The ultimate goal of functional cost analysis. What is functional cost analysis

Functional cost analysis (FCA)

One of the methodologies of strategic economic analysis that helps increase the competitiveness and innovative attractiveness of organizations is functional cost analysis (FCA, Activity Based Costing, ABC), allowing you to estimate the real cost of a product or service regardless of the organizational structure of the company.

According to the FSA, in order to focus on improving the quality parameters of an object, unnecessary costs are eliminated or minimized. In this case, both direct and indirect costs are distributed among products and services depending on the amount of resources required at each stage of production.

The purpose of the FSA is to ensure the correct distribution of funds allocated for the production of products or the provision of services, according to direct and indirect costs, which allows for the most realistic assessment of the organization's expenses. The ultimate goal of the FSA is to find the most economical options for a particular practical solution from the point of view of the consumer and manufacturer.

The subject of the FSA is function of the object being studied, and its objects can be: product design; technological process; any process of production and management activity.

Obviously, when choosing one or another method of performing a certain function, one should lay down in advance a certain minimum amount of costs for its creation. Thus, by replacing the existing method of performing functions with a cheaper one, the cost of the product can be reduced.

The functional approach is a set of techniques that allow us to consider and improve the object of analysis through the prism of the functions performed and the relationships between them, which is based on a number of principles (Table 19.11).

Basic principles of functional cost analysis

Table 19.11

Let us consider in more detail some features of functional cost analysis in the USA, where Value Engineering is considered as a ratio of quality to the costs of its implementation.

The main idea of ​​the American FSA system can be expressed in a simple formula:

Value- (Function + Quality) / Cost,

Where Function - specific work that an object, product, part, university, store, airport and other objects must perform;

Quality- the expected or already achieved quality of performance of functions in comparison with the maximum appropriate;

Cost-total costs throughout all stages of the life cycle; Value- the most effective cost level at which the wishes of the customer operating the facility, manufacturer, designer and other interested companies or organizations will be taken into account.

The most commonly used FSA plan is shown in Table. 19.12.

Let's briefly look at two forms of incentives provided by the US government. The first form of incentive is called Value Engineering Proposal (VEP) and involves stimulating proposals for FSA. Special incentives are reserved for individual employees who propose to improve the functional component of the project. The second form of incentive is Value Engineering Change Proposal (VECP), allowing to stimulate the contractor who proposed to reduce the cost of the project compared to the cost agreed with the customer. In this case, the profit received is divided between the government agency and the contractor in the ratio of 45:55. In other words, it benefits everyone.

The FSA methodology must be applied continuously. In fact, FSA is used in government agencies - on government orders, before organizing a competition. With the help of the FSA, at the government level, it is determined and predicted in an aggregate manner to what minimum costs can be reduced. Next, the FSA “goes down” to the persons who are involved in the design of a new product, its modernization, production, organization, operation and disposal.

We have already noted that FSA in practice always focuses on the total costs at all stages of the product life cycle. Much attention is paid not only to material and labor costs, but also to energy and time costs, because time in the USA is considered as money, i.e. the ability to complete faster without sacrificing quality is usually seen as an additional, and sometimes decisive, benefit.

An important requirement for the work is that the group of FSA specialists should not be previously professionally familiar with the project, nor be interested in it in one way or another. That is, they must have a completely fresh look. When carrying out its work, the FSA group faces a number of difficulties, including in measuring real costs and losses. It is relatively easy to carry out feasibility studies when all or most of the work has been completed, but project evaluation is required at an earlier stage. Therefore, FSA specialists are intensively trained in the system Estimation, those. preliminary, enlarged forecast assessment of the function-cost ratio. Systematically, in the context of projects, individual parts of projects, FSA groups as a whole and individual performers, deviations of preliminary and actual estimates, magnitude and variability, and percentage of deviations are compared in detail. This criterion for the accuracy of the forecast is also used when deciding on the promotion of an employee and increasing his pay.

