The main purpose of this report is to map out the importance of management accounting in a manufacturing organization. Management accounting can be explained id the inflow and distribution of information within an organization that can help management of such organization to take an important decision. The important if management accounting increases for a manufacturing company as the importance of such data for a manufacturing company is higher as compared to another type of companies. There are various business decisions in a manufacturing business that can have vital financial and operational impact on the business such as make or buy decision. Here Adelaide Brighton Limited has been selected for better evaluation than management accounting has on a manufacturing company. This report will focus on various branches of management accounting and evaluate how such branch impacts manufacturing company. The process of manufacturing will also be discussed in this report that will give a light on the value chain process adopted by the company. In addition to that planning and controlling, the process implemented in the manufacturing process will also be discussed in this report.
The company selected for evaluation of cost management in this project report is Adelaide Brighton Limited. Adelaide Brighton is engaged in the production of construction material such as cement. The company is also engaged in the production of lime which is a type of rock that contains more than 75% of calcium or magnesium carbonate. Over the period of time, the company has become leading producer of lime a construction material in Australia. Adelaide Brighton is also listed in the list of ASX-100 that contains the companies that are biggest companies in Australia in term of market capital (Adelaide Brighton Ltd, 2017). Inclusion in ASX-100 list explains the size of the organization and its impact on Australians cement manufacturing market. Other products produced by the company include concrete, aggregates and concrete products.
The company was established in 1882 and not it operating in every state and territory of Australia. The company currently has 1500 employees that are working for growth and development of the company.
Main products of the company are-
Adelaide Brighton has a very experienced and skilful executive team that is working in best interest of the company. The executive team of the company is led by Martin Brydon who is acting as Managing Director and Chief Executive Officer of the company (Adelaide Brighton Ltd, 2017). The vision of the company is to continue its marketing position in future and become leading producer of cement in the market. The mission of company making company enables to achieve highest standards of business operation in cement manufacturing industry
The value chain can be defined as the set of procedures that are adopted by an organization in their manufacturing process. This is a core activity of business as for a manufacturing entity; effective and efficient production process is the main source of income. The value chain is responsible for production and delivery of goods and services to its customers (Christopher, 2016).
The value chain of Adelaide Brighton can be divided into two categories-
Primary activities- These are the activities that responsible for the production of primary products manufactured by the company.
Support activities- These activities are the activities that give support to the company in order to make management of the company easy and smooth (Tayur, Ganeshan and Magazine, 2012).
These are the management activities that help in effective management of primary activities performed by the company. These are not considered as primary activities as they are not directly related to goods and services produced but they are equally essential for effective production and distribution of such goods and services. There are various secondary activities that are helping the company in the production of final products. Some of these activities are-
Business Strategy
The business strategy the strategies that a business organization uses for operating business. The business strategy used by the company is cost leadership. As per this strategy, the company provides the quality services to at the best prices to its customers. Price is a significant factor that can affect supply and demand of a product. Hence a company can increase the demand for the products by effectively decreasing the prices of the product as compared to its competitors. But effective implementation of this strategy is a very important task as it can result in loss of money for that company if prices are decreased without bringing efficiency in a business operation (Metzger, ). Adelaide Brighton uses various cost reduction methods to reduce the cost incurred in a production process that helps in cutting down the selling prices offered to the customer.
Completion
Cement manufacturing industry in Australia is very competitive and there are various other organizations that are working in this industry giving completion to Adelaide Brighton. Over the period of time, Adelaide Brighton has become the leading manufacturing companies in Australia as it is the second largest producer of cement and largest producer of lime in Australia. To reach this level the business strategy adopted by the company has been very helpful. The prices of the company are lower as compared to other cement producer and distributors in the country. In addition to that, the quality of products produced by the company is also high as compared to its competitors. Hence it can be said that price and quality are the two factors that have given a competitive advantage to the company (Erasmus, Strydom and Rudansky-Kloppers, 2016).
