Management Accounting

Management Accounting

1. In your own words, based on your understanding of the paper by Cullen et al. (2013), briefly explain what reverse logistics is, and how management accounting can contribute to managing the reverse logistics process. [WordCount: 350]

According to Prahinski and Kocabasoglu (2006), reverse logistics is presently gaining interest across various academic disciplines, and it is slowly becoming acknowledged as an essential practice within supply chain management. Reverse logistics has been described as a model shift in terms of material from a “cradle-to-grave” method to the “cradle-to-cradle” method. It has also been defined as a procedure that goes the wrong approach down a one-way road as supply chains are adjusted within forward logistics. According to Rogers et al. (2002), buyer’s remorse, liberal return policies, and merchandise evokes are amongst the cause products to be reimbursed back via the supply chain. In the 1980s, the latitude of reverse logistics was primarily bound to the movement of the product against the basic flow. However, over time, extra refineddescriptions started to arise and Rogers and Tibben-Lembke (1998), stated that reverse logistics was the procedure of arrangement, applying as well as regulating the efficient, cost-effective delivery of raw provisions, inventory, and finished merchandises and associated info from the point of usage to the source for the role of proper disposal or recalling value. Nevertheless, this explanation is incomplete because several products are reimbursed to their point of retrieval and not their source. According to Cullen et al. (2013), reverse logistics denotes all the actions related to a service/product after the point of transaction, the eventual aim to make more effectual or optimize aftersales action, thus saving expenditure plus ecological resources.

Management accounting can enable the administration of the reverse logistics practice through the implementation of different rules and procedures as part of reducing the noteworthy costs linked with no-fault established returns experienced in higher valued merchandise items. At the case study at Halfords, there was a specific focus on the prevention of failure charges to a broader audience, with the emphasis being placed on reducing the budget of no-fault returns. Also, an improved understanding of the magnitudes of insufficient sale procedures in regards to customer gratification and the eventual bottom-line performance at the managerial level, which influenced the staff behavior. Additionally, the relationship between reverse logistics is impacted by the application of technology, such as SAP technology. According to Cullen et al. (2013), the implementation of SAP technology at Halfords exposed new likelihoods for organization accountants, and their part in the reverse logistics procedures became noteworthy and much broader within the organizational life routines.

2. This question centers on Halford’s business strategy and has the following two parts [Word Count: 300]:
3. Identify the business strategy adopted by Halfords, using evidence from Cullen et al. (2013) to support your answer.

Halfords is a United Kingdom-based firm in the FTSE 250 plus it had around £894 million in market capitalization during the study by Cullen et al. (2013). The company aims at delivering tourism plus leisure items to individuals on travel via market-leading information, service as well as choice. Halfords is a leading UK retailer in regard to the income of all of the main merchandise markets in which it functions. The company deals with vehicle maintenance comprising of vehicle parts, repairing consumables like oil, body repair equipment, plus workshop tools. Also, the firm offers car improvement tools, including vehicle entertainment systems, accessories, cleaning items, and external car designing products, alloy wheels, and navigation arrangements. In leisure and comfort, the company sells cycle accessories, kid’s car seats, cycle carriers, and open-air leisure equipment.  Halfords distinguishes itself from its contestants via its nationwide store portfolio, wide-ranging products, reasonable pricing which is obtained via the scale of buying power, customer check done in-store by staff (like fitting and renovation) in addition to its robust brands.

1. The business strategy adopted by Halfords leads to the organization experiencing several problems, specifically related to reverse logistics, which prompted their participation in the interventionist research (IVR) project. Explain the problems that Halfords were experiencing.

Returns turned out to be increasingly difficult for Halford’s firm as they presented advanced value items into their item offering, for example, satellite navigation items. A rising number of the returns comprised of no-fault established returns, which began to influence their profit levels. Before the start of the interventionist research by Cullen et al. (2013), the business did not have a clear performance assessment of its reverse logistics process. Nevertheless, varying market conditions caused the section to be given an increasingly significant role in the firm from the Board down. Also, the firm had information about their returns cost policy, and there existed a noteworthy absence of discernibility plus management reportage in the section. Stores failed to perceive the returns management as a significant driver in regards to their enactment, and evasion of returns plans was not completely controlled.  Lost in transit was a significant problem through tracking delays via returns certification, and there were no fixated defective products cost management at Halfords.

