Perishability

Abstract: It is suggested that the four main characteristics of services, intangibility, heterogeneity, perishability and inseparability, greatly increase the degree of perceived risk in the purchase of services by decreasing the certainty with which purchases can be made. A review of the literature shows that the only two studies have considered the difference in risk between goods and services. The present study reports in more detail on the differences in perceived risk, its component losses and of the usefulness of fourteen risk relievers in the purchase of six services. The results confirm the hypothesis that services are riskier than products and that this riskiness is primarily due to extra uncertainty in the purchase of services. The importance of losses and the usefulness of risk relievers for six service offerings are reported and indicate financial loss as being the most important loss and brand loyalty as most important risk reliever.

Abstract: There has been sustained interest in explaining why firms adopt different management accounting practices. This paper applies contingency theory to respond empirically to calls by Gerdin (2005), Tillema (2005) and Chenhall (2007) to increase understanding of factors that explain management accounting sophistication. We examine the impact of a range of potentially contingent variables on a broad set of management accounting practices in a sample of companies selected from the UK's largest industry sector. The variables relate to external characteristics, organisational characteristics, and manufacturing or processing characteristics. The method differs from prior studies in not testing association between contingency factors and a single, or a limited number of, accounting practice(s) but in looking for relationships with aggregate levels of sophistication based on the emphasis that respondents place on 38 practices and techniques. Furthermore, the 10 contingency factors considered in this study include two constructs (product perishability and customer power) not previously explored.The results, derived from a large scale questionnaire survey, indicate that differences in management accounting sophistication are significantly explained by environmental uncertainty, customer power, decentralisation, size, AMT, TQM and JIT. The data confirms that customer power should be considered as an added external variable in the contingency theory paradigm. Expectations of relationships between competitive strategy, processing system complexity and product perishability, and management accounting sophistication were not, however, supported by the data.The improved understanding of the relationships between 10 contingency factors and management accounting techniques employed contributes to the further development of an integrated contingency framework explaining variations in the investment in management accounting.

Abstract: There has been sustained interest in explaining why firms adopt different management accounting practices (MAPs). This paper applies contingency theory to respond empirically to calls by Gerdin [2005. Management accounting system design in manufacturing departments: an empirical investigation using a multiple contingencies approach. Accounting, Organizations and Society 30, 99–126], Tillema [2005. Towards an integrated contingency framework for MAS sophistication: case studies on the scope of accounting instruments in Dutch power and gas companies. Management Accounting Research 16, 101–129] and Chenhall [2007. Theorizing contingencies in management control systems research. In: Chapman, C., Hopwood, A., Shields, M. (Eds.), Handbook of Management Accounting Research. Elsevier, Amsterdam.] to increase understanding of factors that explain management accounting (MA) sophistication. We examine the impact of a range of potentially contingent variables on a broad set of MAPs in a sample of companies selected from the UK's largest industry sector. The variables relate to external characteristics, organisational characteristics, and manufacturing or processing characteristics. The method differs from prior studies in not testing association between contingency factors and a single, or a limited number of, accounting practice(s) but in looking for relationships with aggregate levels of sophistication based on the emphasis that respondents place on 38 practices and techniques. Furthermore, the 10 contingency factors considered in this study include two constructs (product perishability and customer power) not previously explored. The results, derived from a large scale questionnaire survey, indicate that differences in MA sophistication are significantly explained by environmental uncertainty, customer power, decentralisation, size, AMT, TQM and JIT. The data confirm that customer power should be considered as an added external variable in the contingency theory paradigm. Expectations of relationships between competitive strategy, processing system complexity and product perishability, and MA sophistication were not, however, supported by the data. The improved understanding of the relationships between 10 contingency factors and MA techniques employed contributes to the further development of an integrated contingency framework explaining variations in the investment in MA.

Abstract: Over the years, several companies have emerged as exemplary of “best practices” in supply chain management; for example, Wal-Mart is frequently cited as using unique strategies to lead its market. One significant challenge for Wal-Mart is managing inventories of products that frequently outdate: A significant portion of Wal-Mart’s product portfolio consists of perishable products such as food items (varying from fresh produce to dairy to bakery products), pharmaceuticals (e.g., drugs, vitamins, cosmetics), chemicals (e.g., household cleaning products), and cut flowers. Wal-Mart’s supply chain is not alone in its exposure to outdating risks – to better appreciate the impact of perishability and outdating in society at large, consider these figures: In a 2003 survey, overall unsalable costs at distributors to supermarkets and drug stores in consumer packaged goods alone were estimated at $2.57 billion, and 22% of these costs, over 500 million dollars, were due to expiration in only the branded segment (Grocery Manufacturers of America 2004). In the produce sector, the $1.7 billion US apple industry is estimated to lose $300 million annually to spoilage (Webb 2006). Note also that perishability and outdating are a concern not only for these consumer goods, but for industrial products (for instance, Chen (2006), mentions that adhesive materials used for plywood lose strength within 7 days of production), military ordnance, and blood – one of the most critical resources in health care supply chains. According to a nationwide survey on blood collection and utilization, 5.8% of all components of blood processed for transfusion were outdated in 2004 in the USA (AABB 2005).