Company Management

Company executives have already felt the need to account for and improve business efficiency. The growing competition leads to the fact that expenses grow faster than incomes. Hence the increased interest in logistics, which allows to reduce costs.

But what is actually “logistics”, how to implement it in the enterprise management system, what can lead to a delay in the construction of accounting? Managers who are excellent traders, but not logisticians, have a rather vague idea.

The logistics approach to doing business is complicated by the fact that the general economic laws do not just adapt to the specific external environment, but change conceptually. We cannot say that logistics is economics or vice versa. Rather, it is a new, applied part of the economy.

Problems and solutions

When developing a logistics system or, in other words, a management system, companies face a number of problems:

  1. Still not enough good logisticians. Suppliers and consumers of logistics services are not satisfied with each other. The first complain that there are no customers who understand and appreciate the level of service, the second are dissatisfied with the specialists and the quality of service.
  2. Businessmen identify logistics with cargo transportation or storage, at best with customs. And this leads to the fact that from the whole process of “snatching” any part, according to which the tasks are set. But even if these tasks are done in the best possible way, the result is usually negative. It may turn out to be positive only by chance.
  3. Responsibilities and responsibilities at the enterprises are divided between the structural units, which is fraught with serious consequences associated with increased costs. The tasks facing logistics cover the entire life of a commodity (product), from the moment of purchase of raw materials to the sale of the finished product to the end customer.
  4. In most companies, accounting and management accounting are mixed, and the accounting hierarchy is put higher. That is, management accounting is based on accounting data, not the other way around. But these data are obviously not enough for effective management of the company. If we do not take into account the costs at the place of their occurrence.
  5. Lack of understanding of the structure of own commodity flows, their classification based on the rules of logical division. As a result, planning is based on incorrect data, i.e., there is practically no planning.

Obviously, in this situation, no modern methods of modeling or operations research will lead to optimal costs. And even good relations with customs will not save you.

Therefore, managers of enterprises that have decided to establish effective cost management should be prepared for the fact that the establishment of logistics in the company is associated with the restructuring of the entire business. We will have to review the organizational structure of the enterprise and corporate information interaction.

Management accounting

The first and main task is to structurally separate management and accounting. In the accounting department, the use of standard software allows for accounting and reporting (including in electronic form) in strict compliance with the requirements of the legislative and regulatory framework.

And the administrative account is built in view of specificity of the concrete enterprise, therefore software products for its conducting are necessary individual.

What’s to count?

For management accounting, the main criterion for the distribution of expenditures and revenues by type in terms of financial results is their economic content, rather than their place in the adopted accounting system. Actual management accounting is formed according to the place of costs occurrence.

That is, for all functional structural units the structure of income and expenses is the same. They plan the costs according to the terms of the budget. The plan is approved. Then various events take place, and the costs start to be distributed among the structural subdivisions.

According to certain rules:

  • The costs are distributed not according to their functional affiliation, but depending on who (which structural unit) actually initiated them.
  • Each employee has his or her own job duties (functions). But in addition, it is necessary to define the rules of work in such a way that the activities of one subdivision do not cause additional costs in another. If for any reason the regulations directly and completely cannot be observed, the information that certain works are carried out, should arrive in adjacent departments.

Each structural unit for financial management is assigned its own number (code “expenditure center”), which must be specified in the application to the accounting department for payment of the bill. The structure of the code should be such that it can be used to define the block, the main function, the department.

The subdivision can initiate the payment of its expenses (the code of the “squander” coincides with the code of the subdivision initiating the payment), or (if the code does not coincide) the account must be signed by the head of the subdivision to which these expenses are written off. Otherwise, the financiers simply do not accept the request for payment.

All information is consolidated in the finance department. Each month, reports are sent to the structural units, the data of which are checked by the managers against their own forecasts. If there are discrepancies, the reasons are identified and corrective action is taken. If there is a need to make changes to cost plans, they are justified and protected by the General/Financial Director.

Reduced costs

All of the company’s logistical tasks are interconnected, and it is impossible to solve one without solving the other. As a result, a flexible logistics system adapted to specific conditions is created, which is minimally dependent on external factors.

Methods of solving logistics problems consist in the effective organization and management of flows of raw materials, materials and finished products, as well as the corresponding information flows.

Operational management

Operational management is a set of interrelated functions that provide continuous movement of the company to the goals of cost optimization and service improvement.

Functional subsystems of operative management of logistical processes can be divided into two components: current technical and economic planning and operative management.

Planning

Plans are made on the basis of statistical material from previous periods. Conditionally planning can be divided into two parts: calendar planning, which determines the timing of the beginning and end of this or that process, and planning of material stocks (volumes) plus the corresponding calculation of standards.

The system of planning indicators is a complex of calculation and evaluation characteristics that allow to set and solve optimization tasks of calendar planning and evaluate the quality of calendar plans. Without such a system in principle it is impossible to estimate whether the logistics in the organization is effective.

Selection of service providers

Choosing a business partner is a very important and serious process. Any trifle that is not accounted for can change or even destroy the project concept and all plans. It is inexpedient to choose a partner only on the level of prices for his services.

Imagine that you are looking for a carrier and considering proposals from three companies. Two of them are asking for 100 rubles for the delivery of cargo from point A to point B, and the third is 10 rubles. Will you accept the offer of the third company without hesitation, or will you try to find out what you will have to “donate” by getting such a low price?

Or choose a warehouse to store your products: examine one, two, three, ask about the quality of services. The answers are the same: “We are the best, we can do anything! But it is worth asking the statistics of recent times, for example, how much the average order picking takes – and the picture will become much clearer.

Statistics

Risks in logistics are defined as external factors affecting the reliability of the system. Including risks related to reliability of management and operational scheduling of incoming and outgoing flows, assessment of insurance (or regulatory) stocks, etc.

Such risks can be significantly reduced by maintaining statistics. It is a cornerstone for logistics. On the basis of statistics the probability of occurrence of this or that event influencing logistics is considered, and on the basis of the received values stationary insurance stocks in a way, time of shipment, time in a way are calculated, planning is carried out and so on.