JIT Philosophy in Modern Management Cost Accounting and Performance Management Systems

Abstract

Currently, traditional cost accounting methods are losing their relevance. Modern production environment is unpredictable and customer-oriented. Product life cycle becomes shorter, and consumers’ tastes are more capricious and fickle. All these factors suggest the need for flexible and adaptive control schemes.Successful decision-making is determined by well-built cost accounting system. The article proposes on the basis of the symbiosis of “just-in-time” approach, adherence to the principles of continuous improvement, and cost accounting methods — Kaizen-costing, standard-costing, target-costing, time-driven activity based costing, backflush accounting and value stream costing — to develop business performance management system that meets the needs of the modern business environment. The principles of continuous improvement, integrated into «Just In Time” management system, expand the horizon of opportunities for strategic management accounting. Zero-inventory philosophy, combined with flexible and adaptable management schemes, can also provide a powerful competitive advantage. The article recommends a system of key performance indicators to monitor the implementation of “Just in Time” philosophy in the symbiosis with these cost accounting methods. Zero-inventory approach has a number of drawbacks. However, integration of concepts with advanced cost accounting techniques will partly offset these shortcomings.The purpose of the article is to study the possibility of integration of «Just in Time” philosophy and advanced cost accounting methods, with respect to their features and peculiarities. The theoretical basis is the hypothesis of improving business performance management system based on “Just in Time” management approach, through its integration with the principles of continuous improvement and modern management approaches, quality assurance and approval.The main result of the article is an enhanced management accounting tools that allow to respond to changes in the environment of the company, develop measures aimed at adapting to these changes and ensuring compliance with the company’s strategy.

Keywords

• just in time
• cost accounting methods
• key performance indicators
• business performance management