Using value stream costing as a method to reduce costs and improve the quality of cost information

Abstract

In light of modern developments, global markets have recently witnessed intense competition between economic units and the continuous attempt of economic units to reduce the costs of producing their products and provide products that meet customer requirements and achieve their satisfaction. Traditional accounting and traditional production systems based on a broad production system have become incapable of providing information that works. To determine costs properly, reduce product costs, and improve productivity, therefore, the need arose to adopt several techniques used by economic units to achieve their goals, including value stream costing (VSC) technology.
The research gained its importance from the possibility of many economic units moving to implement the Value Stream Costing (VSC) system, which is used to measure costs more accurately with the aim of supporting and rationalizing decisions and optimally exploiting available resources and energies. It is a modern system that helps improve the quality of cost information.
Thus, the current study aims primarily to apply the value stream costing system (VSC) in economic units and demonstrate its role in reducing costs and improving the quality of cost information, and drawing a value stream map of the current situation in an attempt to identify the most important problems that Fayd Al-Qassim Metallurgical Industries Company suffers from (sample). Research) to identify areas available for development, address deficiencies in the current situation, and draw a map of the future value stream.
The study is based on the main assumption that (applying the value stream costing system leads to providing appropriate information that enables management to reduce costs and improve the quality of cost information).
The study concluded with a set of conclusions, the most important of which is the existence of a strong correlation between the value stream costing system (VSC) and reducing costs and improving the quality of cost information, and that the value stream costing system (VSC) can contribute positively to reducing costs, as the value stream sheds light on the activities that It adds value to the product rather than unnecessary use. This means that the value stream makes significant contributions to achieving the quality of cost information.
The study concluded with a set of recommendations, the most important of which is that companies in general and Fayd Al-Qassim Metal Industries Company in particular should consider switching to production according to the value stream costing system (VSC) due to the multiple needs of customers and the changing forms and benefits of products, as it is not allowed to produce typical products in large quantities, and this calls for aspiration. Towards the establishment of modern systems and tools such as lean manufacturing, so that these companies can compete with goods produced locally and imported from abroad with their products.