Essi Tuovinen Optimizing Interdepartmental Communication and Information Flow: The Role of Process Control in Production and Management Accounting Case Study Vaasa 2025 School of Technology and Innovations Master’s Thesis in Industrial Management Industrial Systems Analytics 2 UNIVERSITY OF VAASA School of Technology and Innovations Author: Essi Tuovinen Title of the Thesis: Optimizing Interdepartmental Communication and Information Flow: The Role of Process Control in Production and Management Accounting : Case Study Degree: Master of Science in Technology Programme: Industrial Systems Analytics Supervisor: Binod Timilsina Year: 2025 Pages: 116 ABSTRACT: In the manufacturing of complex products, the seamless flow of information both within systems and in interdepartmental communication is essential. Gaps in information flow and delayed availability of information can cause challenges in the later stages of cross-functional processes and result in errors. This case study examines the role and importance of the Process Control department, established a few years ago in the case company. In addition to clarifying the role, the aim is to investigate and improve interdepartmental communication, while optimizing cost accuracy and the consistency of maintained data with the production environment. The data maintained by the Process Control interconnects the production process, product structure, and cost information, linking multiple departments. The role of the department is particularly exam- ined between the finance and production functions within the organization, identifying the in- formation needs of different departments and examining current communication practices. The primary data consists of semi-structured interviews and observations, while internal reports and documents represent the secondary data. The data was analyzed with thematic analysis, which identified that the department’s role and significance can be categorized into two main themes. The first theme addresses the creation and maintenance of standard process data, which connects product structure, the production process, and the needs of the finance function for cost management. In situations deviating from the standard process, a second role emerges, in which the department supports cost tracking and aims to ensure the alignment of data with the actual production situation. The findings highlight the importance of effective communica- tion in maintaining data accuracy and preventing information gaps, which requires an under- standing of stakeholder information needs. An annual clock of the Process Control is developed, visualizing recurring tasks throughout the year and recommending improvements to interde- partmental communication practices. The research indicates that accurate data and proactive communication are crucial in cross-functional processes in manufacturing complex products. KEYWORDS: Information flow, bill of process, management accounting, interdepartmental communication, annual clock, manufacturing company 3 VAASAN YLIOPISTO Tekniikan ja innovaatiojohtamisen yksikkö Tekijä: Essi Tuovinen Tutkielman nimi: Optimizing Interdepartmental Communication and Information Flow: The Role of Process Control in Production and Management Accounting : Case Study Tutkinto: Diplomi-insinööri Oppiaine: Industrial Systems Analytics Työn ohjaaja: Binod Timilsina Valmistumisvuosi: 2025 Sivumäärä: 116 TIIVISTELMÄ: Monimutkaisten tuotteiden valmistuksessa tiedon sujuva kulkeutuminen niin järjestelmissä kuin osastojen välisessä viestinnässä on tärkeää. Tiedonkulun katkokset ja viivästynyt tiedon saata- vuus voivat aiheuttaa haasteita poikkitoiminnallisen prosessin myöhemmissä vaiheissa ja altis- taa virheille. Tapaustutkimuksessa tarkastellaan muutamia vuosia sitten tapausyrityksessä pe- rustetun Process Control osaston roolia ja merkitystä. Tavoitteena on roolin selventämisen li- säksi tutkia ja parantaa osastojen välistä tiedonkulkua, sekä optimoida kustannustarkkuutta ja ylläpidetyn tiedon yhdenmukaisuutta tuotantoympäristön kanssa. Process Controlin ylläpitämä data yhdistää tuotantoprosessin, tuotteen rakenteen ja kustannustiedot yhdistäen useita osas- toja. Osaston merkitystä tarkastellaan erityisesti talous- ja tuotantofunktioiden välillä, kartoite- taan eri osastojen tietotarpeita ja tutkitaan nykyisiä viestintäkäytäntöjä. Ensisijainen tutkimusaineisto koostuu puolistrukturoiduista haastatteluista ja havainnoinnista, kun taas toissijaisen aineiston muodostavat sisäiset raportit ja dokumentit. Aineisto analysoitiin temaattisen analyysin avulla, jossa tunnistettiin roolin ja merkityksen jakautuvan kahteen pää- teemaan. Ensimmäinen teema liittyy standardiprosessin tietojen luomiseen ja ylläpitoon, jossa yhdistetään tuotteen rakenne, tuotantoympäristön prosessi, sekä talousfunktioiden tarpeet kustannusten seuraamiseen. Standardiprosessista poikkeavissa tilanteissa tulee esille toinen rooli, jossa osasto tukee kustannusten ohjaamista poikkeavissa tilanteissa ja pyrkii varmista- maan järjestelmissä olevan tiedon vastaavuuden tuotannon kanssa. Havainnot korostavat te- hokkaan viestinnän merkitystä tiedon tarkkuuden ylläpitämisessä ja tietokatkosten ehkäisemi- sessä, mikä edellyttää sidosryhmien tietotarpeiden ymmärrystä. Tutkimuksessa kehitetään Pro- cess Controlin vuosikello, jossa visualisoidaan vuoden aikana toistuvat työtehtävät ja ehdottaa parannuksia osastojen välisiin viestintäkäytäntöihin. Tutkimus osoittaa tarkan datan ja enna- koidun viestinnän olevan olennaista poikkitoiminnallisissa prosesseissa monimutkaisessa val- mistusympäristössä. Avainsanat: Information flow, bill of process, management accounting, interdepartmental communication, annual clock, manufacturing company 4 Contents 1 Introduction 8 1.1 Research Gap 8 1.2 Research Problem and Questions 9 2 Literature Review 12 2.1 Conceptual Frameworks and Theoretical Background 12 2.1.1 Management and Cost Accounting 12 2.1.2 Interdepartmental Communication and Information Flow in Manufacturing 16 2.1.3 System-Level Hierarchy: Integrating PLM, ERP, and MES 18 2.1.4 Routing and Bill of Materials as Key Enablers of Cost Information 24 2.2 Organizational Communication and Cross-functional Processes 29 2.2.1 Barriers to Effective Communication 30 2.2.2 Consequences of Communication Gaps 34 2.2.3 Strategies for Enhancing Collaboration and Information Flow 38 2.3 Process Control in Organizational and Manufacturing Settings 41 2.3.1 Coordinating Function 44 2.3.2 Managing Change 45 2.4 Summary 46 3 Methodology 48 3.1 Research Design 48 3.2 Data Collection 49 3.2.1 Observation and Documents 49 3.2.2 Interviews 50 3.3 Data Analysis 52 3.4 Reliability, Validity, and Limitations 54 4 Results 56 4.1 Overview of Work Categories and Stakeholder Departments 57 5 4.2 Maintaining Routing for Cost Calculation 61 4.2.1 Modus Operandi and the Role of the Process Control 62 4.2.2 Future State Process Model 63 4.3 Data Supporting the Process 67 4.3.1 Structure of BOP1 and Importance of Activity Hours 68 4.3.2 Current Process for Creating Routing 72 4.3.3 Importance of Determined Times and Future State Process 75 4.3.4 Managing Change in the Process 79 4.3.5 Establishing New Processes 86 4.4 Supporting the Connection Between Production and Cost Accounting 88 4.4.1 Additional Orders and Allocation of Additional Costs 89 4.4.2 Challenges in Identifying Additional Production Costs 93 4.4.3 Ensuring Accurate Data for Costing in Exceptional Cases 96 4.5 Annual Clock of the Process Control 99 5 Discussion 102 5.1 Main Findings 102 5.2 Key Findings in Response to the Research Questions 105 5.3 Contributions 106 5.4 Limitations and Future Research 107 6 Conclusion 108 References 110 6 Figures Figure 1 Cost assignment to a cost object. 14 Figure 2 Automation pyramid according to the ANSI/ISA-95 model. 21 Figure 3 The link between cost center, routing, and work center. 27 Figure 4 Costing with cost centers. 29 Figure 5 Relationship map template. 40 Figure 6 Feedback loop between output and input of a process. 43 Figure 7 Steps of data collection and analysis. 52 Figure 8 Main system used by the stakeholder departments. 59 Figure 9 Understanding of responsibilities and frequency of communication. 60 Figure 10 Current state of the cross-functional process map. 65 Figure 11 Future state of the cross-functional process map. 67 Figure 12 Current process for creating the routing of new products and variants. 73 Figure 13 Future state process map for creating routing data for new products. 78 Figure 14 Swimlane chart of optimal information flow in additional orders. 95 Figure 15 The primary systems used by departments and their interfaces. 97 Figure 16 Annual clock of the Process Control. 100 Tables Table 1 Interviewees of stakeholder departments. 51 Table 2 Main themes and subthemes of thematic analysis. 56 Table 3 Summary of the cases requiring additional order. 93 7 Abbreviations ABC Activity-based costing BOM Bill of Materials BOP Bill of Process BOP1 Bill of Process 1 BOP2 Bill of Process 2 BPM Business Process Management CFPM Cross-functional Process Map EBOM Engineering Bill of Materials ERP Enterprise Resource Planning IT Information Technology MBOM Manufacturing Bill of Materials MES Manufacturing Execution System PC Process Control PLM Product Lifecycle Management 8 1 Introduction In the manufacturing industry, the product process and the order-to-delivery process can be considered one of the most important business processes (Sääksvuori & Immonen, 2010). These processes cover the product lifecycle from the emergence of a customer’s need to the final delivery of the product. Especially for complex products, the time be- tween order and delivery can be long, requiring the cooperation of multiple depart- ments and organizations to manufacture the final product (Brière-Côté et al., 2010). The product is typically considered complex when manufacturing processes are complex, structures are multi-level and intricate, and the time between order and delivery is one to one and a half years (Wang et al., 2023). A successful outcome requires the creation of coherent and accurate information and efficient transfer of information between var- ious organizations and systems. When examining the manufacturing of a product, the need to manage production pro- cesses and resource consumption becomes apparent. To enable this, modern ap- proaches create a Bill of Process that covers more details on manufacturing a product and resource consumption that are not provided by a Bill of Materials (Sly, 2018). This approach involves constructing the product structure, process structure, and plant struc- ture as individual entities, which are then combined into a single structure that supports the entire process (Sly, 2018; Zhan & Li, 2022). This linkage is essential to monitor the resources consumed during production and for managing costs. Maintaining the functionality of a unified structure requires collaboration in management and maintenance, along with commitment from the company (Sly, 2018). 1.1 Research Gap In companies manufacturing complex products, the Bill of Materials transfers infor- mation and connects multiple departments (Wang et al., 2022). It integrates the require- ments of design, manufacturing, process manufacturing, cost accounting, and planning. 