Financial Executive - Vol. 10 Nbr. 6, November 1994
Bowlby, Robert J.
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Boeing Co. has improved its cost-management procedures by giving its operating units more responsibility for controlling their costs. To accomplish this, Boeing opted to realign its accounting processes to make it easier for cost information to be broken down on a departmental basis. It also made sure that each department received the financial information needed by identifying which cost information was relevant for each unit's operations. Boeing's move toward a cost-management system that supported continuous improvement required several important adjustments, such as the implementation of a modified process-cost accounting system and the use of activity-based analysis in cost-assignment procedures. It also required a shift to product-oriented process management, a system which stresses the matching of resources to highly-focused product groups to allow better control of costs in product- or servicing-producing units.How Boeing tracks costs, A to Z.
When Boeing's internal customers clamored for better cost information, the company decided to empower its business units by giving them more responsibility for their own costs.
A few years ago, two of Boeing's internal customers, engineering and operations, told the finance department they weren't getting the cost information they needed to manage airplane design and production. They lacked relevant economic information on which to base their decisions. When we heard that, we knew we had to do something to remedy the situation. Boeing's cost-accounting system worked for tax and financial accounting and could be used to determine product cost and profitability at an airplane model level. Bu...Try vLex for FREE for 3 days
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