The present era of intense global competition is leading U.S. companies toward a renewed commitment to excellence in manufacturing. Attention to the quality of products and processes, the level of inventories, and the improvement of work-force policies has made manufacturing once again a key element in the strategies of companies intending to be world-class competitors. There remains, however, a major—and largely unnoticed—obstacle to the lasting success of this revolution in the organization and technology of manufacturing operations. Most companies still use the same cost accounting and management control systems that were developed decades ago for a competitive environment drastically different from that of today. Consider, for example, the following cases drawn from actual company experiences.
A version of this article appeared in the July 1984 issue of Harvard Business Review.