9 Typically, this data is transferred across three core systems to respond to the information needs of different departments (Avvaru et al., 2020; Bruno et al., 2019). Research has been conducted to enable the flow of information between systems, resulting in stand- ards that support information transfer (Chen, 2005). Berente et al. (2009) emphasize the importance of understanding data transformation to optimize business process efficiency. While the information systems facilitate the seamless transfer of information, it is crucial to transform the information in the event of change to ensure its accuracy. This requires greater collaboration and understanding of the information needs involved in the process (Berente et al., 2009). Furthermore, Wen et al. (2025) highlight that the flow of information in an organization significantly impacts decision-making efficiency. Despite the availability of powerful organizational communication technologies, they note that the challenge of communication between teams persists. Current research primarily focuses on the transfer of data between systems and the tech- nical facilitation of this process. A distinct area of research has examined communication within the organization and the sharing of information between different departments. As previously stated, the interconnection of product structure, process structures, and plant structure requires management and collaboration (Sly, 2018). Despite this, there has been little research on the need for interdepartmental communication to maintain the accuracy of information in changing situations. As the data structure connects vari- ous departments in a company, ensuring its accuracy is essential and requires further research. 1.2 Research Problem and Questions This case study is conducted in a company that manufactures complex products. A few years ago, a department called Process Control (PC) was established in the case company, responsible for maintaining the bill of process data structures of the plant. The data must 10 accurately reflect the structure of each product, the process of production environment, and include information on the amount of capacity utilized in manufacturing the product, which generates costs. The research problem is the ambiguity of the role of the depart- ment and how it is identified by stakeholders within the organization. A key challenge is the delayed transfer of information to the Process Control, which can compromise the accuracy of the data. The research problem is addressed through the following three objectives and research questions. The first objective aims to investigate and clarify the current role and impact of the Pro- cess Control department in supporting coordination between production, specification management, finance and control functions. This leads to the following research ques- tion: RQ1: What is the role and strategic importance of the Process Control Department in coordinating production and finance functions within the organization? The second research objective is to identify and analyze the essential information needs of the production, product specification, and finance departments, and to examine how these needs support each other to enhance process efficiency and ensure accurate cost management. Based on this objective, the second research question has been formu- lated: RQ2: What specific types of information are required by the production, product speci- fication, and finance departments, and how can these be effectively aligned to enhance process efficiency? The third objective is to evaluate current communication methods and propose strate- gies for improving interdepartmental information flow. A specific focus is on how the Process Control department can enhance accurate costing and ensure consistency with 11 the production environment and the data. To investigate this, the third research question is defined as follows: RQ3: In what ways can the information flow and collaboration between departments be improved to optimize cost accuracy and ensure consistency with the production envi- ronment and the data? By answering these questions, this paper aims to clarify the role of the Process Control department as a link between different departments and promote cross-functional in- formation flow with the aim of improving cost accuracy and process efficiency. Further- more, this study contributes to understanding the role of communication at system in- terfaces, where communication gaps can have an impact on the functionality of pro- cesses and the accuracy of information. The case study addresses the topic from the perspective of the Process Control depart- ment, focusing specifically on the department's information needs in cross-functional processes. The stakeholder departments have been identified and narrowed down to those most relevant to the research. The interdepartmental information flow between stakeholders is examined horizontally, which limits the examination of the vertical flow of information within the organization. This thesis consists of six main chapters. The introduction is followed by a review of the relevant literature. It contains conceptual frameworks and a theoretical background, fol- lowed by two subsections on the literature related to the topic. The third chapter dis- cusses the methodology and implementation of the research. Subsequently, the fourth chapter presents the results of the research and establishes an annual clock of the Pro- cess Control. Finally, chapter five discusses the main findings, and the final chapter con- cludes the research. 12 2 Literature Review The literature review focuses on the information transfer between systems and commu- nication between departments within manufacturing companies. First, the theoretical background of the study is examined, followed by two main themes. The first theme examines the literature on barriers to effective communication in cross-departmental processes, consequences, and strategies for improving information flow. The second main theme delves into understanding processes to stabilize them after changes. 2.1 Conceptual Frameworks and Theoretical Background The theoretical background discusses themes from a general level to more detailed top- ics related to research. First, management accounting and cost accounting are reviewed, including a view of cost assignment. Secondly, information flow between departments is presented, and a system-level hierarchy that includes the aspect of information flow- ing in systems. Finally, the previously discussed topics will be connected with a theoret- ical background about routing, which combines the transfer of information between de- partments and systems. 2.1.1 Management and Cost Accounting The theoretical background will begin by explaining the difference between manage- ment accounting and financial accounting, followed by a discussion of management ac- counting and its importance in a company. The discussion then turns to cost accounting and its relation to management accounting. Accounting can be divided into two main branches in a company, which are financial accounting and management accounting (Drury, 2018). Financial accounting can be de- scribed as external accounting, as it provides information to external stakeholders of the 13 company (Neilimo & Uusi-Rauva, 2005). It is mandatory and regulated by International Financial Reporting Standards and must follow Generally Accepted Accounting Principles to ensure consistency and precision (Noreen et al., 2011). In contrast, management ac- counting is optional and focuses on internal reporting (Drury, 2018). The time dimension is on the future by utilizing information from the past, while financial accounting reports on the past. The purpose of this future-oriented information is to improve decision-mak- ing and enhance the effectiveness and efficiency of operations. Calculations in management accounting may serve various purposes to support deci- sion-making. For instance, calculations can support investment decisions, while a budget is an example of target calculations (Neilimo & Uusi-Rauva, 2005). The alternatives are assessed to determine the most appropriate option (Noreen et al., 2011). Monitoring the implementation of the plan ensures that the implementation proceeds as expected. For this purpose, control calculations are used to report the realization of objectives to management, allowing corrective actions to be planned in response to deviations (Neilimo & Uusi-Rauva, 2005). This emphasizes the time dimension of management ac- counting towards the future. The information needed to support decision-making must be relevant to the specific is- sue and may contain both qualitative and quantitative data (Noreen et al., 2011). For example, make or buy decisions involve assessing whether it is more profitable to man- ufacture a component in-house or to purchase it from an external supplier (Drury, 2018). However, decision-making should not be limited to a mere comparison of costs but should consider factors such as the alternative utilization of available resources. Noreen et al. (2011) recommend taking into account the effect of quality control on Make or Buy decisions as well as the potential risks when relying on external suppliers. To accurately assess the profitability of outsourcing, a company must have precise information on cur- rent capacity costs to enable comparison. 14 Kitsantas et al. (2020) emphasize that in today’s global competition, the accuracy of cost- ing is crucial for decision-making and planning. Management accounting focuses on uti- lizing appropriate information in which costs play a central role. Without determining costs, the profitability of business operations cannot be determined (Neilimo & Uusi- Rauva, 2005). Thus, a cost accounting method is required for a company to monitor its costs. For this reason, the theory of allocating and tracing costs in a manufacturing com- pany is discussed. A cost object refers, for example, to a product to be manufactured or a department whose costs are examined (Drury, 2018). Figure 1 below illustrates a cost object in blue to which direct and indirect costs are assigned (Horngren et al., 1999). When considering the product to be manufactured, direct costs can be traced to the specific cost object (Noreen et al., 2011). When a cost object is a product, the direct materials required for manufacturing the final product can be determined in advance (Drury, 2018). Moreover, direct costs include direct labor hours spent converting raw materials into the final prod- uct. Figure 1 Cost assignment to a cost object (Based on Horngren et al., 1999). Indirect costs include manufacturing and non-manufacturing costs excluding the direct costs discussed earlier, and are often referred to as overheads (Drury, 2018). Manufac- turing overheads consist of equipment, and machine repairs, costs of production facili- ties, and indirect labor costs. Non-manufacturing costs include administrative overheads, 15 marketing, and distribution overheads. Costs are assigned to cost objects for a variety of reasons, including pricing and managing consumption (Noreen et al., 2011). The alloca- tion of indirect costs to a cost object is more sophisticated and requires drivers to deter- mine how they are allocated within a company (Drury, 2018). There are direct and absorption costing systems to assign costs to cost objects (Drury, 2018). The direct costing system assigns only direct costs to cost objects, while the ab- sorption costing system assigns both direct and indirect costs. The absorption costing system can be divided into two subcategories, which are traditional and activity-based costing (ABC). ABC system allows for a more accurate calculation of indirect costs when there is variability between products (Kitsantas et al., 2020). According to Drury (2018), simplistic pricing systems are cheaper to maintain but can lead to costly errors. If the overhead costs are increasing, there is a large variety in products, including complex op- erations, ABC could be useful (Cooper & Kaplan, 1990). In ABC, the primary focus is on the activities rather than products (Neilimo & Uusi-Rauva, 2005). Costs are first allocated to resources and then to activities based on the use of resources. Activities include sales, purchasing, and manufacturing, while resources are facilities, machines, and materials. The design of ABC begins with identifying major ac- tivities (Drury, 2018). Next, the cost of resources is assigned to each activity. Resource drivers are responsible for allocating costs to activities (Alhola, 2016). After costs are allocated to activities, cost drivers are needed to allocate them to a cost object. Accord- ing to Drury (2018), these are called activity cost drivers, and they can consist of duration and transaction drivers. Noreen et al. (2011) discuss how organizations are utilizing a formal costing system for external financial reports, while ABC is for internal decision-making. However, the imple- mentation of a highly sophisticated costing system is costly (Drury, 2018; Noreen et al., 2011), so ensuring that the benefits outweigh the costs is essential. Cost information must support strategic decision-making in a way that exceeds the resources invested in 16 its calculation. Akeem (2017) examines cost control and cost reduction in order to max- imize profit, which is the goal of most organizations. As overhead costs rise, understand- ing their sources and identifying control methods becomes increasingly important. Ef- fective cost management depends on proper data collection and analysis, with accurate cost accounting enhancing opportunities for cost control. As Rounaghi et al. (2021) note, strategic cost management with more accurate data facilitates decision-making for long- term and short-term decisions. Hence, an accurate cost accounting system not only aids financial reporting but is a tool for improving cost efficiency and supporting strategic decision-making. 