Management Accounting and Supply Chain Management

In the modern business world, “supply chain management” is not just a buzz word; it is considered a key driver in the midst of foreign competition and offshore sourcing as well as global markets. Keeping a company’s supply chain performing well requires a high level of responsiveness, as does keeping the shelves in stores filled. Management accounting drives the necessary planning, monitoring and use of logistical information to maximize efficiencies throughout the supply chain.

 

Profit Driven Management Reporting

Supply chain management today involves increasing the speed of inventory and trimming costs. Accomplishing these tasks requires skills in management along with creativity. Companies compete based on how effectively they can move raw materials, parts and finished goods. Those that do it the best make the most profits. The reporting and analysis provided by the management accounting system provide the techniques and context to drive those profits. 

The accounting rules worked particularly well with companies in the past, which were more likely to be vertically integrated and focus mostly on making sales domestically. However, these principles do not necessarily work well with today’s business practices and operations.

 

The Challenges

There is no one size fits all management accounting solution for supply chains. Industries vary, business plans change, and strategies differ even within similar industries. It is important to use a system that works in the context of your business model, product mix and customers. The right management accounting system can be the difference between a mediocre company and a stellar performer..

Lewis Daidone works alongside boards of directors, venture capitalists, senior executives and partners toward improving infrastructure, growth projections, and fiscal results of financial services and technology companies. Follow him on Facebook to know more.