3. Baard and Dumay (in press) and Cullen et al. (2013) explain what interventionist research is. Synthesizing the explanations offered by these authors, in your own words, explain what interventionist research (IVR) is.[Word Count: 130]

According to Baard and Dumay ( 2018), interventionist research(IVR) is a procedural approach that originates from  Lewin’s (1946, 1947) action investigation methods in the social sciences. From Lewins’s initial work through the use of action research, various scholarly interpretations have emerged. Therefore, IVR is a comprehensive concept that incorporates variations such as action investigation, action discipline, design knowledge, clinical study, constructivist research, and engaged scholarship. Baard and Dumay (2017), defined IVR as a research practice that is founded on case studies, whereby scholars encompass themselves to working openly with administrators in businesses to unravel real-life issues by using theories for planning and executing solutions via intermediations and examining the outcomes from both a practical and theoretical viewpoint. Cullen et al. (2013) adopted the interventionist research methodology to study reverse logistics in around 40 companies, with Halfords being the main case study of the project. Through IVR, Cullen et al. (2013) involved associates of the Halfords firm over matters which concerned decreasing the budget of reverse logistics.

4. Show how management accounting, using IVR, was able to support Halfords’management in solving the reverse logistics problems you previously identified. Include the following in your answer: What are the benefits (the‘good’) of IVR? To what extent did the solutions reflect the ‘good’ of IVR? Were the solutions implemented effectively or not? Why or why not? Give reasons and use evidence from the case to support your answer. [WordCount: 900]

Involvement of researchers, through IVR in the Halfords organization of the wider reverse logistics, Chris Hall( Administrator of Quality and Cost Control) organized a demonstration to the Board, which was aimed at “ A visualization or best -practice returns procedure.” Financial info was utilized as a fragment of change, plus authorization was given for the appointment of a Returns Manager in a commercial part. In the first phases, Chris worked for hand in hand with associates’ from various sectors of the company (product team, delivery, procedures team plus finance). Additionally, while the senior staff of the operations crew had continuously been very defensive of other staff within the supplies operational groups, they were convinced of the cost of the alterations being proposed through the changes had noteworthy effects on store performances. As the variations were happening, an SAP R3 technological system was presented at Halfords, and the organization was utilized in controlling almost all the roles within the business.

IVR enabled the researchers to hold several discussions with respect to the possible usage of balanced scorecard and quality costing category performance procedures for the reverse logistics procedure. The managers and management accountants at Halfords welcomed the usage of avoidance, assessment, plus failure costs. Instances of recognized failure costs involved stock write-offs, transportation costs linked to the returns, staff time used, used warehouse space or returns, three-way treatment in the process, buyer dissatisfaction, and possible loss of buyers. Instances of disbursement on prevention involved the supplying of perfect directives to both stores and the buyers, improved staff training to minimize customer returns as well as heightened transparency via added monitoring and behavior controls.

The use of quality costing at Halfords reverse costing, enabled by the IVR research method at the firm, involved different practices. Examples of these practices include the cost of prevention, which involved staff training at Halfords to reduce customer returns. The stores trained workers at their stores to suit Satellite Navigation schemes in the buyer’s cars and demonstrate to them how to make use of it. This minimized the return rates of the items, most of which were termed as “No Fault Found.”  In the cost of the assessment, IVR allowed for the implementation of a checklist of processes that ensured that returns were reduced. Halfords started the process of encouraging clienteles to ring telephone helplines afore returning certain types of items. After ringing a helpline, a buyer would be engaged in a number of questions enabling the fault (actual or professed) to be identified. Through IVR research, Halfords presented a strategy of selling off undesirable items that had a retail price of below £15 in the warehouse as “Managers Specials.” This led to the reduction of the number of items reimbursed to the Distribution point by almost 4o percent.