2.1.2 Interdepartmental Communication and Information Flow in Manufacturing This chapter explores the communication and information flow between functional de- partments. It first examines directions of information flow, followed by a discussion of the channels through which information can be transferred. The discussion then shifts to the role of information technologies in facilitating communication. Finally, the back- ground of system integration and its impact on interdepartmental information flow in manufacturing is given in view of the following chapters. Organizations are hierarchically structured and consist of functional units that work to- wards a common goal (Musheke & Phiri, 2021). According to Calçado et al. (2024), a company consists of functional areas called departments. They examined business pro- cess management and lean manufacturing to improve document and information flow and pointed out that functional units can plan improvements, ignoring the needs of oth- ers. Musheke and Phiri (2021) approach effective communication through systems the- ory. According to them, functional units of an organization do not operate in isolation but are interconnected, forming a unified system. What both views have in common is that the organization consists of functional units that have a common goal. 17 According to Paim et al. (2008), functional division appears to be restrictive in today's environment, as flexible and agile organizations are essential to sustain operations and improve organizational performance. They divide the identification of processes in a functionally divided organization into three different levels. If an organization identifies the internal processes only within functional units, there is functional management of functional processes. On the other hand, if cross-functional processes are identified in a functionally structured organization, this is called functional management of cross-func- tional processes. Thirdly, if management is guided by processes, it can refer to the pro- cess management of cross-functional processes. It has been clarified that an organization consists of departments that need to communi- cate with each other to reach common goals without ignoring the needs of others. In this context, interdepartmental communication refers to the exchange of information between departments within an organization (Adler, 1995), and it can flow in various directions. Vertical information flow is possible in two directions, which are downward and upward (Wen et al., 2025). Horizontal information flow is in question between the same hierarchical level or diagonally between managers and employees from different functional teams. In modern organizations, collaboration is more extensive, and commu- nication technologies are more advanced, facilitating diagonal communication (Wen et al., 2025). Information is described as a critical factor for businesses, and it flows between two sep- arate parts that are connected or related to each other. Information flows in an organi- zation in various forms, including verbal, written, and electronic (Yazici, 2002). Durugbo et al. (2013) note that the use of multiple communication channels can improve the flex- ibility of information flow and ensure that important information reaches the recipient, even if the communication channels are overlapping. According to them, information flow is a significant part of the workflow in modern organizations, requiring synergy be- tween people and computer systems. Studies on information systems suggest that infor- mation technology (IT) enhances coordination across departments and business units by 18 supporting data sharing and system connectivity (Berente et al., 2009). While infor- mation integration is a key prerequisite for business process integration, it is not suffi- cient alone, as the individuals and groups involved in the process have different infor- mation needs and ways of working. When business processes are integrated, communi- cation and coordination between process activities reduce (Berente et al., 2009). When examining the flow of information between departments in a manufacturing com- pany, the different departments are linked to each other via enterprise resource plan- ning (ERP) systems (Abd Elmonem et al., 2016). It facilitates the sharing of information between various functions in the enterprise, for example, finance, manufacturing, and sales. In addition to internal departments, it allows information to be shared with exter- nal suppliers (Avvaru et al., 2020). Beyond timeliness, the quality of the data must be taken into account to ensure the accuracy of the information used by the different de- partments (Xu et al., 2002). To enable better decision-making with ERP data, the infor- mation must be accurate, complete, and relevant (Ouiddad et al., 2021). Information systems play a crucial role in today's manufacturing enterprises, and main- taining accuracy requires cross-departmental collaboration. ERP is not the only software that transfers information, but it highlights how information connects different depart- ments. As Sääksvuori and Immonen (2010) state, the most important business processes in the manufacturing industry are the product process and the order-delivery processes, which are both cross-functional and cross-organizational. Next, we will examine the sys- tem-level hierarchy of a manufacturing company and how the various systems within an enterprise exchange information. 2.1.3 System-Level Hierarchy: Integrating PLM, ERP, and MES This chapter introduces three key systems used in manufacturing companies, and the hierarchy between systems will be clarified by the ISA-95 standard. The first is Product Lifecycle Management (PLM), which is a concept and a set of systematic methods used 19 to maintain product-related information (Sääksvuori & Immonen, 2010). This functional entity includes the creation, maintenance, sharing, and control of product-associated information. While PLM does not refer directly to software, product data is typically maintained in PLM systems, where product data is used to integrate business processes and the products produced (Sääksvuori & Immonen, 2010). The product data is divided into three subcategories. The first one is the product speci- fication data, which defines the physical and functional characteristics of the product (Sääksvuori & Immonen, 2010). This can be described as a complete product definition. The second one is product lifecycle data, which covers information about design, manu- facturing, use, maintenance, and recycling of the product. The third one is metadata, which is data describing and providing information about the product data. Sääksvuori and Immonen (2010) note that product data and product structure are usu- ally used as synonyms, despite the fact that product data is not hierarchical. The Bill of Materials (BOM) is strongly linked to the product data but is not a product structure. Instead, the BOM is a list of all materials used to assemble a specific product. However, whereas the BOM lists components needed for manufacturing, the Bill of Process (BOP) defines the combined and interconnected structure between them (Zhan & Li, 2022). The management and maintenance of these product structures is considered one of the most important tasks of a PLM system (Brière-Côté et al., 2010), as many other system functionalities depend on them (Sääksvuori & Immonen, 2010). Different types of BOM serve distinct purposes throughout the product life cycle (Wang et al., 2023; Xu et al., 2007), two of which are discussed below. Engineering Bill of Mate- rials (EBOM) represents the product from a design perspective according to relationships of items in drawings (Xu et al., 2007). Since EBOM does not correspond to the require- ments of manufacturing, it must be transformed into a format suitable for production. This is achieved by combining information from the BOP with the EBOM (Xu et al., 2007). 20 In contrast, the Manufacturing Bill of Materials (MBOM) is structured to support the manufacturing of a product (Sly & Schneider, 2011). Next, the focus shifts from PLM to the system-level hierarchy, which provides the basis for addressing the relationship between other systems to be discussed. Furthermore, the hierarchy can be exploited to better understand the flow of information between different systems. The ISA-95 standard provides a hierarchy of functional control be- tween functions and systems (Erasmus et al., 2018). The purpose of this international standard is to integrate a manufacturing enterprise and control systems to ensure the flow of information to different parts of the company's functional areas (Chen, 2005). Figure 2 below illustrates the ISA-95 automation pyramid with a timeframe and related system at every level in the pyramid (Katti, 2020). The pyramid consists of four different levels. In this research, the main focus is on level four, where the ERP and PLM are lo- cated. The previously discussed PLM system has not been directly implicated in every ISA-95 pyramid in the literature, although it is shown alongside ERP in Figure 2 (Katti, 2020). However, the information produced in PLM software is utilized at layers three and four (Erasmus et al., 2018). It is particularly important for the study to understand the information flow between PLM and ERP, as well as the up-to-date information from pro- duction to ERP. For this reason, the hierarchy between the systems becomes a key factor. 