Every project manager should have information about B.C.W.S. (Budgeted cost of work scheduled), those. on the budget cost of business processes in the context of project implementation stages, determined on the basis of the FSA. BCW3 shows the actual cost of work performed, a ACWP (Actual cost of work performed) - information about the money actually spent.

Table 19.12

Stages of conducting functional cost analysis

Much attention is paid to cost control during the design of an object, the severity and reasons for deviations from the planned design progress in time and cost. It is necessary to answer three main questions: “At what stage of the project are we?”, “How much money has already been spent?”, “Where are the deviations and what are their reasons, what needs to be done?” There are four options that can help answer the question: “What should I do?” (Table 19.3).

Options for possible further development of the FSA scenario

Table 19.13

In the FSA methodology, the goal is formulated in the form of an efficiency criterion, which is generally expressed as a fraction: quality/cost - indicator whose value tends to a maximum. This indicator is specific use value, characterizing use value, i.e. the usefulness of a thing as an item of consumption (Table 19.14).

Criteria for the effectiveness of operations and selection of an FSA object

Table 19.14

The order of the FSA is determined the final sum of points, which should be determined by multiplying the columns “ranking of products” and “weighting coefficient of the indicator” for each criterion and calculating their total amount. In this case, weighting coefficients can be determined based on expert assessments. Based on the results obtained, the products with the lowest number of points are subjected to functional-cost analysis first.

The decisive influence on the content and results of comparisons is exerted by selection of parameters and objects included in the analysis program. For example, by including already produced products in the analysis program (A 0 , B (] , From 0), modernized based on products (A r B ( , C,) and “synthetic products (ideal) with the best performance

In this case, the selection of the best products should be based on several compared parameters, for example, 5-7. A comprehensive assessment of a product is carried out using the multidimensional assessment method using immeasurable quantities for individual parameters. The essence of the method is to determine the significance of each parameter and reduce the analyzed indicators to immeasurable values. Weighting coefficients are determined based on expert assessments. And to reduce the compared parameters to dimensionless values, their ratio with the best values ​​is calculated (Table 19.15).

Table 19.15

Parameters used to select the best products

Topic 11. Functional cost analysis

Functional cost analysis allows you to perform the following types of work:

· determining and conducting a general analysis of the cost of business processes at the enterprise (marketing, production of products and provision of services, sales, quality management, technical and warranty service, etc.);

· carrying out a functional analysis related to the establishment and justification of the functions performed by the structural divisions of enterprises in order to ensure the production of high quality products and the provision of services;

· identification and analysis of basic, additional and unnecessary functional costs;

· comparative analysis of alternative options for reducing costs in production, sales and management by streamlining the functions of the structural divisions of the enterprise;

· analysis of integrated improvement of enterprise performance.

The FSA method has now become a comprehensive tool for assessing systems, processes and concepts.

Functional cost analysis (FSA, Activity Based Costing, ABC) is a method for determining the cost and other characteristics of products, services and consumers, using as a basis the functions and resources involved in production, marketing, sales, delivery, technical support, provision of services, customer service and quality assurance.

The FSA method is designed as an "operations-oriented" alternative to traditional financial approaches. In particular, in contrast to traditional financial approaches, the FSA method:

· provides information in a form understandable to enterprise personnel directly involved in the business process;

· distributes overhead costs in accordance with a detailed calculation of the use of resources, a detailed understanding of the processes and their impact on costs, and not on the basis of direct costs or accounting for the full volume of output.

The FSA method is one of the methods that allows you to indicate possible ways to improve cost indicators. The purpose of creating an FSA model for improving the activities of enterprises is to achieve improvements in the operation of enterprises in terms of cost, labor intensity and productivity. Carrying out calculations using the FSA model allows you to obtain a large amount of FSA information for decision making.

