1 Paragraph Response To Each Colleague
Assignment and Instructions attached. Respond with 1 paragraph to each Colleagues response. USe APA citations and References. I have also attached my Wk7D1 assignment for comparison to the Colleague
Read through your colleagues’ posts and respond to two or more of your colleagues in one or more of the following ways:
· Provide an alternative perspective on the organization’s decision.
· Compare your results to your colleague’s. Do you notice any similarities or differences?
· Offer any lessons you learned about the application of throughput accounting as a decision-making tool in different organizations and scenarios.
· Offer alternative methods that could be used to evaluate the decision made and explain why you think that method might be better.
1st Colleague to respond to:
I work at a software development company that has (fairly) recently invested in a Business Analyst to determine how to increase our profits. Our company sells document management software, business system integration software, and we provide implementation services, and training. As a result of the Business Analyst’s recommendations, the sales team has been reorganized, while much of everything else has stayed the same, other than our Development team working on creating our own viewer. We have been using a top-of-the-line viewer that was purchased by Oracle. Before the product was owned by Oracle, we had very little delay in receiving bug fixes. After Oracle purchased the viewer, the bug fixes either don’t happen or they take the amount of time that Oracle designates to fix. As a result, we have had issues with our client’s hating the viewer, primarily because it still uses Java, which is very outdated and cumbersome. Hence the decision by the Business Analyst and Senior Leadership to create our own viewer.
The impact of developing our own viewer has meant that the company has decided to not renew with Oracle at the end of this calendar year, and this has put pressure on the already-overwhelmed Development team to get the viewer to market, and they have run into multiple issues. Namely, the CAD integration is not working properly. Since the majority of our clients are engineers, or use CAD design tools in one form or another, this is a huge issue. The sales team is stressed because after December 31, we will not, at this time, be able to sell to new customers with the older viewer. The Development team is stressed and there has been in-fighting over the direction of the viewer and what should be included in the first release. And Senior Leadership is stressed because the new viewer not being released will obviously affect our bottom line. More than it already is. And it is. A majority of the Development team is fully-focused on the viewer, which takes away from other development tasks or from bug fixes and the length of time it will take for us to be compatible with certain CAD tools. Which could affect our rating with top CAD vendors and would negatively impact our client relations. Corbett’s article on the three questions for accounting include asking, “1. What will be the impact of our decision on the amount of money the company generates?, 2) What will be the impact of our decision on the amount of money we spend to operate the company?, and 3) What will be the impact of our decision on the amount of money captured in the company?” and would be questions that I assume our management and Finance teams asked themselves. (Corbett, T., 2006, p. 52)
Looking now at whether management made the correct decision by creating our own viewer or not, it would appear that they have not. No one could have anticipated the impact of Covid-19 last Summer when this decision was made, and it has affected our company by impacting the size of our Development team. If Senior Leadership is forced to renegotiate a contract with Oracle at this late time, the cost will be much higher, impacting the total of operating expenses even with this reduction in our workforce. Some of the work has been outsourced, so the operating expense is not much lower now. In any event, at this time, because of the loss of revenue from upgrades, the TVC is higher. If the viewer is completed by December 31, then the decision will be solid. If the viewer is not completed, our company will take a huge hit.
Corbett, T. (2006). Three-questions accounting. Strategic Finance, 87(10), 48-55. Retrieved from https://ezp.waldenulibrary.org/login?qurl=https%3A%2F%2Fwww.proquest.com%2Fdocview%2F229819741%3Faccountid%3D14872
2nd Colleague to respond to:
Throughput Accounting and Optimization
“The practice of throughput accounting is about how to wring more profits from your company by focusing strictly on the management of your bottleneck resources, or constraints.” (Bragg, 2007. The organization I selected for this assignment is a construction company. There was a situation with a construction project where the company had to make changes in labor cost to finish with a project that was scheduled to be done in twenty days but instead took them twenty-eight days. The project in question was small but this construction company believes that the benefits of many small projects put together show a good income at the end of the fiscal year. This company does work on big projects but they mostly work on several small projects. For them, every small project counts. The office of the engineers prepared a schedule for the construction of a fence. The cost report of the fence included the number of workers needed to do the work. The hourly rate of the labor cost, the number of days needed to complete the work. The engineers didn’t leave any room in their schedule or cost report for any unforeseen problems. They said, the resources are available, everything is ready they didn’t see what could go wrong.
The first part of the schedule was to be completed in 12 days. Workers were working slower than usual. What should have been done in 12 days took them 17 days to finish. The head of the civil engineering department got a notice from the client saying that they visited the work and saw that is not near being done. He requested a meeting with the staff to try to fix the problem. The workers told him that they are working as fast as they can, the problem is not them, and that it’s the schedule. The head of the department checked the schedule again and noticed an error in the schedule. He understood right away that he had to make a decision which he did. He implemented a timely intervention decision. Because the workers get paid on an hourly wage, he reduced in the number of workers, prepared a new schedule, and offered the remaining of the workers a fixed priced to finish the work in the next 11 days. The impact it had on the project was that the project was late, the client wasn’t satisfied. The cost of the project went up, the revenues went down. The workers didn’t appreciate how the head of the department handled the situation. The complete operations of this project changed and despite the changes, the company didn’t cash in the benefits they predicted because the project was already late.
Based on the principles of throughput accounting I think the head of the civil engineering department made the right decision because his decision is based on the management and financial report of the project. The company didn’t finish on time but they finished as fast as they could. They didn’t make the revenues expected but they did make some revenue. This decision was made based on the impact it will have on the finances, the resources, the people, and the client. It prevented the complete financial loss of the project. It was made based on the 3 important questions of throughput accounting (TA). “1. What will be the impact of your decision on the amount of money the company generates? 2. What will be the impact of your decision on the amount of money you spend to operate the company? 3. What will be the impact of your decision on the amount of money captured in the company?” (Corbett, 2006).
Corbett, T. (2006). Three-Questions Accounting. ProQuest. https://search-proquest-com.ezp.waldenulibrary.org/docview/229819741/fulltext/C67627CD7AA8441APQ/1?accountid=14872
Bragg, S. M. (2007). throughput accounting a guide to constraint management. Google Books. https://books.google.ht/books?hl=en&lr=&id=OrT3mqhGoO4C&oi=fnd&pg=PT9&dq=Throughput+accounting&ots=jTphC-Tg51&sig=W6v-MDwaJmGMiR9uqHkcqaXyXBU&redir_esc=y#v=onepage&q=Throughput%20accounting&f=false