Lean management accounting
A lack of lean management accounting, control and measurement will, inevitably, lead to the failure of the lean enterprise
Brian Maskell,
who is president of BMA Inc., a lean accounting
consulting firm in
New Jersey cautioned: "A lack
of lean management accounting, control and
measurement will, inevitably, lead to the
failure of the lean enterprise initiative
because what is measured and accounted for are
those issues the people within the company will
focus their attention upon" (McCormack, 2001, p.
6).
He went on to say that traditional
accounting methods are actually hostile to the
lean manufacturing environment because they
motivate people to do traditional things instead
of lean things. Standard and traditional cost
accounting procedures are designed to hide the
waste rather than illustrating it (McCormack,
2001).
Maskell explained that lean accounting works by
value stream. This means that people must
identify the transactions and the reasons for
these transactions. The accounting team must
then determine what needs to be in place so that
unnecessary transactions can be removed without
sacrificing control of the business.
For example, "if we want to eliminate work-in-process tracking, we have to have inventory levels of work in process that have to be relatively low and consistent. Relatively low means the production cycle time needs to be short and consistent means there has to be some sort of kanban or pull system that is really working, is effective and people are maintaining the rules. There have to be performance measurements in place to ensure that the kanban system is working right" (McCormack, 2001, p. 6).
He also pointed out that it is not easy to change the accounting system to a lean one that supports lean manufacturing efforts but it is necessary to do so.
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