The FSA method is based on data that provides managers with the information necessary to justify and make management decisions when applying methods such as:

· “just-in-time” (JIT) and KANBAN;

· global quality management (Total Quality Management, TQM);

· continuous improvement (Kaizen);

· business process reengineering (Business Process Reengineering, BPR).

The FSA concept allows you to present management information in the form of financial indicators. Using simply US$ or RUB as units of measurement for financial indicators, the FSA method reflects the financial condition of a company better than traditional accounting does. This is because the FSA method physically reflects the functions of people, machines and equipment. The FSA method displays the level of resource consumption by functions, as well as the reasons why these resources are used.

FSA information can be used both for current (operational) management and for making strategic decisions. At the level of tactical management, information from the FSA model can be used to formulate recommendations for increasing profits and improving the efficiency of the organization. On the strategic level - assistance in making decisions regarding the reorganization of the enterprise, changing the range of products and services, entering new markets, diversification, etc. FSA information shows how resources can be reallocated for maximum strategic benefit, helps identify the opportunities for those factors (quality, service, cost reduction, labor intensity reduction) that matter most, and also determines the best investment options.

FSA value

The main directions of using the FSA model for reorganizing business processes are increasing productivity, reducing cost, labor intensity, time and improving quality.

Improving productivity involves three steps. At the first stage, functions are analyzed to determine opportunities to improve the efficiency of their implementation. On the second, the causes of unproductive expenses and ways to eliminate them are identified. Finally, the third step monitors and accelerates desired changes by measuring key performance parameters.

As for reducing costs, labor intensity and time, using the FSA method it is possible to reorganize activities in such a way that a sustainable reduction is achieved. To do this you need to do the following:

· reduce the time required to perform functions;

· eliminate unnecessary functions;

· create a ranked list of functions by cost, labor intensity or time;

· select functions with low cost, labor intensity and time;

· organize the sharing of all possible functions;

· redistribute resources released as a result of improvements.

It is obvious that the above actions improve the quality of business processes. Improving the quality of business processes is carried out through a comparative assessment and selection of rational (by cost or time criteria) technologies for performing operations or procedures.

Function-based management is based on several analytical methods that use FSA information. These are strategic analysis, cost analysis, time analysis, labor intensity analysis, target cost determination and cost calculation based on the life cycle of a product or service.

One of the areas for using the principles, tools and methods of FSA is budget planning based on functions. Budget planning uses the FSA model to determine the scope of work and resource requirements. There are two ways to use it:

· selection of priority areas of activity linked to strategic goals;

· development of a realistic budget.

FSA information allows you to make informed and targeted decisions on resource allocation, based on an understanding of the relationships between functions and cost objects, cost factors and scope of work.

The development of the FCA method was the method of functional cost management (FSU, Activity-Based Management, FSU).

FSU is a method that includes cost management based on the use of more accurate attribution of costs to processes and products.

We especially draw attention to the fact that the FSU method allows not only to determine costs, but also to manage them. However, one should not equate management and control. FSA/FSU data are used more for “predictive” modeling than for control. Today, the use of cost data for control needs is being replaced by more timely information from the TQM method, implemented in the form of Statistical Process Control (SPC) functions, or from integrated information systems operating in real time.

In the process of constructing functional cost models, it was possible to establish a methodological and technological relationship between the IDEF0 and FSA models.

Advantages and disadvantages of functional cost analysis compared to traditional methods
Advantages:

1. More accurate knowledge of product costs makes it possible to make the right strategic decisions on:

a) setting prices for products;
b) the correct combination of products;
c) the choice between the possibilities of making it yourself or purchasing it;
d) investing in research and development, process automation, promotion, etc.

2. Greater clarity regarding the functions performed, due to which companies are able to:

a) pay more attention to management functions, such as increasing the efficiency of expensive operations;
b) identify and reduce the volume of operations that do not add value to products.

Flaws:

· The process of describing functions can be overly detailed, and the model is sometimes too complex and difficult to maintain.

