Lean Accounting

By Clinton Jones on Sep 8, 2014

Illustration of lean strategy ballAsk Brian Maskell or Bruce Baggalay what they think about accounting systems and they will likely tell you that traditional accounting systems are ‘actively anti-lean’. What exactly does Lean, in this context mean?

Lean Accounting is a term more generally used to describe the business efforts that need to be put in place to support lean manufacturing. In addition, a commitment to the long-term determines whether your business can be seriously committed to the concept of Lean.

The purpose of ‘Lean’ is to remove all forms of waste from the ‘value stream’. Lean Accounting can also be referred to as Value Stream Accounting (VSA) and it has the potential for providing valuable costing information as it relate to “value streams” within an organization.

The idea of continuous improvement is that there should be a constant and never-ending effort to reduce waste and improve productivity. Individual employees in an organization are to be encouraged and made responsible for finding improvements and empowered to implement those agreed changes to eliminate waste and thereby reduce costs.

Using Lean Accounting allows one to tie accounting information to lean management concepts and has proven to be something that can be effective in a ‘for-profit’ context. Costs are then no longer arbitrarily allocated, but actually allocated based on where value (to customers) is created.

Maskell maintains that Lean Accounting enables your company to greatly increase profits and cash flow and is ultimately less work for accounting – sounds like something every Winshuttle customer should pursue.

Check out how Winshuttle can help you automate the mass maintenance of pricing in your SAP ERP environment.

If you have never heard of the Lean Accounting approach before, here is a short video you can watch that outlines the fundamentals and how this is different from conventional cost accounting.

About the author

Clinton Jones

The Winshuttle blog is written by professional thought leaders who are dedicated to providing content on a variety of topics, including industry news, best practices, software updates, continued education, tips and techniques, and much more.

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