Lean Accounting
Essay Question 1
What are the main benefits and challenges of implementing a lean accounting system in a lean manufacturing environment? Do you anticipate interest in lean accounting will grow, the methods will change, or the concepts will fade out and be replaced with another ‘flavor of the month’? How do you perceive lean principles affecting your career? Justify your answers.
I. Lean Accounting
Lean accounting often refers to more simplified accounting practices that focuses on eliminating waste, reducing production lead time, and producing products on customer demand. But Lean accounting does not stand alone. It is enabled by lean thinking and lean production methods. And lean accounting not only needs lean manufacturing, it also facilitates lean manufacturing.1 That’s why lean accounting is always related to, but not necessarily have to be associated with lean manufacturing. Here are some specific positive reasons that lean accounting is important. 1. Reduces time, cost, and waste by eliminating wasteful transactions and systems. 2. A better way to understand costs, product costs and value stream costs. 3. Provides information for better lean decision making. 4. Identifies the potential financial benefits of lean manufacturing improvements. 5. Frees up the time for finance people to work on lean improvement. 6. Focuses the business around the value-added activities created for customers. 2 II. Benefits of Implementing a Lean Accounting System in a Lean Manufacturing Environment
According to the positive reasons that addressed above, companies can be benefited from implementing a lean accounting system in a lean manufacturing environment in several different ways.
1. Eliminate Waste One of the most important objectives of lean improvement is to eliminate waste from the non-value-added
1. Chapter 2, “Maturity Path to Lean Accounting”, Practical Lean Accounting.
2. Chapter 1,
What are the main benefits and challenges of implementing a lean accounting system in a lean manufacturing environment? Do you anticipate interest in lean accounting will grow, the methods will change, or the concepts will fade out and be replaced with another ‘flavor of the month’? How do you perceive lean principles affecting your career? Justify your answers.
I. Lean Accounting
Lean accounting often refers to more simplified accounting practices that focuses on eliminating waste, reducing production lead time, and producing products on customer demand. But Lean accounting does not stand alone. It is enabled by lean thinking and lean production methods. And lean accounting not only needs lean manufacturing, it also facilitates lean manufacturing.1 That’s why lean accounting is always related to, but not necessarily have to be associated with lean manufacturing. Here are some specific positive reasons that lean accounting is important. 1. Reduces time, cost, and waste by eliminating wasteful transactions and systems. 2. A better way to understand costs, product costs and value stream costs. 3. Provides information for better lean decision making. 4. Identifies the potential financial benefits of lean manufacturing improvements. 5. Frees up the time for finance people to work on lean improvement. 6. Focuses the business around the value-added activities created for customers. 2 II. Benefits of Implementing a Lean Accounting System in a Lean Manufacturing Environment
According to the positive reasons that addressed above, companies can be benefited from implementing a lean accounting system in a lean manufacturing environment in several different ways.
1. Eliminate Waste One of the most important objectives of lean improvement is to eliminate waste from the non-value-added
1. Chapter 2, “Maturity Path to Lean Accounting”, Practical Lean Accounting.
2. Chapter 1,
Bibliography: [1] Tyler Lacoma, Demand Media, Accounting Differences with Lean vs. Traditional Manufacturing [2] Dan Antony, Demand Media, Benefits of Lean Accounting in a Lean Manufacturing Company [3] Dan Woods, Lean Accounting’s Fat Problem, 07/28/2009 [4] John Cleveland, Benefits of lean in the accounting department, Feb, 2005 [5] Brain Maskell; Bruce Baggaley, Practical Lean Accounting [6] SMA _Lean Enterprise; SMA _Lean Accounting [7] Karen M. Kroll, The Lowdown on Lean Accounting—A new way of looking at the numbers, Journal of Accountancy, July 2004