Getting the Metrics Right – Introduction to Measurements: Throughput Accounting

(1-day Programme)

The way we measure performance in companies determines the policies and related behaviours. When a measurement system is not usefully designed to support decision-making, we will create wrong policies. By subordinating to such a policy, we can actually damage the results of the organization

Aim

The course aims at providing technical tools and a methodology so that we can extract from the accounting data we have available in our organizations real information, and therefore make the right decisions.

Contents

• the indicators from The Theory of Constraints (TOC)
• the main equations from Throughput Accounting
• the difference between “cost” and “totally variable cost”
• the constraint and cash generation
• Statistical Process Control and monitoring the indicators
• the TOC “budget”
• Figuring out what really makes you money (the P&Q exercise)

Takeaway

Participants will be able to:

• interpret the TOC indicators and how to apply them

• see clearly the difference from traditional accounting indicators

• appreciate the limitations of traditional accounting indicators for decision-making

• understand the impossibility of reconciling the two accounting approaches

• recognize the realms of applicability of both approaches

Methodology

The course provides a theoretical introduction, in which the basics of the TOC accounting approach are presented, the main equations are explained, and decisions taken using traditional accounting methods and Throughput Accounting are compared. Participants also take part in a practical exercise of accounting and management known as P&Q,