21 Figure 2 Automation pyramid according to the ANSI/ISA-95 model (Katti, 2020). Next, the different functions of the ERP system at level four of the pyramid and its inter- connection with other systems are examined. After this, a brief discussion about the Manufacturing Execution System (MES) at the level three in the pyramid is provided. In the literature, these three key information technology systems PLM, ERP, and MES, emerge as providing the central functionalities for enterprises to facilitate seamless flow of the data (Avvaru et al., 2020; Bruno et al., 2019). The use of these systems assists in managing manufacturing information. The aim of an ERP system is to connect the different functional units of a company col- laboratively (Abd Elmonem et al., 2016; Erasmus et al., 2018). These may include sales, production, human resources, and finance of an enterprise, for example. According to the ISA-95 pyramid, the ERP system at level four has the widest time frame, depending on the case at the monthly or weekly level (Erasmus et al., 2018; Katti, 2020). This level includes broader business management, such as resources and financial functions. The ERP system provides tools for production, including scheduling planning, budgeting, and 22 materials management (Avvaru et al., 2020). To conclude, ERP can be utilized to monitor a company's resources, such as money and materials. Moreover, the status of commit- ments can be monitored, including orders and purchase orders. From the product data point of view, PLM can be considered as a producer while ERP is the consumer (Sääksvuori & Immonen, 2010). The integration between PLM and ERP ensures that updated product data is accessible in all necessary areas of the enterprise (Bruno et al., 2019). The master data transferred to the ERP system is maintained in the PLM database, including BOM, procurement control, and subcontracting data (Sääksvuori & Immonen, 2010). Thus, data is transferred between systems to meet the needs of several different departments. For example, a purchasing team is responsible for ordering the components needed to manufacture a product (Sly & Schneider, 2011). The team requires information from MBOM to determine the components needed. Ad- ditionally, information on the time of need for the component is required. In this context, BOM information and routing are essential. In the next chapter, the BOP data used by ERP and the routing maintained in PLM are discussed in more detail. In manufacturing companies, production is the central place where the product data maintained in the PLM is transferred, and from where actual information on the progress of production is transferred to the ERP system. MES acts as a bridge between the top level and the lower levels of the automation system in the ISA-95 pyramid (Govindaraju & Putra, 2016). The major challenge for companies is the functional integration of the system, as data needs to be transferred between multiple interfaces. Levels four and three in Figure 2 represent the interface between production scheduling and operation management and actual production (Chen, 2005). MES is utilized to manage production operations from order release to finished product (Govindaraju & Putra, 2016). The necessary information about the product to be manu- factured is transferred from the PLM system to the MES. These include work instructions, manufacturing processes, and BOM (Avvaru et al., 2020). MES concretely assists 23 production by enabling materials to be called to the workstation. After the work is com- pleted, the linked information systems receive information in real time. At level three, the time frame ranges from hours to minutes (Katti, 2020). From the system hierarchy point of view, MES provides information exchange between the production and the enterprise level (Avvaru et al., 2020). The integration between ERP and MES provides information from the shop floor to the departments that need it in business processes. From a financial perspective, up-to-date information about pro- duction helps to monitor budget implementation and other activities that emerged when examining the activities of the fourth level of the pyramid in Figure 2. Moreover, efficient inventory management and purchasing functionalities, for example, benefit from the flow of information between MES and ERP (Bruno et al., 2019). It can be concluded that production is a highly cross-functional process requiring the information flow and accuracy of data between different systems and departments. Data generated and maintained by different departments in the PLM system must be synchro- nized to ensure the complex BOM and BOP processes are seamlessly transmitted to the next phases of the system hierarchy. Although the role of PLM in the ISA-95 pyramid is not in all cases recognized in the literature, it has been highlighted as one of the most important systems in manufacturing companies alongside MES and ERP. According to Sääksvuori and Immonen (2010), PLM system can create a bridge between engineering and production. If changes are made to products, it is PLM's function to ensure that up- to-date information is transferred to production. On the other hand, there may occur problems related to the manufacturability of the product during the assembly phase. In this case, the bridge between production and engineering is used in the reverse direction, and problems identified can be resolved with the aid of the PLM system. Interdepartmental cooperation and interfaces between different systems are essential aspects of the research when examining the flow of information between departments. Functional departments typically operate within a single system of the three discussed 24 systems. The system hierarchy showed the importance of the data maintained in PLM for the departments operating in ERP. If the data in PLM is not accurate, the incorrect information is transferred to ERP. Consequently, it is critical to examine the interfaces of the system and analyze the key challenges that can hinder effective interdepartmental collaboration and affect data accuracy. 2.1.4 Routing and Bill of Materials as Key Enablers of Cost Information The previous chapter discussed the system-level hierarchy in which information is main- tained, created, and transmitted for various purposes to different systems in a manufac- turing company. This highlighted the central role of the ERP system in integrating infor- mation. Two different BOMs were discussed, and next we will examine the importance of BOM and routing information from a cost accounting perspective. In order to under- stand the product structure and cost data transferred to the ERP system, the processes of constructing the BOM are examined in more detail. Different BOM variants have distinct structures and attributes but are interconnected (Wang et al., 2023). Data integration has a significant impact on improving business de- cision-making. Furthermore, integrating different BOM variants can support the unifica- tion of business processes and ensure the consistency, correctness, and integrity of BOM data. Wang et al. (2022) examined the reconstruction process of BOMs in complex prod- ucts. They note that managing the BOM of such products is a complex process due to the multi-dimensional structure and parallel work steps combined with the need for structural changes coming from the design. Additionally, the changes can emerge as a result of the developments in the production process. Transforming the materials in the EBOM into a practical structure for the product to be manufactured requires the design of the production process (Zhan & Li, 2022). Manu- facturing process design combines the design structure with the production characteris- tics and the production environment in order to produce high-quality products from raw 25 materials. This process is described as the premise for the production of the product. These processes enable the product to be manufactured and provide a hierarchical struc- ture between subassemblies (Sly & Schneider, 2011). According to Sly (2018), the bill of process describes how a product is built, in contrast to the Manufacturing Bill of Materi- als (MBOM), which represents what is built. Thus, MBOM is a representation of the planned processes in BOP, containing everything known about how to manufacture the product (Sly, 2018). BOP is a composite structure, a relationship between product, pro- cess, plant structure, and resource information (Zhan & Li, 2022). BOP, like other struc- tures, needs to be constructed, managed, and regularly maintained (Sly, 2018). There- fore, collaboration and commitment are required to maintain an accurate BOP. The information in the BOM is the basis for planning, process monitoring, procurement, and cost accounting, as well as the link between various departments when manufac- turing complex products (Wang et al., 2022). Next, the previously discussed product structure is linked to data, enabling cost accounting. In this context, the BOP is main- tained in the PLM system according to the system hierarchy, from which the data is ex- ported to the ERP system. The theoretical background of ERP software functionality plays an important role in this context. Therefore, information from the literature will be combined with the practical application of the ERP system by applying SAP instruction manuals. The planned assemblies of the product structure must be interconnected. This connec- tion is routing, which is described as the core of the assembly process documentation (Sly & Schneider, 2011). Routing defines the high-level steps that link the process to pro- duce assemblies. Furthermore, it provides a corresponding routing for each subassembly, defining the tasks it contains to produce the subassembly. The main tasks are called op- erations and sub-operations, which are necessary to produce the subassembly (Sly & Schneider, 2011; SAP, 2023a). Operations consist of a list of smaller tasks called activities. Hence, the sum of the time necessary to perform the activities is the time needed to perform the operation. 26 Process routings are configured in a similar way to products, considering a routing per- spective (Sly & Schneider, 2011). It is important to maintain the configured routing infor- mation, enabling the reuse of fundamental process information. When examining the information that is necessary in an ERP system to link production and financial data, a production order emerges as essential information. The production order contains infor- mation on operations, production location, schedule, and cost settlement of the order (SAP, 2023b). An essential part of that production order is the information from the BOM and the routing data copied to the order. In the production order context, we will next delve into the level of operation that is linked to cost accounting. SAP (2023c) classifies routing, BOM, and work centers as the most important master data for the production planning and control system. The work center is deployed at the operation level of the production order, and the data it contains is utilized for different purposes. Operating times and formulas are entered into the work center to enable the duration of the operation to be calculated (SAP, 2023c). However, the work centers have multiple functions, but the primary focus in terms of this theoretical background is on enabling costing. Hence, formulas for calculating the cost of the operation are included in the work center (SAP, 2023d). Figure 3 illustrates the linkage between the topics to be covered from a costing perspective. 27 Figure 3 The link between cost center, routing, and work center (based on SAP, 2023d). Various specifications are necessary for each operation in order for the calculation for- mula to function. Default values for operations can be entered in the work center (SAP, 2023c). For example, the control key and activity types play an important role in cost calculation. A control key is an indicator that can be used to determine whether an op- eration is costed (SAP, 2023e). This key can be used to define the subcontractor as the author of the operation. In this case, a purchase requisition is created when the order is created. Previously, direct costs were discussed, which include material costs and labor hours to convert materials into the final product (Drury, 2018). Direct costs, excluding material costs, are assigned using activity types defined in the work center (SAP, 2023d). Conse- quently, the activity type, for example, setup, machine time, and labor time needed to prepare the operation can be added to the work center as a default value. The tracing of direct costs to a cost object was illustrated in the cost accounting section of the theoret- ical background. In ERP, this is implemented on the basis of defined activity values, which represent direct capacity consumption to produce the operation that constitutes the 28 cost. Standard values are defined for each operation, indicating how much each opera- tion consumes of each activity type, which are defined as default values (SAP, 2023d). These predefined values, along with other parameters beyond the scope of this theoret- ical background, enable the system to calculate the total cost of an operation (SAP, 2023d). The work center used at the operation level is linked to the cost center. A cost center refers to a department or unit within an organization that incurs costs but does not di- rectly generate revenue (Noreen et al., 2011). A department may have a cost center, with a manager responsible for controlling its expenses but not its income. Examples of cost centers include accounting departments and service units. Moreover, manufacturing fa- cilities can be considered cost centers (Noreen et al., 2011). To enable cost tracing at the cost center level, the work center is connected to the cost center. A work center can be connected to one cost center, but a cost center can have several work centers connected to it (SAP, 2023c). The topic has been addressed from a detailed level to a general level. Figure 4 below combines previously discussed topics while illustrating the linkage between them (SAP, 2023d). Starting from the right, with the heading routing, the standard values 1, 2, and 3 hours are defined for operation number 10. Activity types setup, machine, and labor are defined as the default for all operations executed in the work center in question (SAP, 2023d). When the activity types are known and the corresponding standard values have been defined by the operation, the cost can be calculated based on the price defined for the activities. By multiplying the price of the activity by the time spent, the cost of each activity can be determined, as shown in the box at the bottom of Figure 4. Once the operation is completed and confirmed in the system, it transfers the costs from the cost center linked to the work center to the production order. 