He was merely interested in the cost and quantity of the raw materials, the value and quantity of the finished goods, and the expenses for the craftsman.And that is even nowadays still a fitting description of the relation between manufacturing and cost accounting.Even if the numbers were correct (see Lies, Damned Lies, and KPI), it misses out on a lot of information.
He was merely interested in the cost and quantity of the raw materials, the value and quantity of the finished goods, and the expenses for the craftsman.
Overburden (): Often overlooked in Western-style lean is overburden.
What are the costs associated with overworked employees? How much additional cost is caused by each frustrated worker, and how much would it cost to un-frustrate them?
Below is an incomplete list of important factors in manufacturing that are ill-covered in accounting.
Speed: Everybody knows that speed gives you an advantage over the competition.
What is the quantitative advantage of having clean and well-maintained toilets on the shop floor rather than the biohazards I often see? But again, what is the monetary damage if a delivery is delayed, if a product breaks, if service is slow, or if your people are unfriendly? Even more difficult to determine is how improvement measures will actually influence the above.
How much does it cost you to provide a better service, how will this influence customer satisfaction, and what is your benefit from this?
Hence, the merchant had little knowledge of the manufacturing process.
He did not know and did not care about the details of the process, its efficiency, and the possibilities for improvement.
As Daniel Defoe observed: “With this attitude, it is no surprise that merchants became wealthier than craftsmen.
Soon, merchants started what we would nowadays call a vertical integration: they included craftsmen in their supply chains through a .