Editing Alfred P. Sloan (section)

===Accounting system drawbacks===
In 2005, Sloan's work at GM came under criticism for creating a complicated [[accountancy|accounting]] system that prevents the implementation of [[lean manufacturing]] methods.<ref name="Waddell_Bodek_2005">{{Harvnb|Waddell|Bodek|2005}}.</ref> Essentially, the criticism is that by using Sloan's methods a company will value inventory just the same as cash, and thus there is no penalty for building up inventory.<ref name="Waddell_Bodek_2005"/> Carrying excessive inventory is detrimental to a company's operation and induces significant hidden costs. This criticism must be viewed in the context that it is provided in hindsight. During the period in which Sloan advocated carrying what would now be considered excess inventory, the industrial and transportation infrastructure would not support what is now known as [[just-in-time manufacturing|just-in-time]] inventory. During this period, the auto industry experienced incredible growth as the public eagerly sought to purchase this life-changing utility known as the automobile. The cost of lost sales due to lack of inventory was likely greater than the cost of carrying excess inventory. Sloan's system seems to have been widely adopted because of its advance over previous methods.{{citation needed|date=July 2012}}

In his memoir, Sloan (who acknowledged that he was not a trained accountant) said the system that he implemented in the early 1920s was far better than what it replaced. He said that years later, a professional accountant (Albert Bradley, longtime [[chief financial officer|CFO]] of GM) "was kind enough to say [that it] was pretty good for a layman."<ref name="Sloan1964p48">{{Harvnb|Sloan|1964|p=48}}.</ref> Sloan was far from the sole author of GM's financial and accounting systems, as GM later had many trained minds in accounting and finance; but regardless of authorship, GM's financial controls, at one time considered top-notch, eventually proved to have latent drawbacks. Systems similar to GM's were implemented by other major companies, especially in the United States, and they eventually undermined the ability to compete with companies that used different accounting, according to Waddell & Bodek's 2005 analysis.<ref name="Waddell_Bodek_2005"/>

Sloan's memoir, particularly Chapter 8, "The development of financial controls",<ref name="Sloan1964pp116-148">{{Harvnb|Sloan|1964|pp=116–148}}.</ref> indicates that Sloan and GM appreciated the financial dangers of excess inventory even as early as the 1920s. But Waddell & Bodek's 2005 analysis<ref name="Waddell_Bodek_2005"/> indicates that this theory was not successfully implemented in GM's practice. For all the intellectual understanding, the reality remained slow inventory turnover and an accounting system that functionally treated inventory similarly to cash.