PRODUCT ... a very critical link (140517)

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[email protected]

www.truevaluemetrics.org

MULTI DIMENSION IMPACT ACCOUNTING (MDIA)

Product:A Very Critical Link

@truevaluemetric

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Accountants are sometimes degoratorily referred to as 'bean counters'. This works when accountantsare doing 'conventional' money profit accounting.

For the 21st century … we need something like MDIA so that there is rigorous accounting for impacton people and planet as well as just the profit.

The 'bean counter' descriptor does not work. Simply 'adding up the money' is not sufficient to describe the performance of an organization in a useful and responsible way.

MDIA analysis is more like the 'counting of spaghetti' … and even that is gross simplification.

Product is the link between almost everything in modern society, in the modern global economy and in the impact of everything on resources andthe environment.

C:\TVMwebsite\WebsiteTrueValueMetricsOrg\TVM-papers\MDIA-Diagrams\MDIA-Pres-B-Product-a-very-Critical-Link-140517.odp

PRODUCT: A Very Critical Link

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The three segments of the MDIA analysis framework are:


People (society)

Nature's bounty

People builtconstructs

The MDIA Framework for Measurement

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The three segments of the MDIA analysis framework are PEOPLE, PEOPLE BUILT CONSTRUCTS and NATURE'S BOUNTY.

We measure corporate performance and profit with great rigor. We use GDP growth as an indicator of economic performance. We have assumed for 70 years that these metrics are also indicators of the state of people and planet … but this is wrong.


PRODUCT: Life Cycle Analysis

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The three segments of the MDIA analysis framework are PEOPLE, PEOPLE BUILT CONSTRUCTS and NATURE'S BOUNTY.

We measure corporate performance and profit with great rigor. We use GDP growth as an indicator of economic performance. We have assumed for 70 years that these metrics are also indicators of the state of people and planet … but this is wrong.

Life Cycle Analysis of products is a very critical linkbetween everything: … between the three segments referred to above … producing impact on quality of life … producing impact on resources … producing impact on environmental degradation

Decisions are made to buy or not to buy products … inturn thus means decisions have to be made to make or not to make products.



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Beauty products

http://pgbeautyscience.com/breakthroughs-xix.php

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http://newscenter.lbl.gov/feature-stories/2008/04/18/life-cycle-analysis/

Impact: Resource Use / Environmental Degradation

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http://www.newhaven.edu/sustainability/carbon-footprint-report/

Impact: Resource Use / Environmental Degradation

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Paper and print

http://www.tappi.org/content/enewsletters/ahead/2011/issues/2011-04-13.html

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MDIA uses the conventional accounting construct:

● State at the beginning of the period (BoP)

● PLUS: Activities for the period

● BECOMES: State at the end of the period (EoP)


PRODUCT: TruCost / TruValue

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MDIA uses the conventional accounting construct:

● State at the beginning of the period (BoP)

● PLUS: Activities for the period

● BECOMES: State at the end of the period (EoP)

The images representing life cycle analysis are circular and difficult to convert into this construct.

Probably more than anything else, this is what MDIA does to make MDIA analysis easy to useand easy to understand.



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The money cost of raw materials and energy areincluded in the accounts based on transactions pricesto buy the materials.

Beyond this cost, there are other cost / value elementsthat should also be brought into account.

The SUPPLY CHAIN for the product frequently has a bigger impact on the true socio-economic performance than the manufacturing / assembly of the product.

The USE of the product also may have a big impact on the trucost / truvalue of the product.

Lastly, the POST USE WASTE CYCLE has an impact on the trucost / truvalue of the product.



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Raw material;Virgin raw materials;Energy;Worker remuneration;Payroll benefits;Cost of capital equipment;Cost of money capital;Cost of working capital; Taxes;Pro-good expenditures;Profit.

Price / Sales revenue


PRODUCT: Elements of TruValue

From previous supply chainRESOURCE DEPLETIONENERGY SUPPLY CHAIN IMPACTPEOPLE BENEFITPEOPLE BENEFITEconomic life based depreciationBenefit to investorsInterest → Benefit to investorsBenefit to Government → SocietyBenefit to Society Profit → Benefit to investors

Benefits in the product

Adjusted TruValue

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Raw material;Virgin raw materials;Energy;Worker remuneration;Payroll benefits;Cost of capital equipment;Cost of money capital;Cost of working capital; Taxes;Pro-good expenditures;Profit.

Price / Sales revenue


PRODUCT: Elements of TruValue

From previous supply chainRESOURCE DEPLETIONENERGY SUPPLY CHAIN IMPACTPEOPLE BENEFITPEOPLE BENEFITEconomic life based depreciationBenefit to investorsInterest → Benefit to investorsBenefit to Government → SocietyBenefit to Society Profit → Benefit to investors

Benefits in the product

Adjusted TruValue

ALL OF THESE ELEMENTS OF COST / VALUE MUST BEEXPLODED INTO THE 'TRUCOST/TRUVALUE' ACCOUNTINGAS THE PRODUCT MOVES THROUGH THE SUPPLY CHAIN.

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PRODUCT: Decision 'To Buy' or 'Not-to-Buy'


ALL OF THESE ELEMENTS OF COST / VALUE MUST BE EASILY ACCESSIBLE TO EVERYONE ENGAGED IN ANY'BUY' OR 'NOT TO BUY' DECISIONS.

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PRODUCT: Decision 'To Buy' or 'Not-to-Buy'


ALL OF THESE ELEMENTS OF COST / VALUE MUST BE EASILY ACCESSIBLE TO EVERYONE ENGAGED IN ANY'BUY' OR 'NOT TO BUY' DECISIONS.

The modern world is driven by advertising and promotion with the singular purpose of selling product and making business profit. Advertising and promotion has been madeeven more effective by modern technology.

It is high time the same amount of effort was put into guiding people into making better decisions for themselvesand the planet we all have to live on. .

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May 2014

QUESTIONS? FEEDBACK?

[email protected]

www.truevaluemetrics.org@truevaluemetric


PRODUCT ... a very critical link (140517)

Economy & Finance

Transcript of PRODUCT ... a very critical link (140517)