29 Figure 4 Costing with cost centers (SAP, 2023d). 2.2 Organizational Communication and Cross-functional Processes Organizational communication is structured both vertically and horizontally. The vertical structure defines the hierarchical organization of departments and the flow of infor- mation between different levels, while the horizontal structure defines the cooperation and exchange of information between departments (Cornelissen, 2004). In the case of a cross-functional process, the workflow crosses departmental boundaries horizontally and involves more than one department or organizational unit (Paim et al., 2008). Func- tionally divided departments lead to a lack of end-to-end process knowledge, resulting in limited control of these horizontal processes. Thus, Paim et al. (2008) underline the difficulty of control without full understanding. Organizational communication and cross-functional processes are closely linked, as im- plementing processes that cross departmental boundaries requires communication be- tween the parties involved in the process. Understanding organizational communication and its barriers is essential when examining the information needs of different depart- ments and the activities that require obtaining information from other departments. 30 Today, powerful organizational communication tools such as Teams and Outlook are available (Wen et al., 2025). Advanced communication technologies enable greater col- laboration and facilitate communication. Despite this, there can still be a lack of commu- nication between teams (Wen et al., 2025). The first subsection examines the barriers that are recognized in the literature to effective communication. Previously, system-level hierarchy and the flow of information between various systems were addressed. Lack of communication or challenges in the accuracy of the data can cause problems at subsequent stages of the process. Implications will be explored in the second subsection to understand the role of communication and information needs in cross-functional processes. There, the focus is on the effects on process operation and efficiency, and examples of the accuracy of cost accounting and decision-making chal- lenges are discussed. After examining the consequences, strategies for improving cross- functional collaboration and information flow are explored. 2.2.1 Barriers to Effective Communication When examining barriers to effective communication, it is essential to clarify what effec- tive communication implies. Effective communication is a combination of various as- pects, including how well information is delivered and how effectively it is shared, uti- lized, and accessed (Yazici, 2002). Understanding the perspective of others is essential for effective communication. This subsection focuses on the structural, organizational, and informational principles that can hinder effective communication. Previously, the focus was on the flow of information in manufacturing companies. Infor- mation flows between systems, providing information about production to different de- partments for their needs in business processes (Bruno et al., 2019). Consequently, Ber- ente et al. (2009) acknowledge the difference between information transfer and trans- formation. Understanding the difference between these two flows is important to opti- mize the efficiency of business processes, which requires an understanding of the 31 associated information flows. In the case of transfer, information can flow from one pro- cess to another without requiring changes. For example, when MES sends real-time pro- duction data to the ERP system, the data can be directly transferred without modification. If challenges arise in the transfer of information, the utilization of information technolo- gies can enhance the process (Berente et al., 2009). In contrast, when transformation is required, the information cannot be directly trans- ferred to the subsequent part of the process (Berente et al., 2009). Actions such as data interpretation, analysis, or modification may be necessary. For example, the finance de- partment receives cost accounting data from the ERP. If an improvement in direct labor hours is achieved, this modification must be updated in the systems from which it is transferred to the finance department. When enhancing a process that requires data transformation, it is essential to examine the content of the data in more detail (Berente et al., 2009). Understanding how information flows within an organizational hierarchy between em- ployees is essential for optimizing operational efficiency and decision-making effective- ness (Wen et al., 2025). Researchers have been interested in analyzing communication and information flows in organizational hierarchy, as it directly affects operations and decision-making. The organizational hierarchy can be thought of as a proposal evaluation mechanism that defines communication between employees horizontally and vertically (Wen et al., 2025). The research conducted by Wen et al. (2025) focused on examining organizational communication to bridge the micro-macro gap. The study concluded that organizational hierarchy could regulate communication behav- ior and the flow of information between employees (Wen et al., 2025). First, the study found the influence of an employee's role in the communication network, meaning that the focal point in the communication network is linked to the role. The types of commu- nication were mainly vertical and horizontal, while communication between the teams was insufficient. Employees working in similar roles can be divided into a community 32 where there is a close relationship between the employee's role and communication behavior (Wen et al., 2025). If there is insufficient communication between different teams in the communication network of the organizational hierarchy, it can hinder effec- tive communication. However, the study identified employees acting as a bridge be- tween different communities despite their lower hierarchical positions (Wen et al., 2025). The bridging role can significantly impact information flow. On the other hand, infor- mation transfer should not rely on a single role. Instead, cooperation between teams should be improved by other means to ensure effective communication. Yazici (2002) examined the role of organizational structure, task complexity, and infor- mation technology in effective communication. The study found that a more hierarchical organizational structure can lead to increased communication problems. Cross-func- tional communication is linked to organizational structure and has an impact on how effectively departments communicate with each other. Information technology was per- ceived to speed up the delivery of information and enhance its efficiency, but IT alone was not perceived to be a significant factor in effective communication. The study found that the effectiveness of communication depends on the complexity of the task and the influence of the communication media. Especially in complex tasks, the delivery rate of information is particularly important (Yazici, 2002). This reflects the limitation of information to only a subset of people, while others have to wait a long time to receive it. This can act as a barrier to effective communication and hinder the information flow. In a complex task, waiting for important information can halt the task until the information is received. In addition to the delivery rate, accessibility of information is highlighted as a barrier (Yazici, 2002). If information is limited to a restricted number of personnel who can receive it, it can hinder the smooth cooperation between departments. On the other hand, effective communication can be hindered by the difficulty of information retrieval, where individuals have to make a vast amount of effort to locate information (Yazici, 2002). This 33 duplication of work may lead to inefficiencies that could be avoided by receiving information in a timely manner through easily accessible channels. Berente et al. (2009) identified a combination of principles that together form a comprehensive framework for understanding and analyzing how information is transferred and integrated within organizational processes. The first principle is the accessibility of information flows. In addition to hindering the flow of information, problems in accessing information become an obstacle to completing tasks. For example, Yazici (2002) highlighted scenarios where the accessibility of information emerged as a barrier to information flow and caused problems in performing a task. On the other hand, accessibility can be affected by organizational structures and the challenges this poses to the flow of information. The second principle is the timeliness of information, ensuring that information is available when needed (Berente et al., 2009). For example, from a decision-making perspective, information must be up-to-date (Husada Tarigan et al., 2019). Decisions made based on outdated information can lead to increased costs and inefficient processes. A further two principles are transparency and granularity of information flows (Berente et al., 2009). Transparency ensures that the receiving parties understand the meaning of the information as intended. It is essential that the meaning of the information remains in the subsequent stages. Thus, the perspective of the recipient must be taken into account when communicating, as stated in the definition of effective communication (Yazici, 2002). Similarly, the granularity of information takes into account the variation in detail between recipients (Berente et al., 2009). In order to best convey information to the recipient, the modification of the level of granularity of the information must be considered (Berente et al., 2009). Shaping the level of accuracy of information between recipients requires a clear understanding of the purpose for which the information is delivered. The need for detail varies between 34 functions and groups, creating a need to balance between conciseness and completeness (Berente et al., 2009). To summarize, communication barriers in cross-functional processes arise from both organizational hierarchies and challenges related to the principles of information flow. In cross-functional processes, information must flow between different departments in the organization. If there is a lack of information transfer between teams, this can hinder the operation of cross-functional processes (Wen et al., 2025). While IT solutions can improve information transfer between processes (Berente et al., 2009), they are insufficient in cases when information transformation is required. In such cases, a deeper understanding of information is necessary to ensure effective communication. If information does not align with the discussed principles, these communication gaps can lead to the consequences examined in the next section. 