Teijin Seiki Co. Ltd Case Study

Teijin Seiki Co. Ltd. divisions had been “languishing in red ink” for 10 years, ever since its establishment. As a last resort, the plant manager decided to implement drastic reforms to its production systems by introducing just in time. The first accounting step was to stop calculating product costs by using the actual time needed for each individual process. The company stopped issuing daily efficiency reports showing standard and actual variances for the previous day. It also banned asking workers what caused efficiency variances. Instead, the company made such activities as helping bottleneck work centers digest the overload a top priority. Keys for strategic management are: 1. Take a holistic approach and do not start with less. 2. Expand and strengthen externally oriented business processes. 3. Do product planning first. 4. Functionally integrate production and accounting. The article talked about 7 main topics. These main topics are the concept of target burden rate, lead time- based accounting, new attitudes about cash flow, getting along with financial accounting, keys for strategic management accounting, how to achieve functional integration, and the architecture of strategic management. The article talks about the company Teijin Seiki Co., Ltd., and how it introduced to its production system the then new production method, just-in-time (JIT). Another accounting concept introduced a flexible manufacturing system (FMS) in its main factory in 1984. Table 1, section A, showed how to calculate the comparative conversion cost for in-house and outsourced work in the traditional way. The calculation showed that the doing the work out is more economical than doing it inside Another problem occurred at the same reduction gear plant after signs of recovery gradually began to appear. Product cost had been calculated using the traditional full costing method. Under the formula, cutting standard machine time at any given process point would seem to lower the conversion cost. After the JIT production method became popular in the 1980s, many companies found it difficult to implement small batch production. Teijin Seiki uses cash flow concepts prominently to evaluate the business performance of its decentralized business units. A company’s performance is assessed by the financial data issued at the end of accounting periods. In 1989, the Massachusetts Institute of Technology Commission on Industrial Productivity firmly stated the importance of a holistic approach in its Made in America. Maid