Lean Accounting
The focal point of a lean management system is reducing the lead time, production time, and resources utilized in all departments. A lean production system points out defects and errors in activities and also excludes those parts from activities that do not add value to products or services.
Lean management and manufacturing are the pillars on which lean accounting relies. The data and reports that lean accounting collects on lean manufacturing and management are also lean. However, the reports and data collected without wasting time are not accurate.
One component of a lean system is measuring the performance of key indicators in manufacturing. This helps identify the defective items per million.
Lean accounting is one component of the lean system. Information collection is done throughout the value chain of lean management. Performance measurement is done on three different levels in the lean accounting system:
- Plant level
- Production cell
- Value chain
Management uses lean accounting to achieve its goals and objectives.
By creating strategies, lean accounting helps maximize the financial impact on the whole lean system. It looks after the whole value chain cost drivers rather than just one cost driver or just one machine cost driver. In this way, it helps add value to the complete value chain.
Lean accounting helps the finance department by providing them with time to work on strategies and improvements throughout the value chain.
Both positives and negatives are pointed out in the lean accounting system. The lean system shows the drawbacks of inventory reduction and excess inventory capacity. Traditional accounting does not highlight all those negative points about inventory, while lean accounting does.
The main focus of lean accounting is helping non-accountants understand the accounts and reports related to those accounts. It helps people through the whole value chain decide on those reports. Lean accounting provides relevant information and helps people make decisions.
In lean accounting, the process becomes fast and accurate based on the data and reports generated from the system. The biggest advantage of lean accounting is that it works with lean manufacturing to add value to the product and increase customer value.
Lean accounting builds people by making them meet the system’s requirements. In this way, employees become an important part of the organization, and they provide handy solutions to problems that help companies make decisions.