2.2.2 Consequences of Communication Gaps In a manufacturing company, the most critical business processes are cross-organiza- tional, meaning that information must be transferred between multiple departments (Sääksvuori & Immonen, 2010). If there are information gaps and relevant information does not reach the necessary stakeholders, this can lead to a variety of consequences. Within the scope of the study, the focus in this chapter is on the consequences of the bill of materials, cost accounting, and decision-making. The theoretical background and conceptual framework addressed the use of three core systems in manufacturing companies. Information flows between these systems, allow- ing different departments to access it as relevant to their needs (Avvaru et al., 2020). Berente et al. (2009) highlighted the difference between information transfer and trans- formation. IT systems are efficient in transferring information to different departments, but there is a risk that the information would require transformation to ensure accuracy due to changes. Therefore, for the information in ERP to be up-to-date, the information 35 in PLM and MES must be accurate and correspond to the actual production. Product data maintained in PLM is transferred to MES and ERP in a form that serves the purposes of the system. If the data in the PLM system is incorrect, transferring it to subsequent sys- tems can cause problems later in the process. BOM connects different departments in the manufacturing process and is the basis for process tracking, planning, and cost calculation (Wang et al., 2022). It effectively com- bines the product structure, the business data of the product, and the relationships be- tween components (Wang et al., 2023). Since manufacturing, purchasing, and cost ac- counting rely on BOM data, accuracy and timely data are vital. However, configuration of BOM between different stages of plan management is challenging for complex prod- ucts (Wang et al., 2023). Configuring a BOM for a complex product requires information to flow between several teams. The information in every step must have coherence, as the configuration process will halt if the system detects inconsistencies or deficiencies in the data. If there are obstacles in configuring the BOM and it is not completed within the required timeframe, departments that depend on the data will not be able to perform their functions. As a result, this may cause delays and deficiencies in production. Zhao et al. (2024) highlight the challenge of effective management and application of complex product lifecycle data from a different perspective. Stakeholders involved in business decision-making at different life cycle stages may be geographically dispersed from each other, posing challenges to data consistency and completeness of information delivery. This highlights how maintaining consistent information is challenging, yet es- sential to the functionality of the process. Information transfer must be efficient and consistent, not only to preserve the completeness and consistency of information, but also to support effective decision-making by stakeholders (Zhao et al., 2024). According to Wang et al. (2022), reconstructing the BOM of complex products is a highly complex process. They mention that the need to update BOM data can arise from vari- ous sources. These include production, design, process changes, and observations made 36 in the maintenance environment. The changes made may cause inconsistencies between production and BOM data (Wang et al., 2022). For instance, if changes are made in the production environment without informing those responsible for the product data, the data becomes unsynchronized with the production environment. This may complicate the manufacturing of the product and cause additional effort to obtain system support. Consequently, both BOM and BOP require continuous maintenance, which requires co- operation between departments (Sly, 2018). Wang et al. (2022) emphasize the im- portance of a dynamic feedback mechanism to support BOM data for product design and manufacturing changes. The objective is to ensure that BOM structures support the requirements of the manufacturing environment. The discussion now shifts from the synchronization of production and BOM data to the importance of cost accounting and product cost synchronization. Previously discussed ABC improves profitability measurement, provides accurate allocation of overhead costs, and improves strategic pricing decisions (Kitsantas et al., 2020). The role of cost manage- ment is to provide information that contributes to the company's strategy (Rounaghi et al., 2021). In large-scale customized manufacturing, BOM plays a key role in refining the accuracy of cost estimates (Chao & Trappey, 2024). The data in the ERP system must serve as a reliable basis for cost estimation. Consequently, the data in the systems must be up-to-date to support cost accounting and enable decisions to be guided by accurate information. Information quality is one of the main determinants of the quality of deci- sion-making (Ouiddad et al., 2021). To ensure that the data in the ERP system provides up-to-date and accurate information for cost accounting and decision-making, the data must reflect the actual situation in changing circumstances (Wang et al., 2022). Kadir et al. (2020) emphasize that cost esti- mation requires a significant amount of knowledge about manufacturing that needs to be synchronized from design to production. After complex configuration processes, the BOM transfers cost accounting data. Thus, the data provided by the ERP is at the level of accuracy defined in the BOM. For example, if there is a change in the subcontractor of a 37 subassembly, the information must be changed in the systems so that the costing aligns with the actual process. If the need for change is not communicated due to information gaps in cross-functional processes, problems occur in cost accounting and production orders. As a result, outdated data is transferred to the systems, which is inconsistent with the actual process. In manufacturing companies, various departments utilize information from the ERP sys- tem that manages business processes in the organization (Avvaru et al., 2020). One of the core functions of the MES system is to provide real-time data on production progress and exchange information between the organizational level and production (Avvaru et al., 2020). If the progress of production reported in the MES is inconsistent with the ac- tual progress of production, this causes an information gap. Consequently, departments utilizing data from the ERP system will not receive up-to-date information. This influ- ences the accuracy of the business resources and order status monitoring in the ERP system (Avvaru et al., 2020). If the system is not up to date with the actual status, the information received by other departments will be unreliable (Husada Tarigan et al., 2019). Accurate and timely information on the costs of processes, cost objects, and ac- tivities is a prerequisite for managing an organization (Kitsantas et al., 2020). These findings indicate that the quality of data transferred between systems plays a cru- cial role in the success of cross-functional processes. To ensure data accuracy in dynamic environments, information must flow through cross-functional processes to the right de- partments to ensure that the data aligns with actual processes. In manufacturing com- panies, the accuracy of the BOM is essential not only for ensuring seamless production operations but also for cost accounting and management accounting. Liang (2025) high- lights that in modern industrial enterprises, strengthening cost management and ena- bling timely executive decision-making requires precise and efficient cost accounting. Accurate and up-to-date information is vital for making informed decisions. Inefficient communication can lead to costly errors and waste, as communication serves as a source of information that managers rely on for decision-making (Musheke & Phiri, 2021). 38 2.2.3 Strategies for Enhancing Collaboration and Information Flow Strategies to enhance information flows and cross-functional collaboration are pre- sented next. When discussing the barriers and consequences of communication gaps, it emerged that information technologies can support integration between business units or organizations through data and systems integration (Berente et al., 2009). However, information integration alone is inadequate for the seamless operation of processes, as individuals and groups have different information needs and practices (Berente et al., 2009). Information flow is an essential part of workflow, requiring synergy between people and IT (Durugbo et al., 2013). To improve information flow, it is crucial to first understand the current flow in the organization, for example, by modeling. Furthermore, it is important to identify interdepartmental communication barriers that inflexible organizational pro- cesses (Durugbo et al., 2013). Similarly, Berente et al. (2009) emphasize the importance of first understanding process-associated information flows when aiming to improve business processes in an organization. They note that when striving to improve organi- zational performance, it is critical to understand information, its flow, and the technolo- gies that support it. Paim et al. (2008) presented three methods for coordinating processes to facilitate the effective implementation of process management in an organization. The first one is to plan and define how the process will be performed. The second one is to see the day-to- day process management, and thirdly, to learn about the evolution and history of the process. Albino et al. (2002) proposed a methodology to describe the information flows involved in coordinating production processes. They define process coordination as con- sisting of the management and execution of interdependent tasks, which includes pro- cessing and transferring the information required for the process. By understanding how 39 tasks are interdependent and related information flows, process coordination and im- provement can be achieved (Albino et al., 2002). In the context of cross-functional process collaboration and improving information flow, the literature emphasizes that the first step is to develop a better understanding of in- formation needs, supported by process modeling or design. Once the process has been designed, it can be developed based on observations, considering the flow of infor- mation and all the stakeholders involved in the cross-functional process. This approach helps ensure that the information needs of each party are acknowledged and not over- looked during process changes. Furthermore, a combination of principles related to in- formation flows should be considered. According to Berente et al. (2009), this includes accessibility, timeliness, transparency, and granularity of information flows. Literature suggests that modeling information flows in organizations is useful for contin- uous process improvement, organizational collaboration, and improved information sharing (Durugbo et al., 2013). However, information modeling is challenged by the def- inition of organizational networks, information synchronization, and information flow focus. Damelio (2011) highlights various reasons for mapping processes. It provides a context for the work and facilitates identifying the part and whole workflow relation- ships and the contribution to the enterprise. Process mapping also improves communi- cation and shared understanding