· Often the stage of collecting data about data sources by functions (activity drivers) is underestimated

· For high-quality implementation, special software is required.

· The model often becomes outdated due to organizational changes.

· Implementation is often seen as an unnecessary "whim" of financial management and is not sufficiently supported by operational management.

FSA stages

Stages of the FSA:

1. Conducting research aimed at setting tasks for creating or improving an object, finding ways to perform functions.

2. Solving the problems formulated at the previous stage.

3. Implementation of the obtained solutions.

When carrying out FSA in one stage (i.e., when performing only the first of the stages), the goal of the work is to search for specific tasks for creating or changing an object, identifying technical, economic and organizational and economic requirements for the proposed solutions. We can consider an analysis of the product manufactured at the enterprise, the formation of specific tasks for its improvement, after which the identified tasks and set economic guidelines can be included in production development plans, as a variant of such work in the corrective form of FSA. Another option for such work within the framework of the creative form of FSA may involve the analysis by the customer of any development at the stage of forming the technical specifications. The formulated tasks and economic guidelines for their solution in this case form the basis of the developed technical specifications. Thus, when carrying out FSA in one stage, the search for specific solutions and their practical implementation can be divorced from the actual analytical work on setting tasks and carried out without any connection with them.

During a two-stage FSA (i.e., when performing the first and second of the above stages), not only problems are formulated, but also solutions to these problems are searched for. This work scheme is typical for functional-cost design (a creative form of FSA), since there may be a significant time gap between finding constructive solutions for a new development and its practical implementation. Two-stage work with the corrective form of FSA forms the basis for certain variants of the Express-FSA method.

Carrying out FSA in its most complete version, including three stages, is regulated by a number of documents at various levels. In this case, the work on FSA includes the practical implementation of the solutions found. A typical example of such an organization of work is the conduct of FSA of industrial products mastered in production (corrective form of FSA), in which most of the work is carried out by a research working group (WG) formed from employees of the enterprise, which, in particular, carries out supervision over the implementation of the developed recommendations.

There are also possible options for conducting FSA, when one or two of the above stages of analysis are repeated. For example, when studying a product that has been mastered in production, specific tasks for its improvement can be formulated, but the search for solutions to these problems is not always effective. In such cases, the first stage of the FSA can be repeated in order to reformulate the objectives, after which the second stage of the study is carried out again. Another option for repeating the first stage of the FSA is possible in cases of developing new facilities. In this case, the most general tasks for creating an object are first set, then with each subsequent repetition of the first stage of research, these tasks are increasingly detailed.

But the most widely used approach is a well-developed approach in the FSA methodology, which considers the process of conducting functional-cost analysis as a relatively strictly defined sequence of stages - a work plan for conducting FSA.

Work plan for conducting FSA

A typical work plan for conducting an FSA is set out in the form of seven sequential stages.

Preparatory stage. Its purpose is a preliminary check of the validity of the task, its clarification, if necessary, and organizational support for the work on carrying out the FSA.

Information stage. At this stage, information on the FSA object is collected, systematized and studied.

Analytical stage. The main goals of this stage are to build a functionally ideal model of the object, identify and set tasks for the implementation of this model.

Creative stage. At this stage, the identified problems are solved, and a set of proposals is developed to ensure the improvement of the original object.

Research stage. The goals of this stage are to identify the maximum effect of the solutions found and predict the further development of the object.

Implementation stage. At this stage, work is underway to ensure the implementation of the adopted FSA recommendations.

Work on FSA is based on an algorithmic principle, when each subsequent procedure is based on the results of the previous one, and the procedures themselves are performed according to certain rules. Each subsequent FSA procedure allows you to correct the results of previous procedures. Iterative loops can be repeated many times. The work inherent in any stage of the FSA can be partially performed at other stages.

