Up The Productivity – A Is for Accountants : A is for Accountants…
When I first got embroiled in productivity improvement, I found myself finding accountants to be ‘the enemy’. At first I thought they felt threatened or were just guarding their turf. There was one particular guy at a plant in New Jersey with whom I had a cat and mouse relationship: would my Activity Based Cost model predict unit cost to the same 3 decimal places as his? ‘You say what your figure is first and then I’ll tell you mine’.
… Take away thought: You can counter childishness with professionalism
However, over more than a decade, I started to find their rather forbidding exteriors to harbor interest. I think what they really liked to hear was that to seriously reduce cost, you have to reduce Overhead, a chestnut close to their hearts. It took me 2 decades before I was hired by a Finance guy rather than an Operations guy. Hadn’t seen or heard from him for 8 years and then he emailed wondering if I would be able to come to the US W Coast, because there was something we might be able to help him with. Luckily I was driving west through Phoenix at the time, so the answer was ‘See you in a couple of days!’
Now I have a number of Finance types who are connected on Linked In, so forget seeing them as enemies. Don’t confuse ‘Cost Accounting’ with ‘Accountants’.
A is also for Activity Based Costing…
ABC is my favorite way of thinking about the concept that is cost. Even the Finance people like the idea of it. The trouble is they have to do their sums according to convention and ABC is not yet conventional, even though Kaplan & Cooper first talked about it in the ’80s. Like Eli Goldratt, I took to ABC immediately after going to a seminar with those two at the Motorcycle Museum in Birmingham, England. Maybe it was Prof Cooper earnestly striding up and down the aisles or it was the large book that came with the show that sold me. Anyway I was straight back in the office on Monday with ideas on how to use it: rather to the dismay of the Finance manager, who wasn’t going to move that quick. Come to mention it, it actually took me another 5 years to actually DO something useful with it. It was worth the gestation, though, because it remains fundamental to my understanding of cost.
… Take away thought: They always say that if you don’t use a new idea from a seminar, as soon as you get back to work, that it won’t stick. Depends how profound the idea is.
The big advantage of ABC for non-finance types is that it makes it easier to value productivity improvements.
James La Trobe-Bateman. Co-author of ‘Bridge Of Faith for Manufacturing Operations, with examples in Medical Device & Diagnostics’. Presented with ‘Global Innovation Award’ by Bristol-Myers Squibb. Nicknamed the ‘Dynamic Duo’ by operations director for a division of Johnson & Johnson.
Over 25 years ago in oil & petrochemical industry, he first started predicting the effects of one change on all parts of the organization. Inspired by Eli Goldratt in the early 80’s. For over 20 years in the Healthcare Manufacturing Industry, James very passionately continues to drive highly successful, ongoing Operations Improvements as well as resolve New Product Development & Market issues Internationally.