by highlighting key areas that require attention and explaining their significance (Damelio, 2011). Moreover, process mapping should be per- formed when establishing new workflows or when changes are made to the enterprise- level processes. With the aim of improving collaboration and information flow in cross- functional processes, concrete examples of modeling and process design are presented. A relationship map provides a visual representation of organization-level relationships without specifying work tasks (Damelio, 2011). It can be used to highlight the contribu- tion of different parts and illustrate how inputs and outputs are interconnected across different parts of the organization. Additionally, a relationship map can be a useful tool 40 for identifying the organizational boundaries that work must cross to create value in the process (Damelio, 2011). This, in turn, helps clarify the role and contribution of different stakeholders within the organization. A typical relationship map consists of three com- ponents, which are Supplier, Organization, and Customer, shown in Figure 5 below (Damelio, 2011). Figure 5 Relationship map template (Damelio, 2011). When the purpose is to enhance collaboration and information flow, the current infor- mation flow in cross-functional processes should be modeled (Durugbo et al., 2013). Di- agrammatic modeling methods of information flow include, for example, pictorial, ma- trix, and graph. Examples of graph modeling are presented next. Organizational work- flows can be illustrated with a Cross-Functional Process Map (CFPM) (Damelio, 2011). This map illustrates processes that span multiple functional areas and outlines the spe- cific work to be performed within each area. It describes a cross-functional process in medium detail, without detailing activities the work includes (Madison, 2005). CFPM, also known as a swimlane diagram, simultaneously visualizes the tasks involved and the organizational units responsible for their execution (Damelio, 2011). The dia- grams are useful to illustrate organizational handoffs and find the activities that have challenges with the flow of information between them (Damelio, 2011; Madison, 2005). Understanding process-associated information flows is essential when seeking to im- prove business processes (Berente et al., 2009). Therefore, when the work is placed as a 41 part of the whole with the help of CFPM and a context is created, the meaning of the own work task can be better understood in the cross-functional process (Damelio, 2011). Improved understanding can enhance the flow of information by identifying where to concentrate in the process. When a more detailed chart is required, a flowchart repre- sents the activities to create a specific output (Damelio, 2011). This chapter has examined how visual tools such as relationship maps and cross-func- tional process diagrams can clarify information flow across departments. The focus of the research is on the Process Control department, thereby its information needs are a central factor in optimizing interdepartmental information flow. The information needs associated with the annual cycle can be visualized using an annual clock, which can func- tion as a coordination tool according to Ruotsala (2014). This shared tool can help to overcome functional boundaries and motivate collaboration. However, the annual clock alone does not guarantee sustainable cooperation but requires other actions to support it. Ruotsala (2014) notes that the annual clock can be utilized as a practice script, provid- ing a means for developing collaboration in the future. Thus, it can serve as a tool to improve collaboration among cross-functional processes and to highlight information needs in their context. To conclude, improving information flow and collaboration across departmental bound- aries begins with examining how information flows within processes (Berente et al., 2009; Durugbo et al., 2013). Modeling can be utilized to identify areas for improvement and the need to develop new processes. The visualization of processes can provide benefits by setting the work of different departments in context and enabling a better under- standing of the information needs of others. 2.3 Process Control in Organizational and Manufacturing Settings The definition of process control begins with the process control of physical processes, from which it shifts to the management of business processes. The aim is to examine the 42 literature on the meaning of process control and to connect the role of process control in organizational and manufacturing settings. When process control is viewed from a physical system perspective, understanding the process is a prerequisite for designing a successful control system (King, 2016). King (2016) emphasizes the differences between the roles of the process engineer and the control engineer in this context. The process engineer is responsible for designing the stable state of the process. In contrast, a control engineer is required to have a deep understanding of the dynamics of the process to maintain it steady under changing con- ditions and in the occurrence of disturbances. Therefore, a control engineer is required to have an understanding of process parameters and their movement between steady state, as well as the dynamics of the process and its impact on the control system. Thus, controlling physical processes requires an understanding of the steady state of the process and how to stabilize it in the event of a disturbance. In addition to the process and control engineer, collaboration is required with the technician, instrumentation en- gineer, and systems engineer (King, 2016). The steady state designed by the process en- gineer is only a starting point. In the event of a disturbance, the process must be resta- bilized. Effective process control is not the responsibility of a single role but requires col- laboration and the input of multiple experts. Process control is centered on the control of specific processes, while process manage- ment focuses on processes as a whole. Next, the discussion shifts from physical pro- cesses in general to processes with input, process, and output as illustrated in Figure 6 below (Munro et al., 2015). The figure presents a feedback loop designed to help in pro- cess control. Munro et al. (2015) discuss two alternative approaches. The first states that the role of process management is to collect information on inputs and outputs that are utilized to improve processes. The second suggests that process improvement should be designed as part of the process. They point out that a business system is designed to execute a set of processes, and it is critical to ensure the appropriate inputs and 43 resources are available for the process. The business system should aim to continuously improve processes, products, and services, which requires the collection and analysis of relevant data (Munro et al., 2015). Figure 6 Feedback loop between output and input of a process (Munro et al., 2015). When it comes to process improvement, Business Process Management (BPM) is a dis- cipline that integrates management sciences and information technology to support and enhance operational business processes (van der Aalst, 2013). Erasmus et al. (2018) de- scribe BPM as an effective tool for organizing and coordinating work between people, information systems, and different business functions. Its objective is to increase produc- tivity and reduce costs through process modeling, analysis, and optimization (van der Aalst, 2013). While BPM does not necessarily require the use of technology, tools such as ERP systems can support its implementation. Van der Aalst (2013) highlights process- aware systems, such as ERP systems, that are designed to support the processes they manage. Moreover, Erasmus et al. (2018) emphasize the growing importance of BPM as new modules are introduced into the ERP system. Similarly to the maintenance required to control and maintain the stability of physical processes, BPM requires continuous effort after the implementation of the system. Pro- cesses require management, as changing circumstances may require modifications to the process. Consequently, continuous monitoring is essential for both business and physical processes (van der Aalst, 2013). 44 2.3.1 Coordinating Function In an organization, processes may require input from several functional units. Business processes can span multiple organizations, becoming more complex over time and de- pendent on information systems (van der Aalst, 2013). It is emphasized that processes between organizations can only function properly if there is a shared understanding of the required interactions. This highlights the importance of process modeling, which is therefore widely applied in modern organizations (van der Aalst, 2013). According to Berente et al. (2009), a key starting point for business process improvement is understanding the flow of information. When an organization has a clear picture of the operation of the process, the information that flows through it, and the information needs of others, the process can work efficiently. In this way, BPM can be utilized in pro- cesses across business functions and improve integration between them (Berente et al. 2009). Business process integration aims to minimize coordination and communication be- tween process activities, thereby requiring the four principles of process integration: ac- cessibility, timeliness, transparency, and granularity (Berente et al., 2009). Erasmus et al. (2018) point out that the manufacturing industry suffers from fragmented process man- agement when multiple information systems are used. The ISA-95 standard aims to pro- mote integration between systems in manufacturing companies (Chen, 2005). However, Erasmus et al. (2018) highlight that the standard focuses on ontological standardization and the exchange of data, thus neglecting process integration. As the literature review has emphasized, information flows in systems, but ensuring its accuracy remains a chal- lenge. Especially in cross-functional processes and as processes become more complex, the need for interaction is essential to be understood (van der Aalst, 2013). It is vital to understand how the process functions and the information needs of others to be able to provide the process participants with the information they require. 45 2.3.2 Managing Change At the beginning of the chapter, the physical process was discussed, where a deep un- derstanding of the process is required to define a stable state (King, 2016). To re-stabilize the process after a disturbance, an understanding of the operation and parameters of the process is essential. This approach is next applied to cross-functional processes. In these, a change to part of a business function process may require a change to other parameters of the process to maintain the functionality of the process. In a manufacturing company, the bill of materials is critical information for the different functional units of the organization, such as enabling production, product, and process planning (Wang et al., 2022). The reconstruction of the BOM is an example of a process where multiple departments combine information to create the final MBOM. Wang et al. (2022) note that BOM data is dynamic and subject to change due to factors such as design improvements or technological developments. As a result, inconsistencies or out- dated information may only become apparent later, for instance, during manufacturing. Therefore, it is essential that all departments involved understand how changes in BOM data affect one another and ensure the consistency of information. Whether creating new processes or maintaining existing ones, a thorough understanding of the process's functioning is essential. Achieving a stable operational state is only one part of process management. As van der Aalst (2013) explains, BPM does not end with the implementation of a process but requires continuous monitoring and adaptation. When circumstances change, the process must be adjusted to maintain stability. Ulti- mately, process management is at risk of failure without effective communication of changes between functions. 