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Make Sure You Know Better --Dickeson

September 2004
I know of only one production manager, at a printing company using a cost accounting system, who doesn't believe that increasing efficiency reduces his costs. How do I know this? I've spoken to him several times about the deceptions of cost accounting.

He didn't learn the truth from the company that supplied the computerized cost system they have. Those guys believe it, too. I think they know better, but they couldn't sell a system to a printing company that didn't have a set of cost rates in it. Well, maybe they don't know better. I may have spoken too quickly.

He didn't learn the truth at meetings of his trade association. Those guys really believe that increased efficiency reduces costs, too. I think they know better, but they couldn't get printers to come to meetings if they spoke the truth. Maybe they've just become confused.

Again, I may have spoken too soon.

Searching for the Truth

He didn't learn the truth from most printing consultants or from all of the printing equipment salesmen. The plain fact is that these guys really don't know any better. Maybe they really know the truth, but it's not in their selfish interest to say so.

The bean counters, the accountants at printing companies, know the facts. They've tried, they're trying, to get us to learn the truth about our "cost" systems. Trouble is, they're not the ones out on the manufacturing floor—not out in the trenches—where decisions are being made every minute and every hour. They know that efficiency of operation never reduced a true cost of the company, never increased profitability a nickel! But still they support cost accounting systems that deceive us, the guys on the floor and, often, top management.

They try to tell people that the cost accounting system is just a convenient fiction—but nobody hears them. "You guys saying our costs aren't really our costs? Come on, buddy-boy, you kidding us? Whom are we supposed to believe?"

Reducing headcount (or firing people, as Donald Trump says) is truly the way increased efficiency can reduce real costs. But firing trained, skillful, knowledgeable people who've improved our efficiency to the point it makes their job redundant is a helluva way to reduce costs! It's deadly. That's the awful truth of the matter. Disagree? Do you have a better way of reducing real out-of-pocket costs? Tell us about it.
 

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