Question

Strategic cost management highlights enhanced cost measurement systems, paving the way for management accounting to retain its relevance in today’s environment. Strategic cost management consists of those actions taken by managers to concurrently reduce cost as well as enhance customer satisfaction with the aid of modified / new approaches and techniques in managing cost more effectively / strategically (Drury, 2012).

Required:
a)   Advanced manufacturing technologies (AMT)

1)   Describe the chosen costing tool / technique.
2)   Discuss how the chosen tool / technique has spearheaded strategic cost management in the area of management accounting. You should use 1 or more case example(s) to aid your discussion.
3)   What are the challenges management accountants and companies face in adopting this tool / technique? Use appropriate case example (s) where applicable.

Answer 1

1.

Advanced manufacturing is the use of innovative technology to improve products or processes, with the relevant technology being described as "advanced," "innovative," or "cutting edge." Advanced manufacturing industries "increasingly integrate new innovative technologies in both products and processes. The rate of technology adoption and the ability to use that technology to remain competitive and add value to define the advanced manufacturing sector."

2.

A number of organizations also included business or management methodologies in their definition of advanced manufacturing.

The following business or management methodologies were listed as being a part of advanced manufacturing:

• Quality controls
• Lean production technologies
• Supply chain integration
• Advanced Planning and Scheduling

3.

A. Identifying a business case

Making the business case for additive manufacturing is a challenge many companies face, particularly with the high costs involved in getting started. The long-term financial benefits of additive manufacturing are clear, and include:

Lower tooling costs

• Ability to produce complex geometries cost-effectively
• Cost-effective customisation

B. Production volumes

To support the high volumes (and short lead times) needed for serial production, additive manufacturing workflows have to be both fast and scalable. Currently, most AM systems lack the speed required for mass production, particularly when compared to conventional manufacturing methods.

C. Repeatability

The need for repeatability when it comes to series production can’t be understated. However, consistently producing reliable parts is an ongoing challenge AM faces. Using the same settings, for example, can still lead to differences in producing the same part.

D. Material availability

Materials development has come a long way since the proprietary filaments of old.

And yet, the availability of suitable materials remains one of the biggest barriers to using additive manufacturing as a production method. Material diversity is limited, with only a relatively small set of compatible materials available.

E. Security

Security is increasingly becoming a key concern for companies looking to adopt additive manufacturing.

F. Standardisation

The lack of a comprehensive set of standards for additive manufacturing remains one of the key barriers for the technology to go mainstream.

G. Training

Perhaps the most significant barrier to AM adoption is the current skills gap.

Advanced technologies like additive manufacturing require a new set of skills.

H. End-to-End Workflows

The reality is that most companies struggle to establish an end-to-end AM workflow management process. One bottleneck lies in using different software packages to go from design to the finished part. This creates a disconnected process, greatly reducing efficiency.