46 2.4 Summary The central focus of the literature review has been the flow of information in cross-func- tional processes within manufacturing companies. Information is transferred across mul- tiple systems, enabling departments to access the data they require. The review has ex- amined the data transferred in the system, for example, to enable cost accounting and to support informed decision-making with accurate information. The summary presents the key findings of the literature review. Management accounting focuses on the future and utilizes both quantitative and quali- tative data to support decision-making (Drury, 2018; Noreen, 2011). The accuracy of cost information is essential for decision-making and planning (Kitsantas et al., 2020), high- lighting the importance of reliable data in cross-functional processes. Information flows vertically, horizontally, and diagonally in an organization (Wen et al., 2025), being a sig- nificant part of the workflow (Durugbo et al., 2013). While IT facilitates coordination be- tween departments and speeds up the delivery of information, it alone is insufficient to ensure effective communication (Yazici, 2002). The core systems of manufacturing companies, PLM, ERP, and MES, have been intro- duced. The interfaces between the systems play a critical role in enabling data transfer between departments. The ISA-95 standard facilitates the flow of information across sys- tems to different functional areas of the organization with varying information needs (Chen, 2005). However, the standard focuses on data transfer without considering the accuracy of the transferred data. The final subsection of the theoretical background and conceptual framework has con- nected the system-level hierarchy, information flow, and the data required for cost ac- counting using routing and BOM. In the production of complex products, the BOM serves as a link between departments, transferring information for various operational and fi- nancial purposes (Wang et al., 2022). As a result, information accuracy becomes essen- tial. Cost accounting requires information such as direct labor hours, which are included 47 in systems via routing and related master data. This master data is created in PLM, trans- ferred to ERP, and monitored in real time through MES. The following themes in the literature review have emphasized the importance of un- derstanding information flow within processes as a prerequisite for improvement. Ber- ente et al. (2009) highlight the need to understand the information in the process, its flow, and supporting technologies when aiming to improve organizational performance. To be able to transfer up-to-date information through systems, the data must be main- tained. There must be a common understanding of the interaction required for the ef- fective functioning of cross-functional processes (van der Aalst, 2013). Effective commu- nication requires accessibility, sharing, and use of information, and an understanding of the information needs of others (Yazici, 2002). These principles serve as a foundation for improving the information flow, as the first step is to understand the current situation and the barriers in order to overcome them. Visualizing the flow of information can help to understand the information needs of others and thereby support communication. Consequently, as a stable state must be maintained in physical processes, sustaining business processes requires a comprehensive understanding of the operation. To ensure accurate information flow between systems after a change, there must be an under- standing of how the process can be restabilized. This requires effective communication with relevant stakeholders to implement the necessary changes. Without such commu- nication, transferred information within systems may cause problems in later stages. Un- derstanding processes and recognizing the information needs of others is the first step towards enhanced communication. 48 3 Methodology This study was conducted as a qualitative case study focusing on the role of the Process Control Department in a manufacturing company. The objective was to explore the im- portance and role of the PC between management accounting and production, while examining the interdepartmental information flow and information needs in the cross- departmental processes. Information flow and collaboration between departments were reviewed with the aim of optimizing cost accuracy and data consistency with the production environment. The following subsections discuss the design of the research, data collection, and data analysis. Finally, reliability, validity, and limitations of research are addressed. 3.1 Research Design This research is a case study that examined the phenomenon in a real-life context (Yin, 2009). There are two types of single-case study design: a study with one or multiple units of analysis. This research is a single-case study with multiple units of analysis, where the work categories of the PC represent different units. The division of the research into units facilitated a deeper exploration of themes relevant to the research, as each unit involves specific challenges and stakeholder departments. The research has an inductive approach, which seeks to achieve a better understanding of the phenomenon through empirical data (Bryman, 2012). Inductive reasoning enables the formation of broader theoretical insights by interpreting patterns that emerge from the case context. The research design is exploratory, as it seeks to examine relatively under-researched topics (Saunders et al., 2007). At the same time, the research contains elements of evaluative research. These are expressed in terms of an assessment of the current information flows and processes. Furthermore, suggestions for improvement are proposed. 49 3.2 Data Collection The aim was to obtain a comprehensive understanding of the case in question (Yin, 2009). The purpose of the data collection was to acquire an overall picture of the matter, from which a more detailed analysis of the topic could be conducted, focusing on aspects rel- evant to the research. Data was collected from several sources to complement and sup- port each other (Yin, 2009). The subsections first describe the observation and the col- lection of secondary data. This is followed by a review of the interviews that were con- ducted as part of the primary data collection. 3.2.1 Observation and Documents Observation and document collection were utilized to obtain a comprehensive picture of the case. According to Simons (2009), observation can provide a holistic view of the case that cannot be achieved through discussion alone. Observation provided context to the information that emerged from the interviews while allowing for cross-validation. Direct observation was conducted by observing work activities and meetings. The ad- vantage is revealing the information in its original context, which is not possible in inter- views (Puusa et al., 2020). Notes were taken of the observations, allowing access to the collected information afterwards. Observation enabled the identification of topics that were not found in the documents related to the case. This allowed the research to focus on these topics through interviews. According to Simons (2009), documents can highlight key aspects of a case before inter- views, which was the intention of document collection in the research. Simons (2009) uses the word document for any written or recorded matter related to the context of a case or produced from the context. The documents utilized in the research included an organizational chart, PowerPoints, flowcharts of cross-functional processes, an annual clock, and a worklist maintained by the PC. The worklist contains completed and in- 50 progress activities, including background information about each task. In addition, the cases and orders discovered in the research were examined using ERP software. The doc- uments provided a general overview, for example through flowcharts, while also ena- bling access to more detailed information. However, the information received from the documents was treated as clues (Yin, 2009), which were verified by interviews. 3.2.2 Interviews Interviews represent the primary data collection method in the research. The interviews were conducted first for an interviewee from the PC. First interviews were guided and open-ended, containing only a few guiding questions, focusing on the department's work tasks and responsibilities. This was followed by semi-structured interviews for the interviewee from the PC to explore specific topics in more depth based on the analysis of open-ended interviews, documents, and observations. A semi-structured interview was chosen to allow for a more focused discussion on issues that emerge during the interview (Simons, 2009). The interviews were conducted in person and recorded with transcript functionality. Afterwards, each interview was transcribed for the analysis. Based on preliminary analyses, the stakeholder teams and departments of the Process Control relevant to the research were identified. Parallel collection and analysis of data enabled the identification of relevant interviewees and the generation of interview ques- tions for the stakeholder teams and departments (Puusa et al., 2020). Five key stake- holder teams and departments were identified and are referred to in the research by letters A to E. The interviewees from each stakeholder group are listed in Table 1 below, which indicates the interviewee and the duration of the interview. A number following the letter indicates different interviewees from the same stakeholder group. 51 Table 1 Interviewees of stakeholder departments. Interviewee Duration of the interview A1 57 min B1 54 min C1 30 min C2 47 min D1 60 min D2 31 min E1 52 min E2 43 min E3 53 min E4 37 min Interviewees were selected utilizing purposive sampling, whereby a person with com- prehensive expertise on the subject was selected for the interview (Campbell et al., 2020). Additionally, maximum variation sampling was partially utilized, allowing differ- ent teams and experiences to be taken into account. This way, the research considers a broader perspective, as different teams have specialized and encountered different cases in their work. The interviews were conducted in person in a planned order. However, the interview for B1 was conducted remotely to maintain the order. The interviews were scheduled for one hour and ranged from half an hour to an hour, with an average of 46 minutes. At the beginning of the interview, a slide about the research and the selection of the inter- viewee was presented, which was also attached to the interview invitation. Furthermore, permission for recording was asked, and the anonymity in the research was explained. Recording and transcription were conducted as in the PC's interviews. The stakeholder interviews consisted of two parts. The first part was the same for all interviewees, and the second part was customized for each department. The first section contained seven Likert-scale questions to obtain the interviewee's understanding of the Process Control department's operations, collaboration between departments, and the frequency of 52 communication. The aim was to establish an overall picture of communication between the department and the PC. The questionnaire also included a question concerning the department’s main areas of responsibility, as well as instances of communication be- tween the interviewed department and the PC in both directions. The department-spe- cific section, including open-ended questions, focused more specifically on cooperation, information sharing, and processes requiring collaboration between the department and the PC. The second part of the interview was semi-structured, allowing flexibility in the order of the questions