What is this thing called LEAN ACCOUNTING, an article in the May/June 2008 edition of On Balance, discusses how lean principles revolve around a relentless pursuit to eliminate waste. It defines Lean and waste:
"Lean is a methodology that eliminates waste, simplifies operations and provides customers what they want, when they want at reasonable prices. Lean is not a cost reduction method. It practices shrink cycles and lead times and expedite cash collection. It does not require huge capital investments, plus it focuses on simple common sense, engages all employees and draws on their creativity."
"Waste is anything that adds costs to a product without adding value. Waste can be found anywhere and everywhere. According to lean experts, about 70 percent of work done at most businesses is waste because it does not add value to customers."
The article also discusses how eliminating waste requires an understanding of what the waste it and where to find it, and defines eight categories of waste:
- Over production
- Unnecessary Motion
- Over processing
- Excess inventory
- Underutilization of Personnel
Here are some related posts:
- Five Training Points: Ownership, Participation, Open Books, Holistic Wellness, and Lean Enterprise (4/26/2008) This post discusses lean accounting as one of five potential training points.
- Standardized Work and Developing Best Practices/ESOP Q&A (8/12/2007) This post discusses how employees can be the most effective at developing best practices.
- Lean Enterprise Institute (5/29/07) This post talks about the exclusion and non-participation of people at work. It also defines Lean and discusses the Lean Enterprise Institute and how eliminating waste is an easy way to build ESOP and company value.