however, once all the changes have been made, the benchmarking to will be able to assess specific performance measures selected.

2. For each of the four categories of quality cost:

a. List each one and give an example of each category in Hiram’s business.

• Prevention Cost:

 An example of preventive cost in Hiram’s business would be investing in a sales team, solely dedicated to placing orders. While another team in the customer service call center is responsible for dealing with trade and retail customer’s complaints and questions. Continuous education and training programs should be implemented to train the customer service call center representatives, on how to efficiently take orders, handle questions and complaints while maintaining quality customer service. Through gathering of information from benchmarking partners, the customer service call center should have an average time spent on the phone with customers. Representatives that constantly provide quality customer service and do better than the average time spent on the phone should be acknowledged and rewarded with an incentive that will create competition among the reps to perform better continuously.

• Appraisal Cost:

 An example of an appraisal cost in Hiram’s business...

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