Lean accounting

Lean accounting

Lean accounting is accounting for the lean enterprise. It seeks to move from traditional cost accounting to a system that measures and motivates good business practices in the lean enterprise. Applying lean principles to accounting can be part of this system.

Principles of lean accounting

Measure

Those in operations have long argued that accounting does not accurately reflect the positive gains made through lean initiatives. For example, a reduction in inventory, cycle time, or new found capacity by shop floor personnel is either not accurately reflected or understood. The problem comes when business strategy is made with wrong or misguided metrics.

Motivate

In addition to the gap between accounting and lean gains, traditional accounting practices often motivate wrong behaviors in the lean enterprise. These wrong behaviors typically involve achieving local optimums at the expense of overall company profitability. For instance, attempts to meet machine efficiency measures may motivate shift production to create needless inventory.

ee also

*Management accounting
*Throughput accounting


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