Cost information barriers and composite materials

Composites are facing increasing competition from traditional materials such as aluminium and metallic alloys in terms of both performance and cost effectiveness. However, composites represent a highly flexible means of meeting customer needs through almost endless combinations of material systems and manufacturing methods. A variety of reasons have been given for the decreasing lead of composites, in spite of their potential as 'materials–by–design' and for the current state of the composites industry. In this paper we review some of the trends and focus on the needs of specific reporting systems. The inability of composites to be a cost–effective substitute should be seen as a limitation not of the materials themselves but of the traditional accounting information system (AIS) in addition to other process and control related factors. The traditional AIS is a monitoring mechanism directed towards satisfvine the information reauirements of external users and is therefore inappropriate for meeting the internal needs of management. When accounting data are evaluated. the final test is whether that information is useful in making decisions. Since world–class companies must now compete not only on cost but also on quality and flexibility as well as the ability to adapt quickly to emerging technologies, it is imperative that an AIS provide cost information consistent with these strategic goals. Traditional cost–measurement practices, adapted from the AIS monitoring system, are also inappropriate for addressing the informational needs of world–class manufacturing. The paper describes some of the attributes of a relevant accounting system, whilst advocating the use of activity based costing as a system of strategic cost management pertinent for the fast developing technology. The appropriate cost–management model for composites manufacturing is highly integrated with the Total Quality Management (TQM) process and provides a concurrent cost information base on which to establish cost–effective designs.