{"id":101244,"date":"2021-01-09T11:40:21","date_gmt":"2021-01-09T06:10:21","guid":{"rendered":"https:\/\/www.vskills.in\/certification\/tutorial\/?page_id=101244"},"modified":"2024-04-12T14:25:59","modified_gmt":"2024-04-12T08:55:59","slug":"comparisons-with-other-methods","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/comparisons-with-other-methods\/","title":{"rendered":"Comparisons With Other Methods"},"content":{"rendered":"\n
Concept<\/strong><\/td>Traditional Method<\/strong><\/td>ABC<\/strong><\/td>JIT and Lean Enterprise<\/strong><\/td><\/tr><\/thead>
Original purpose<\/td>Inventory valuation, matching and overall profit<\/td>More accurate product costs for management decisions<\/td>Reduce waste and increase efficiency<\/td><\/tr>
Expanded purpose<\/td>Management control – variance analysis<\/td>Leads to activity based management<\/td>System philosophy of Continuous improvement<\/td><\/tr>
Concept of optimization<\/td>Promotes sub-system optimization<\/td>Not addressed by ABC<\/td>Promotes system optimization<\/td><\/tr>
Emphasis on improvement<\/td>Assumes a static set of constraints to optimize within, not improvement<\/td>Not addressed by ABC, but extends to activity analysis<\/td>Kaizen to reach perfection using the Plan-Do-Check-Action technique<\/td><\/tr>
Orientation<\/td>Short run emphasis with long run implications<\/td>Long run variable costs<\/td>Long run improvement<\/td><\/tr>
Main Concept<\/td>Production and value added by production departments<\/td>Cost tracing to provide accurate costs and profits by cost object, e.g., products etc<\/td>The whole system: interdependence, cooperation and synergy<\/td><\/tr>
Production control or emphasis<\/td>Push system with emphasis on labor efficiency and production volume<\/td>Not addressed<\/td>Pull system using kanban authorizations to produce<\/td><\/tr>
Overhead cost allocation emphasis & drivers<\/td>Allocate using production volume based drivers<\/td>Trace to activities, then to products using various drivers<\/td>Assign costs based on cycle time in the cells<\/td><\/tr>
Product costs accuracy<\/td>Not accurate – distorted<\/td>Fairly accurate<\/td>Fairly accurate<\/td><\/tr>
Inventory levels<\/td>High<\/td>Not addressed<\/td>Minimum to zero<\/td><\/tr>
Waste<\/td>Price and quantity variances<\/td>Not addressed, extends to ABM<\/td>Emphasis on eliminating<\/td><\/tr>
Quality of conformance<\/td>Inspect to find spoilage<\/td>Not addressed<\/td>Quality at the source, Jidoka<\/td><\/tr>
Effect producing excess inventory has on profit<\/td>Increases profit<\/td>Increases profit<\/td>Using throughput costing it decreases profit<\/td><\/tr>
Signals towards increasing product diversity<\/td>Tends to promote it by showing that more diversity creates higher production volume and lower unit cost<\/td>Discourages it by showing the additional costs created by product diversity, i.e., overhead creeps up<\/td>Discourages it through the concepts of focused factories & dedicated cells<\/td><\/tr>
Recognition of the concept of variability<\/td>No explicit recognition of common cause variation<\/td>Not addressed specifically from the SPC perspective, but it recognizes that diversity creates variation in costs<\/td>Recognized and applied at the operator level with statistical process control (SPC) techniques<\/td><\/tr>
Performance Measurements<\/td>Mainly financial measurements, i.e., variances, Net income and return on investment<\/td>Product costs, service activity costs and customer costs all related to profitability<\/td>Non-financial measurements such as cycle time, on time delivery, quality (% defects) inventory turns as well as unit costs<\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"

Concept Traditional Method ABC JIT and Lean Enterprise Original purpose Inventory valuation, matching and overall profit More accurate product costs for management decisions Reduce waste and increase efficiency Expanded purpose Management control – variance analysis Leads to activity based management System philosophy of Continuous improvement Concept of optimization Promotes sub-system optimization Not addressed by ABC…<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-101244","page","type-page","status-publish","hentry"],"acf":[],"yoast_head":"\nComparisons With Other Methods - Tutorial<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/tutorial\/comparisons-with-other-methods\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Comparisons With Other Methods - 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