The hottest enterprise strategic management inform

Enterprise strategic management informatization

preface

after ERP, CRM, SCM, etc., balanced scorecard (BSC) has triggered a new round of application upsurge of management tools in China. The concept and method of Balanced Scorecard as a strategic management tool has really begun to be widely valued and applied in China. Its influence has ranged from the initial foreign-funded enterprises to private enterprises, state-owned enterprises, small and medium-sized enterprises, as well as public service industry and government departments

we can see that many enterprises are keen to use the Balanced Scorecard for strategic management and performance evaluation. A set of key performance indicators (KPIs) is defined using the balanced scorecard, and the data supporting these KPIs is clearly defined. However, a question soon arose: is the data good enough and accurate enough to make important strategic and tactical daily operational decisions for the management team? How to obtain the data of these key performance indicators

when communicating with enterprises, we found that without the use of Balanced Scorecard, it would be difficult to implement the enterprise strategy. Using the Balanced Scorecard without activity-based cost management will also cause many problems. Lacking activity-based cost management as a foundation, the balanced scorecard, a very effective strategic tool, may be a castle in the air and difficult to play its due role. In particular, if a large amount of wrong data enters your balanced scorecard, the most likely result is that major decisions made based on such information lead to failure

this paper analyzes the importance of the integrated application of activity-based cost management and balanced scorecard in enterprise strategic management, especially the reliability and quality of activity-based cost management in formulating the measurement index value in the balanced scorecard. We have some experience in the implementation of activity-based cost management and balanced scorecard. Most of the knowledge here is collected in the implementation of the project

first, we briefly introduce the basic concepts and implementation of ABCM (activity-based cost management) and BSc (Balanced Scorecard). Then, we describe the various functions of the ABCM project and how it enhances the function of the balanced scorecard. Although the whole topic of ABCM and BSC cannot be explained clearly in several articles, you can learn from ABCM topics and BSC topics in relevant books, magazines and websites

balanced scorecard, activity-based cost management and management accounting expert Robert Kaplan

"activity-based cost management was popularized and applied abroad earlier than balanced scorecard, which laid a very solid foundation for a new strategic management tool - balanced scorecard!"

through the popularization and application of Balanced Scorecard in China, more and more people have known the name of Robert S Kaplan, a famous American management accounting expert. He came to China twice in 2003 and 2004 to teach activity-based cost management and balanced scorecard. He is a co-author who invented the concept of Balanced Scorecard (BSC) with David Norton, executive director of Nolan Norton Institute. But what is not widely known is that he is also a (4) plastic body covering: the development and utilization of plastic windows and plastic fenders. He co founded and developed the activity-based cost management (ABCM) method with Professor Robin Cooper of Harvard University. Activity based cost management (ABCM) and balanced scorecard (BSC) are both important core parts of modern management accounting concepts. Activity based cost management (abc/abm) began to be widely used abroad in the 1980s, and has a history of more than 20 years. As of this year, about 90% of enterprises, institutions and government departments in Europe, America, Japan and other countries have implemented and applied activity-based cost management. It is earlier than the balanced scorecard, which rose in the 1990s. It is also more popular than the balanced scorecard. It provides important basic data for the application of the balanced scorecard. These two are two very important methods used by Professor Kaplan to strengthen and promote each other in two fields

Introduction to activity-based cost management

simply speaking, the concept of ABCM is how resource costs such as wages, equipment, rent, etc. are consumed by work activities, which are components of various processes in the organization. Operations and processes are consumed by the output of the organization in turn. Outputs include products and services provided to customers. This consumption flow is described by the cross of CAM-I (consortium of advanced manufacturing international), as shown in the following figure:

Figure 1 activity based cost management (ABCM) architecture

because this way shows the resources consumed by products and services through the activities (activities) performed, ABCM has become a particularly accurate method for calculating the cost of products and services. It is indeed a very useful way to allocate overhead costs to products and services. It is described in the vertical view of the cross. ABCM's main benefits are better accuracy of product and service cost accounting and analysis and management of activities, so it can also provide more accurate profit calculation. In today's highly competitive environment, keep in mind that profit analysis does not only provide the latest figures in the income statement, but also tells you more about which products/services are profitable and which are at a loss; Which customers bring you profits and which ones cost you money

in a word, ABCM provides the key and main information for the effective management of processes and operations in the organization. What is the cost of machine servicing? What is the cost of processing customer orders? What is the cost of rework? How much is the quality cost? What is the cost of customer service? What is the cycle time of these jobs? The answers to these questions can be found in the job analysis of ABCM model (vertical or process view in the cross)

