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Why Not Lean
A
fter World War II, the United States made an effort to help rebuild Japan from the devastation caused at the end of the war.
Dr. W. Edwards Deming, with a Yale Ph.D. in physics, used his knowledge of statistical quality control to advance managerial strategies. He used his theories of continuous improvement centered on efficiency, productivity and profitability to help the Japanese rise to excellence in the areas of automobiles, electronics and shipbuilding. While the world watched Japan’s industries soar, he received little attention in the U.S. until the mid- 1980s. His revolutionary thinking focused on the idea that 85 percent of the worker’s productivity is based on his environment (SkyMark, 2015). Likewise, cost accounting has purpose when
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it provides meaningful and timely information to guide management in decision making. In other words, the accountants transform from bean counters to business partners in all aspects of the process. According to Cunningham and Fiume (2003), the lean approach derived from seeking continuous improvement through just-in- time and lean notions of manufacturing, which avoids waste and effort through a streamlined production flow. Te best use of lean methods occurs when the production flow can be designed as a single continuous process. For example, a lean manufacturing process occurs when a product is made in one production unit in a matter of a few days. Its core purpose is to eliminate waiting time, movement time from one facility to another, multiple inventory storage, over processing, wasted motion and continuous corrections. “Kaizen” is lean continuous improvement, the foundation of lean thinking (Maskell, Baggaley, and Grasso, 2012). Te lean principles are value, value stream, flow and pull, perfection and empowerment. Tese five principles must be considered interlocking pieces of one puzzle. It only works when all five pieces work in unison. Value relates to the desires of the
May/June 2015
customer—what does the customer want from the product? Value stream is a group of related products that require the same processes in production from customer order to delivery. Flow and pull depend on the customer demand. Tis occurs when the customer’s order initiates creation of all requisitions to order raw materials and schedule production through the value steam. Goods are produced not by estimates of possible sales, but because of the customers’ real orders. Te pull process eliminates many of the costs of work-in-process and finished goods inventories, transportation between processes and warehousing costs. Perfection occurs when the flow from the order to delivery to the customer is uninterrupted. Empowerment of each employee to take any action necessary to avoid interruption of the value stream is required to prevent delays in production. Tis requires a system of controls and measurements made known to all employees so that they can understand when and how to react (Maskell, Baggaley, and Grasso, 2012). Implementation of a lean accounting system can only occur when a company is willing to adopt lean manufacturing. Experts on lean manufacturing suggest that a company select a process that can be accomplished within a few days using existing machinery that is easily adjusted from one process to another. Once the company succeeds with lean manufacturing techniques, it can begin to adapt other processes as it matures (Maskell, Baggaley, and Grasso, 2012). Benefits of lean manufacturing include
reduced costs of raw material, work-in-process and finished goods inventories due to just-in-time strategies created with the pull philosophy, thus improving cash flows. Empowered employees reduce manufacturing time and waste from errors. Customers can get products in a short time frame, especially when a company has a lengthy processing time under the current manufacturing value chain. Te company is not producing
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