Compared to the general scientific method of problem solving, the FSA work plan distinguishes the creative process from other stages that contribute to obtaining the most unique, cost-effective solutions in the project under consideration. At the same time, cost reductions of more than 30% and up to 50% are not unusual. FSA practitioners in different countries use different names and different numbers of steps to describe the FSA process.

A work plan is an organized plan of action for carrying out FSA studies and ensuring that recommended changes are implemented. The work plan contains seven stages, five of which are usually carried out by the FSA IWG. The other two stages are carried out in accordance with the corporate policy stated in the FSA program.

Each stage of the work plan includes several tasks. This set of different tasks and rules associated with the art of their application makes FSA a way of working.

In the process of development, FSA has absorbed many technologies that were previously used as independent methods for solving specific problems. At various stages of research, the structuring of quality functions, the Pareto method, ABC analysis, the Taguchi method, the method of analyzing the nature and consequences of failures, parallel design, TRIZ and other methods are widely used. The work plan presented below provides specific steps to effectively analyze a facility to develop the maximum number of alternatives that will achieve the required functionality of the product or service. Strict adherence to a work plan is more likely to ensure maximum benefits with sufficient flexibility.

The FSA work plan covers three main periods of activity: the preliminary stage, the direct implementation of functional cost analysis and the final stage - the implementation stage. All stages and steps are performed sequentially. As the cost study progresses, new data and new information may cause the IWG to return to earlier stages or steps within a stage in an iterative manner. Stages or steps within a stage are not skipped.

I. Functional and cost analysis……………………………….....4

1.1. Concept, essence and objects of the FSA method……………………...… 4

1.2. Principles and forms of functional cost analysis……… 8

1.3. Problems of introducing accounting using the FSA method…………………. 13

II. Calculation part……...……………………………………………..…. 15

CONCLUSION………………………………………………………...20

LIST OF REFERENCES……………………...…..21

INTRODUCTION

Currently, one of the ways to improve product quality and develop industrial enterprise management systems is the use of functional cost analysis (FCA). There are different opinions about the effectiveness of using FSA. Some economists consider FSA a simple method. To apply it in practical activities, others are complex, both in methodological terms and in the field of technology for using FSA. This may be due to the fact that there is insufficient information about experience with the method.

The purpose of this work is to reveal the essence of functional cost analysis, as well as ways of using it to improve product quality and improve the marketing management system at an enterprise. According to these goals, the following tasks have been set in the work:

– give the concept of a system using the FSA method (ABC-cost);

– determine the scope of application of this method;

– assess the problems of introducing accounting using the FSA method.

1.1. Concept, essence and objects of the FSA method

In the economic literature, the relationship between marketing strategy and FSA strategy is noted. The FSA strategy develops a marketing strategy, as it is an effective method for studying the technical and economic characteristics of goods and their functionality.

Functional cost analysis is understood as a method of comprehensive systematic study of the cost and characteristics of products, including functions and resources involved in production, sales, delivery, technical support, service provision, and quality assurance activities. This method is aimed at optimizing the relationship between the quality, usefulness of an object’s functions and the costs of their implementation at all stages of its life cycle.

The purposes of using functional cost analysis in an enterprise may vary depending on the object of study. If the object of the study is a division of the enterprise, for example the marketing department, then the goal of the study will be to achieve improvements in the work of the department in terms of cost, labor intensity and productivity. If we consider the quality of the enterprise’s products as the object of study, then the goals of the FSA will be: at the stages of research and development work - to prevent the occurrence of unnecessary costs, at the stages of production and operation of the facility - to reduce or eliminate unjustified costs and losses. The ultimate goal of the FSA is to find the most economical options for a particular practical solution from the point of view of the consumer and manufacturer.