According to Baard and Dumay( In press), IVR has the prospective to arouse change that can help in solving practical problems in an organization.  Baard and Dumay( In press) argued that obtaining clearness on change represents the possibility of interventionist research likelihood to cause alteration and makes obvious the unintentional alteration that may happen. For example, interventionists can obtain social significance via the liberation of people and groups. Organizational alteration involves an alteration to the organization’s operations, including structure plus technology and people over time. Change also involves a shift in reporting relations, the organization’s plan, control arrangements, and work designs, and it spreads to shifts in groups, individuals as well as team actions. Apparently, in accounting IVR, structural shift precisely focuses on attaining social alteration via enhancement of the capability of organizational players to improve their capabilities and to improve the aptitude to sole-manage their own conditions.

The solutions provided to the problems affecting Halfords’ reverse logistics structure reflected the good associated with IVR. According to Cullen et al. (2013), the involvement with practitioners through the IVR study provided them with a good understanding of reverse logistics as it was shown by Chris Hall from Halfords. Hall stated that the IVR research assignment had a key effect on the outline of different reverse logistics procedures in Halfords. It assisted in increasing mindfulness of the matters as well as the big potential for enhancement to both lowest line presentation plus client service via the starter of enhanced procedures. Identification of other methods and the provision offered by workshop deliberations played a vital role in the application of modification at Halfords.

The solutions implemented at Halfords were effective. The purpose of the reverse logistics IVR scheme was to come up with a number of analytic tools that could support organizations to device operative reverse logistic processes. Before the commencement of the project at Halfords, the company, returns had turned out to be increasingly difficult to Halfords as they presented advanced value items into their item submission like the satellite navigation systems. Additionally, Halfords did not have a clear performance assessment of its reverse logistics procedure. Nevertheless, shifting market conditions caused the extent to be certain an increasingly significant role in the firm from the Board down. The introduction of staff training at their stores to fit Satellite Navigation systems in the buyer’s cars minimized the return rates of the items, most of which were termed as “No Fault Found.”  In the cost of the assessment, IVR allowed for the implementation of a checklist of processes that ensured that returns were reduced. Additionally, IVR enabled the researchers to hold several discussions in regard to the potential usage of the balanced scorecard and quality costing type performance measures for the reverse logistics procedure.

5. In your opinion, based on your understanding of the Halfords case, discuss how this research on reverse logistics may inform and/or help other retailers and their management, experiencing similar problems. [Hint: what can other retailers learn from this research?] [Word Count: 220]

The research on reverse logistics can provide evidence on the practical applications of the strategic and commercial use of management accounting in reverse logistics. Also, the research can help other retailers to appreciate the role of technology, such as customer calls on the reduction of reverse logistics.

6. Academics utilize theory to help them make sense of the world in which we live, including the life within an organization. Baard and Dumay (in press) outlined a theory of interventionist research. [Word Count: 300]
7. Compare the three (3) principles of intervention theory, as described by Baard and Dumay (see section 4.1 Theory), to the practice of interventionist research evident in the Cullen et al. paper. [Hint: You may want to use a table or a diagram for your comparison].

1. Comment on the usefulness of IVT, in making sense of how interventionist research was undertaken in Halford.

IVT enabled the researchers to participate in the problems that were being encountered at the case organization (Halfords) and to offer narratives of decisive action between organization accounting and additional organizational procedures.

Reference List

Baard, V.C., and Dumay, J., 2018. Interventionist research in accounting: reflections on the good, the bad, and the ugly. Accounting & Finance.

Cullen, J., Tsamenyi, M., Bernon, M., and Gorst, J., 2013. Reverse logistics in the UK retail sector: A case study of the role of management accounting in driving organizational change. Management Accounting                Research, 24(3), pp.212-227.

Rogers, D.A., Lambert, D.M., Croxton, K.L., Garcia-Dastugue, S.J., 2002. The returns management process.       International Journal of Logistics Management 13, 1–18.

Rogers, D.S., Tibben-Lembke, R.S., 1998. Going Backwards: Reverse Logistics Trends and Practices.                Reverse Logistics Executive Council, USA.