Note by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida
The purpose of this paper is to document the principles, practices, and tools of lean accounting that were developed by a group of lean advocates at the 2005 Lean Accounting Summit. The following provides a brief outline of the lean accounting concept as described by Maskell and Baggaley.
1. Lean and simple business accounting. Eliminate waste in transactions, processes, reports etc.
2. Accounting processes that support lean transformation.
a. Visual performance measures.
b. Continuous improvement - value stream boards.
c. Value stream costing.
d. Target costing.
3. Clear and timely communication of information.
a. Visual management - both financial and non-financial
b. Decision making and box scores - See the table below and many other JIT measurements in Chapter 8.
|Box Score Example Format|
|Operational measures:||Period 1||Period 2||Period 3||Period 4||Goal|
|Units per person||Number||Number||Number||Number||Number|
|On time shipments||%||%||%||%||%|
|Dock to dock days||Number||Number||Number||Number||Number|
|First time through||%||%||%||%||%|
|Sales, Costs etc...||$||$||$||$||$|
4. Lean planning and budgeting.
a. Hoshin policy deployment.
b. Sales operations, and financial planning.
c. Capital planning - 3P.
d. Investment in people.
5. Strengthen internal controls.
Baggaley, B. and B. Maskell. 2003. Value stream management for lean companies, Part I. Journal of Cost Management (March/April): 23-27. (Summary).
Baggaley, B. and B. Maskell. 2003. Value stream management for lean companies, Part II. Journal of Cost Management (May/June): 24-30. (Summary).
Brosnahan, J. P. 2008. Unleash the power of lean accounting. Journal of Accountancy (July): 60-66. (Summary).
Castellano, J. F. and R. Burrows. 2011. Relevance lost: The practice/classroom gap. Management Accounting Quarterly (Winter): 41-48. (Summary).
De Luca, M. 2018. How lean accounting promotes lean in the organization. Cost Management (January/February): 21-26. (Summary).
Goodson, R. E. 2002. Read a plant - fast. Harvard Business Review (May): 105-113. (How the rapid plant assessment (RPA) process can tell you if a factory is truly lean in as little as 30 minutes. The process includes two tools: The RPA rating sheet includes 11 categories for assessing leanness, and the RPA questionnaire includes 20 yes or no questions). (Summary).
Kapanowski, G. 2016. Lean fundamentals for accountants. Cost Management (January/February): 5-14. (Summary).
Kapanowski, G. 2017. Lean accounting. Cost Management (January/February): 37-41. (Summary).
Kristensen, T. B. and P. Israelsen 2012. Management accounting system problems in context of lean: Development of a proposed solution. In Mitchell, F., H. Norrreklit and M. Jakobsen, eds. 2012. The Routledge Companion to Cost Management. Routledge Companions in Business. (Summary).
Maginnis, M. A. and G. Uminger. 2018. Management accounting in a true lean (TPS) environment. Cost Management (January/February): 27-35. (Summary).
Martin, J. R. Not dated. Just-in-Time Systems Attitude and Practice Elements. Management And Accounting Web. http://maaw.info/JITSUM.htm
Martin, J. R. Not dated. Lean concepts and terms. Management And Accounting Web. http://maaw.info/LeanConceptsandTermsSummary.htm
Martin, J. R. Not dated. What is lean accounting? Management And Accounting Web. http://maaw.info/LeanAccounting.htm
Martin, J. R. Not dated. Chapter 8: Just-In-Time, Theory of Constraints, and Activity Based Management Concepts and Techniques. Management Accounting: Concepts, Techniques & Controversial Issues. Management And Accounting Web. http://maaw.info/Chapter8.htm
Pickering, M. 2017. Implementing lean management reporting in lean enterprises. Cost Management (January/February): 28-36. (Summary).
Staats, B. R. and D. M. Upton. 2011. Lean knowledge work: The "Toyota" principles can also be effective in operations involving judgment and expertise. Harvard Business Review (October): 100-110. (Summary).
Swank, C. K. 2003. The lean service machine. Harvard Business Review (October): 123-129. (Summary).
Toyota Public Affairs Division and Operations Management Consulting Division. 1998. The Toyota Production System: Leaner Manufacturing for a Greener Planet. The Toyota Motor Corporation. (Summary).
Womack, J. P. and D. T. Jones. 1994. From lean production to the lean enterprise. Harvard Business Review (March-April): 93-103. (Summary).
Womack, J. P. and D. T. Jones. 1996. Beyond Toyota: How to root out waste and pursue perfection. Harvard Business Review (September-October): 140-144, 146, 148-152, 154, 156, 158. (Summary).