Accordingly, the tasks of FSA are distinguished according to the objects of study. In the first case, the activities of the marketing department personnel are analyzed and the cost of performing management functions is determined, the efficiency of using the department’s labor resources is examined, sources of increasing labor productivity are identified, eliminating “bottlenecks” in management, etc. In the second case, the main tasks will be the following: reducing material intensity, labor intensity , energy intensity and capital intensity of products, improving product quality, ensuring a reduction in costs for improving product quality by completely or partially eliminating unnecessary costs for ineffective measures.

FSA objects can be:

Organizational and management processes and structures, construction (improvement) of the organizational structure, distribution of tasks, rights and responsibilities in the department’s management system, creation of conditions for the effective work of service employees;

Product quality (identifying reserves for improving product quality, achieving the optimal state of “quality - price”);

Product design (at the stages of design, pre-production, directly during the manufacturing process), all types of technological equipment and tools, special equipment and special materials;

Technological process (at the stages of development of technological documentation, technological preparation of production, organization and management of production), and other processes

production (procurement, processing, assembly, control, warehouse, transport).

Functional cost analysis allows you to perform the following types of work:

1. determine the level (or degree) of implementation of various business processes at the enterprise, including the effectiveness of marketing management and product quality management;

2. justify the choice of a rational technology option for implementing business plans;

3. analyze the functions performed by the structural divisions of the enterprise;

4. ensure high quality products;

5. analyze the integrated improvement of the enterprise’s performance, etc.

In order to ensure the greatest return from performing work on FSA, it is necessary to observe a number of basic principles of analysis (Table 1.1).

1) there is no unified FSA methodology suitable for all areas and all objects of research;

2) before deciding to use FSA, it is necessary to analyze the main factors influencing the process and methodology for implementing this method:

Directions for conducting FSA (enterprise management system, management system of a structural unit - marketing department, product quality);

Object of study and its life cycle;

Goals and objectives of the method;

Amount of funding for research using FSA;

Qualification of specialists conducting FSA.

The FSA theory is widely used in the mechanical engineering, electrical and electronic industries. This is due to the systematic nature of the method, which lies in the fact that it requires the study of an object as a single whole and as a system that includes other constituent elements that are in interaction, and also as parts of another system, of a higher level, in which the analyzed object is located with other subsystems in certain relationships. Due to its systematic nature, FSA allows us to identify cause-and-effect relationships between quality, characteristics and costs in each studied object.

Specialists performing FSA must have a high level of development of abstract thinking and creative (scientific and technical) imagination. These individual psychological characteristics contribute to an increase in the variety of alternatives when making management decisions.

Grouping costs by production factors allows us to identify the hierarchical structure of areas for reducing the cost of products. It is advisable to detail the areas, ranking them according to the degree of importance determined by the method of expert assessment. Comparison of functions with the costs of their implementation allows you to choose ways to reduce the cost of products.

Correlating the share of costs for a function in total costs and the significance of the corresponding function allows you to calculate the cost ratio by function. Considered optimal

The result of the FSA is alternative solutions that take into account the ratio of the total costs of products (being the sum of element-by-element costs) with basic costs. The base can be the minimum possible cost of the product. The economic efficiency of FSA, which shows what share of cost reduction in their minimum possible value can be determined by the formula:

The result of carrying out FSA as a product quality management tool should be a reduction in costs per unit of beneficial effect, which is achieved:

· reducing costs while increasing the consumer properties of the product;

· reducing costs while maintaining quality levels;

cost reduction with a reasonable reduction in technical parameters to their functionally required level.

1.2. Principles and forms of functional cost analysis

Principles of functional cost analysis

Table 1.1

Currently, three main forms of FSA are used in domestic and foreign practice.

Functional costing analysis (also sometimes called activity-based costing) is a cost accounting model (Figure 1). It is designed to categorize all expenses based on the time spent on activities that involve producing goods and providing services to consumers.

