Taking it to the Next Level

May 05, 2014

This was the first Saturday “post-wrestling” season. Last Saturday, my son was awarded the prize for points leader in his age group for Monroe County wrestlers. He won first place at every tournament other than one, which ironically, was last Saturday. His birthday was Friday, so he moved up to the 9-10 age group at his last match. We thought he was going to have a tough time, but my son held his own and even managed to place. He has decided he is willing to work a little harder in order to reach the next level, so we will support him. We are the “leaders” if you will, and the coaches provide his system, and the input (his effort) is determined solely by him. It is very easy for him to determine whether he wants to escalate this and he can affect the results he wants.

I had lunch with a former colleague last week who spent many years working in the lead costing position for a mutil-million dollar company. She had worked her way up through the ranks and basically had the costing down to a science. They transitioned into new systems with which she assisted and then she decided it was time to move on to a new position. She took some time off and has now found herself working as a consultant helping other companies with their costing and systems. She enjoys what she is doing, but never imagined herself quite where she is at today.

I am going through all of this as a precursor to a statement she made to me over lunch that really made me think about companies, their need and their capacity to present accurate costing information, and the roadblocks that I and many others have come up against in our efforts to facilitate change. Here is the comment: “I led the costing division for this multi-million dollar company, and had one person to support me. That was it. For the WHOLE COMPANY- GLOBALLY.” Her point? Why would the smaller players ever feel the need or want to invest the money to take their costing to the next level? For a Company that big to have only two people dedicated to this analysis, how realistic is it for a company that generates $25 million in revenues to hire a cost accountant and invest in the systems?

She had a very valid point and we have faced that same question many times. As we have pointed out, designing a good management accounting system with accurate product costing is a process and it will never provide 100% accurate information. The process determines the outcomes and it is always dictated by the systems (technology), the input, and the driver (leader of the cost department). A change in one of these dynamics can provide widely varying results.

And isn’t that what this is all about? The results? We use that information to make important, relevant decisions for the Company. It is not about valuing the inventory! In a mass statement, we really want to know if each product is profitable, how profitable, and if it’s not, how do we make it profitable. So really, this decision is up to YOU. How much is it worth to you to increase your knowledge and visibility of the financial side of your operations? You don’t need to hire a whole new position to track volumes of information that you will likely never use. Decide what results are significant to you and with our help, figure out how to take it to the next level.

Categories: Cost Accounting