I've been looking at Goldratt's TOC and throughput accounting. I have found some material on this subject, but very little. I wonder if this form of accounting will work for my manufacturing company. The benefits are enticing, but I wonder about practical application.
My main question revolves around the interactions between Management and Financial accounting. I know (at least I think I do) that management accounting only matters internally. A company could choose any management accounting system, even write one from scratch, and that would be OK because enforceable accounting standards don't really apply. Management accounting is solely for decision making.
Financial accounting, on the other hand, is what the government sees and must conform to the GAAP. Can't do anything earth-shattering here.
So if I understand correctly, a company in Goldratt's world could use throughput accounting internally and really optimize their operation; however, at the end of the day everything is still reported *officially* on the *other* set of statements. So if my company switches to throughput accounting internally, the gains won't matter because on the other set of documents I'm not absorbing my costs due to decreased efficiency.
The benefits are greater sales, better delivery performance, and increased flexibility. I need all of these, and I have no doubt that Goldratt's method would work better. But, if our stock holders feed us to the wolves because our financial statements don't reflect those gains, then it's all for nothing.
Am I correct? Any throughput accounting gurus here?
A side question:
There is a company in Japan that has idle equipment at all times because they do not care much about efficiency. They are wildly successful. I know of examples like this, but wonder how they do it. Are accounting standards different in Japan? Would they run into the same problem I'm having trading off efficiency for flexibility?
How do people make this work?