In traditional cost accounting models, indirect costs (overhead) are allocated proportionally to production volumes. Because of this, costs for products that are produced in large quantities tend to be overstated, and for goods and services produced in small quantities, they are underestimated. Unlike traditional cost accounting methods, when using the functional cost analysis (FCA) model, real costs associated with goods, consumers or services are determined, for which indirect costs are distributed among types of products not on the basis of volume, but on the basis of the required or actually completed types activities.

Instead of using arbitrary percentages, which is often found in traditional cost accounting methods, FSA focuses on identifying cause-and-effect relationships in order to objectively allocate costs based on them. Once the costs for individual activities are determined, the costs for each such type are distributed across all products - depending on the extent to which this type of activity was used in the production of a specific product or in the provision of a specific service. With this approach, FSA often helps identify areas with high overhead costs per unit of product and thereby try to find ways to reduce them or charge larger amounts for products that are expensive to produce.

When applying the FSA model, the following basic assumption is made: costs arise not from products or consumers as such, but from the performance of the activities that were required to produce goods or provide services. Since the creation of different products requires different types of activities, each of which also requires different resource support, when distributing total costs for individual types of goods and services, it is necessary to correctly use weighting coefficients.

When making decisions, knowing the real costs helps:

• establish economic break-even points;
• identify those consumers who bring profit and those on whom the company incurs losses (i.e., assess the “customer value”);
• identify opportunities for improvement;
• compare investment alternatives.

When to use the model

FSA can be useful when a company's overhead costs are high and when multiple product and customer combinations increase job complexity and increase material handling costs. This method of cost accounting allows you to transfer indirect costs to the category of direct costs. As a more accurate cost management system, FSA identifies opportunities to increase efficiency and improve business process outcomes, aided by knowledge of the true costs associated with producing goods and providing services.

There are other models similar to FSA. These are, in particular, the total cost of ownership (TCO) model and the cost model throughout the product life cycle. When applying TCO, the total investment costs are calculated, including one-time purchases, recurring costs and operating expenses. This concept is very widely used in the implementation of projects related to information technology, where it is difficult to quantify their benefits, and therefore the main emphasis in this case is on minimizing project costs. Life cycle cost analysis allows you to determine the total costs over the entire life of the product (from its development to disposal).

How to use the model

FSA in its simplified form consists of five steps.

1. Identify accounting objects and non-core activities and the resources needed to perform them.
2. Determine the costs per non-core activity.
3. Establish cost drivers for each resource.
4. Calculate the total indirect costs associated with the product by accounting object.
5. Divide the total costs into parts equal to the indirect costs allocated to individual accounting items.

Goods, consumers, and services can be selected as the accounting object. And the type of activity can be everything that a company does while running its business: receives raw materials, carries out loading operations, packs goods, makes calls, gives explanations, makes sales and purchases, promotes its products, makes calculations and calculations, places orders, receives orders, etc. A non-core activity is understood as one whose costs cannot be directly attributed to accounting objects. Resources can be machines and equipment, computers, people, and any other capacity or assets that can be (at least partially) attributed to a specific activity.

conclusions

FSA allows you to segment costs based on real profitability, which helps to more accurately assess customer value. As such, the application of this model is the first step towards the use of process-oriented management or, as it is also called, activity-based management. FSA does not evaluate the efficiency or productivity of activities, although knowledge of these indicators can be very important for business improvement. It should also be noted that FSA is carried out on the assumption that it is possible to identify unique accounting objects, types of activities and resources. But ultimately, the accuracy of the results of this analysis depends on the accuracy of the original data on which it was conducted.

Functional cost analysis allows you to perform the following types of work:

Determining and conducting a general analysis of the cost of business processes at the enterprise (marketing, production of products and provision of services, sales, quality management, technical and warranty service, etc.);

Conducting a functional analysis related to the establishment and justification of the functions performed by the structural divisions of enterprises in order to ensure the production of high quality products and the provision of services;

Determination and analysis of basic, additional and unnecessary functional costs;

Comparative analysis of alternative options for reducing costs in production, sales and management by streamlining the functions of the structural divisions of the enterprise;

Analysis of integrated improvement of enterprise performance.

