Executive Briefings

'Lean' Accounting Concerned With Value Stream From Customers to Suppliers

In the "Benefits of Lean Accounting in a Lean Manufacturing Company," author Dan Anthony discusses the major differences between traditional and lean accounting, starting with a quote from Taiichi Ohno that says "costs do not exist to be calculated; costs exist to be reduced." This really gets to the core of the difference between traditional and lean accounting: traditional accounting focuses primarily on the cost of goods sold, whereas lean accounting focuses on the value stream from customers to suppliers.

Lean accounting looks at cost reports on a daily basis, as opposed to after the fact in weekly or month-end reports as is common in traditional accounting; it views capacity as an asset instead of just idle time, and sees inventory as a liability and not an asset.

The lean accounting process itself frees up the time of the financial people by eliminating a great number of transactions, reports, reconciliations and meetings so that they can be less like "bean counters" and more like consultants, providing timely, detailed, focused reports as to costs at any step in customer fulfillment.

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Lean accounting looks at cost reports on a daily basis, as opposed to after the fact in weekly or month-end reports as is common in traditional accounting; it views capacity as an asset instead of just idle time, and sees inventory as a liability and not an asset.

The lean accounting process itself frees up the time of the financial people by eliminating a great number of transactions, reports, reconciliations and meetings so that they can be less like "bean counters" and more like consultants, providing timely, detailed, focused reports as to costs at any step in customer fulfillment.

Read Full Article