Significant information for production
Most important information that is required for the production of goods and services is the demand for the product among customer. It is very important that the quantum of production should be exactly equal to the demand of the product in the market. If the production is low then it would result in loss of business to the company and if the production is high then it would require an extra cost in form of storage and wastage of product (Adekola and Sergi, 2016).
Monitoring manufacturing and selling plans
Manufacturing and selling of goods is an essential part of every manufacturing company such as Adelaide Brighton. Hence it is important that these activities are properly overviews and monitored. Main monitoring methods adopted by Adelaide Brighton are as follows-
Balanced scorecard method is a performance evaluation system that can help an organization in reviewing the processes undertaken and give feedback to management for its improvement. Balanced scorecard method can be implemented in the following manner.
Decision making
There are various important decisions that a manufacturing unit has to take in respect to the production of goods and services. Same has been the case in business operations of Adelaide Brighton and tow of such important decision are-
Make or buy decision- This decision has to be taken by the management of the company from time to time to increase the cost efficiency of the production process. A company is providing their products at lower prices it is essential that the cost of production is also lower as compared to other market players. For this make or buy decision is required to evaluate whether it would be cheap to produce certain raw material within the manufacturing unit or to purchase such raw material from the market (Bianchi et.al, 2016). This is a very common decision that is required to be taken in a manufacturing unit.
Continue or drop a particular business segment- This is also a common decision that is taken by a manufacturing unit. It is a known fact that profitability of each and every product is different it is not essential that all products are making profits for a company. Hence, in this case, it is important that segment that is incurring losses should be shut down by the company so that it does not affect other profitable ventures of the company.
Conclusion and recommendation
Three important points that can be highlighted in respect of Adelaide Brighton are its supply chain management, competitive advantage and adoption of balanced scorecard method. Supply chain management of the company is very effective and it is helping the organization in the implementation of the effective production process. The competitive advantage of the company is its prices and quality of cement and lime provided to the customer that increases the demand for the product in the market. As a discussed review of financial and operational activities is an important function and balanced scorecard method is the best method for doing so. From an overall evaluation of Adelaide Brighton, it can be said that it has bright future and it will continue to lead the cement manufacturing industry in coming future. One change that it can implement in its business operations it including more strategies to review the work done by employees of the company. Through this management of the company would be able to identify the idle time that can be used in a productive manner by such employees.
References
Adekola, A. and Sergi, B.S., 2016. Global business management: A cross-cultural perspective. Routledge.
Adelaide Brighton Ltd, 2017. Adelaide Brighton is one of Australia’s leading integrated construction materials and lime producers. Retreivable at: https://adbri.com.au/aboutus#profile
Adelaide Brighton Ltd, 2017. Adelaide Brighton Ltd. Retrievable at: https://adbri.com.au/-/adbri/lib/pdfs/2016/asx%20announcements/ASX%20-%20ABL%202017%20Result%20Presentation%20(&%20cover%20sheet)%20280218.pdf
Adelaide Brighton Ltd, 2017. Executive team. Retrievable at: https://adbri.com.au/aboutus#executive-team.
Adelaide Brighton Ltd, 2017. Our business. Retrievable at: https://adbri.com.au/ourbusinesses
Bianchi, A., Barnett, J., Dempsey, W., Giachinta, M., Hugenberg, M. and Talley, A., 2016. Applying Value-Focused Thinking to a Make Versus Buy Decision. Industrial and Systems Engineering Review, 4(2), pp.171-177.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business management. Oxford University Press Southern Africa.
Gibbons, R. and Kaplan, R.S., 2015. Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?. American Economic Review, 105(5), pp.447-51.
He, K., Jia, M. and Xu, Q., 2016. Optimal sensor deployment for manufacturing process monitoring based on quantitative cause-effect graph. IEEE Transactions on Automation Science and Engineering, 13(2), pp.963-975.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Metzger, R., Biomet Manufacturing LLC, 2017. Pre-operative planning and manufacturing method for orthopedic procedure. U.S. Patent 9,757,238.
Olhager, J., 2012. The role of decoupling points in value chain management. In Modelling value (pp. 37-47). Physica-Verlag HD.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain management (Vol. 17). Springer Science & Business Media.
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