Functional cost analysis (FSA, Activity Based Costing, ABC) is a method for determining the cost and other characteristics of products, services and consumers, using as a basis the functions and resources involved in production, marketing, sales, delivery, technical support, provision of services, customer service and quality assurance.

The FSA method is designed as an "operations-oriented" alternative to traditional financial approaches. In particular, in contrast to traditional financial approaches, the FSA method:

Provides information in a form understandable to enterprise personnel directly involved in the business process;

Allocates overhead costs in accordance with detailed calculations of resource use, a detailed understanding of processes and their impact on costs, rather than on the basis of direct costs or accounting for the full volume of output.

The FSA method is one of the methods that allows you to indicate possible ways to improve cost indicators. The purpose of creating an FSA model for improving the activities of enterprises is to achieve improvements in the operation of enterprises in terms of cost, labor intensity and productivity. Carrying out calculations using the FSA model allows you to obtain a large amount of FSA information for decision making.

The FSA method is based on data that provides managers with the information necessary to justify and make management decisions when applying methods such as:

- “just in time” (Just-in-time, JIT) and KANBAN;

Global Quality Management (TQM);

Continuous improvement (Kaizen);

Business Process Reengineering (BPR).

The FSA concept allows you to present management information in the form of financial indicators. Using simply American dollars or rubles as units of measurement for financial indicators, the FSA method reflects the financial condition of a company better than traditional accounting does. This is because the FSA method physically reflects the functions of people, machines and equipment. The FSA method displays the level of resource consumption by functions, as well as the reasons why these resources are used.

FSA information can be used both for current (operational) management and for making strategic decisions. At the level of tactical management, information from the FSA model can be used to formulate recommendations for increasing profits and improving the efficiency of the organization. On the strategic level - assistance in making decisions regarding the reorganization of the enterprise, changing the range of products and services, entering new markets, diversification, etc. FSA information shows how resources can be reallocated for maximum strategic benefit, helps identify the opportunities for those factors (quality, service, cost reduction, labor intensity reduction) that matter most, and also determines the best investment options.

The main directions of using the FSA model for reorganizing business processes are increasing productivity, reducing cost, labor intensity, time and improving quality.

Improving productivity involves three steps. At the first stage, functions are analyzed to determine opportunities to improve the efficiency of their implementation. On the second, the causes of unproductive expenses and ways to eliminate them are identified. Finally, the third step monitors and accelerates desired changes by measuring key performance parameters.

Using the FSA method, you can also reduce the cost, labor intensity and time of work. To do this you need to do the following:

Reduce the time required to perform functions;

Eliminate unnecessary functions;

Generate a ranked list of functions by cost, labor intensity or time;

Select functions with low cost, effort and time;

Organize the sharing of all possible functions;

Reallocate resources freed up as a result of improvements.

Function-based management is based on several analytical methods that use FSA information. These are strategic analysis, cost analysis, time analysis, labor intensity analysis, target cost determination and cost calculation based on the life cycle of a product or service.

One of the areas for using the principles, tools and methods of FSA is budget planning based on functions. Budget planning uses the FSA model to determine the scope of work and resource requirements. Two ways of use can be distinguished: selection of priority areas of activity linked to strategic goals; and developing a realistic budget.

The development of the FSA method was the method of functional cost management (FSU, Activity-Based Management, FSU).

FSU is a method that includes cost management based on the use of more accurate attribution of costs to processes and products.

The FSU method allows not only to determine costs, but also to manage them. However, one should not equate management and control. FSA/FSU data are used more for “predictive” modeling than for control. Today, the use of cost data for control needs is being replaced by more timely information from the TQM method, implemented in the form of Statistical Process Control (SPC) functions, or from integrated information systems operating in real time.

Application of the FSA model to assess the activities of an enterprise