Introduction to the Balanced Scorecard (BSC)

the balanced scorecard is oriented by the company's strategy, looking for the key success factors (CSF) that can drive the strategic success (analyze the key success factors of each value-added process according to the company's value chain), And establish an index system closely related to it to measure the status of the strategy implementation process and take necessary modifications to maintain the continuous success of the strategy

the balanced scorecard is a very useful tool that we can use when formulating key performance indicators

why is it called balance? The Balanced Scorecard does not think that financial indicators are unimportant, but needs to achieve a balance. This is why it is called the balanced scorecard. The balance here mainly refers to the balance between short-term income and long-term income; Balance between financial indicators and non-financial indicators; Balance between external measurement (shareholders and customers) and internal measurement (internal processes, innovation and personnel, etc.)

Figure 2 balanced scorecard model

four levels of the Balanced Scorecard:

1. Financial level: its goal is to solve "how do we meet shareholders?" This kind of problem. The direct result of business operation is to make shareholders get the return of financial value. Finance shows whether our efforts have had a positive effect on the economic benefits of the enterprise. Therefore, finance is the starting point and destination of the other three aspects. Financial indicators include sales, profits, asset utilization, etc

2. Customer level: its goal is to solve "how do customers treat us?" This kind of problem. Only by providing products and services to customers and meeting their needs can enterprises survive. Look at our company through the eyes of customers, and pay attention to market share, customer needs and satisfaction from the aspects of time (delivery cycle), quality, service and cost. Customers reflect the company's response to external changes. Customer indicators include on-time delivery rate, customer satisfaction, product return rate, number of contract cancellations, etc

3. Internal business process level: its goal is to solve "what must we be good at?" This kind of problem. An enterprise is not the best in everything, but it must meet the function of producing products in some aspects and have a competitive advantage in order to gain a foothold. Pay attention to the internal efficiency of the company, such as productivity, production cycle, cost, qualified product rate, new product development speed, attendance rate, etc. Internal business process is the focus of the company to improve business performance

4. Learning and growth: its goal is to solve "are we making progress?" This kind of problem. Enterprises must continue to grow, including the progress of human resources, product lines, technology, capabilities and other aspects. They must also have the ability to grow themselves - the ability to learn. Learning and growth indicators such as employee morale, employee satisfaction, average training time, retraining investment and key employee turnover rate

the balanced scorecard is characterized by always putting strategy and vision at the core of its change and management process. By clearly defining strategy, consistently conducting organizational communication, and linking it with change drivers, we will build an "open closed-loop organizational structure with strategy as the core", so that finance, customers, internal processes, and learning and growth are interconnected and integrated. Using the balanced scorecard, we can measure how our company creates value for current and future customers. While maintaining its focus on financial performance, it clearly shows the outstanding and long-term value and drivers of competitive performance

the benefits of activity-based cost management on the Balanced Scorecard

the Balanced Scorecard pays more attention to the management objectives at the company level, and then decomposes the company objectives layer by layer. For very detailed work, only by relying on activity-based cost management, a fine management tool, can it be completed

considering the benefits of activity-based cost management (ABCM) for the balanced scorecard, the founder and chairman of the Balanced Scorecard association can be cited, David Norton's description is as follows:

"the balanced scorecard provides a top-down model of business strategy, and activity-based cost management provides the self requirements of business processes. All regions take epidemic prevention and control as a bottom-up view of a major political task at present. Connecting the two will create new opportunities for strategic review and action."

"as a data source of strategy related information about customers and product profitability, ABCM has infinite value for using the Balanced Scorecard in the strategic management process."

from the above, it is obvious that ABCM has two benefits for the Balanced Scorecard - Profitability Management and process management. Next, we will explain how ABCM information affects all aspects of the balanced scorecard

activity based cost management and all levels of the Balanced Scorecard

in the financial level of the balanced scorecard, it is typically about the key performance indicators (KPIs) of profitability. ABCM can accurately tell you where the company's profits come from - which products and which customers. The traditional income statement can only provide a rough figure, lacking better information; It assumes that all products and customers have the same profit or loss, however, this is wrong

customer profitability information is also very useful at the customer level. This helps to identify the most appropriate customer strategy and to implement this strategy. Organizations need to understand how to make customers satisfied and remain profitable. The services provided should add value to customers and should be provided in a cost-effective manner; Therefore, ABCM proposes