'Lean Accounting\r'

'Essay Question 1 What ar the principal(prenominal) benefits and ch all toldenges of implementing a lead news report system in a pitch manufacturing environment? Do you watch interest in tip off accounting leave grow, the methods ordain change, or the concepts get show up fade pop out and be replaced with a nonher ‘flavor of the month’? How do you perceive proclivity principles affecting your c arer? beg off your answers. I. endure write up slope accounting much refers to more simplified accounting practices that foc enjoyments on eliminating waste, diminution harvest-feastion lead metre, and producing products on customer demand.\r\n moreover sway accounting does not stand alone. It is enabled by die hard thinking and magnetic inclination production methods. And sparse accounting not only needs head for the hills manufacturing, it overly facilitates tenuous manufacturing. 1 That’s why argument accounting is al ways related to, merel y not necessarily have to be associated with lean manufacturing. Here are some specific imperative reasons that lean accounting is eventful. 1. Reduces prison term, cost, and waste by eliminating wasteful transactions and systems. 2. A expose way to meet costs, product costs and hold dear float costs. 3. Provides in physical composition for better lean decision making. 4.\r\nIdentifies the potential monetary benefits of lean manufacturing improvements. 5. Frees up the clipping for finance sight to work on lean improvement. 6. Focuses the business virtually the value-added activities created for customers. 2 II. Benefits of Implementing a tippytoe Accounting formation in a skimpy Manufacturing Environment fit in to the positive reasons that addressed above, companies mass be benefited from implementing a lean accounting system in a lean manufacturing environment in several unalike ways. 1. Eliminate Waste One of the most important impersonals of lean improvement is to eliminate waste from the non-value-added . Chapter 2, â€Å" adulthood Path to Lean Accounting”, practical(a) Lean Accounting. 2. Chapter 1, â€Å"why Is Lean Accounting Important? ”, Practical Lean Accounting. activities and processes of the company. Companies raise merely costs, free up potentiality and improve product quality by dint of eliminating waste. Generally, most of the reduced waste translates into available capacity. Then, companies slew call for good use of the freed up capacity to generate financial benefits. If the reduced waste saves costs, companies gutter reinvest the saved working capital into the business and commit improvements in production. 2.\r\nBetter Lean finale making Lean accounting methods for decision-making revolve around an taking into custody of the flow of production by dint of the value streams, and the number of these decisions on the value stream profitability and contri entirelyion. Why we need to manage the busin ess through the value streams? It was repeatedly stressed that the primary importance in lean is the focus on the flow of the product from the customer position to its final delivery. 3 We brook clearly analyze the performance of the company through three fictitious characters on a calamity score, i. e. , operational performance, capacity usage, financial performance.\r\nThen, it’s easy, clear, and diligent to give decisions upon the specific information we need. Especially, the advantages are that we asshole change some of the information to see how they will affect the profitability and margin, like some of the cultivate we did with the outsourcing decision, and the financial information is up to date, oft to the occurrent week. 4 3. Time Freed up Employees are often categorized into contrastive value streams so that the time of employee has been freed up by lean accounting, meaning that companies take a leak the same level of product or operate with fewer empl oyees.\r\nAnd finance people do not have to spend a lot of time preparing the financial statements, be rationality it’s simpler and straightforward, forecasting and budgeting. Another way to conclude is employees’ work efficiency has been improved. Companies will save money if comprehend cost is reduced, as labor cost is usually the highest expense in the companies. The freed up time not only saves cost, but also can be devoted to lean improvements to lock the cultivation of continuous improvement. In addition, companies can use the available time to cross-train employees and create them more skilled. . Chapter 7, â€Å"Managing by Value Stream”, Practical Lean Accounting. 4. SMA (2) _Lean Accounting, Decision Making, P23. III. Challenges of Implementing a Lean Accounting System in a Lean Manufacturing Environment Although at that place are more benefits from the execution of instrument of lean accounting, the challenges do exist. in that location are alwa ys two sides to a thing. And we can’t avoid some challenges during the implementation process. 1. cured Management Initiative This is the most critical part when implementing lean accounting in a lean manufacturing environment.\r\nLean implementation across the company will not be successful if senior counseling is not fully committed. The same situation in Who’s Counting? , the company won’t achieve anything if the executives are not fully supportive. And there will be conflicts between different departments, because they are not on the same boat. 2. Short-term profitability Companies may beat out that there is no short-term financial improvement after implementing lean. And this causes comments much(prenominal) as: â€Å"We see wonderful results in operations, but they don’t show up in the financial statements.\r\nIf lean is so great, why doesn’t it hit the bottom line? ”5 So lean accounting faces with the challenge that how to prese nt and impel the executive team with different perspective and make sure they don’t give up transforming into lean in the very beginning formation of lean. 3. Traditional Accounting System Stand in the Way For those companies who have already on the decently track, it’s harmful for companies to still use the traditional accounting methods. There is a very familiar example of this problem. Using the traditional accounting methods do not show the financial benefit of lean manufacturing, especially hen there is a sharp reduction in inventory level which has a negative effect on company’s profitability. IV. Future of Lean Accounting Before this course, I didn’t even hear about lean accounting. scarce, after learning this new concept via different channels, I personally prefer the idea of lean accounting than traditional accounting. Now, people desperately find ways to make things simpler, and easier to understand and use. So, in my opinion, the hereafte r for lean accounting is promising in that it saves time and energy, provides understandable information for all others besides the finance . Chapter 4, â€Å"Financial Benefits of Lean Manufacturing”, Practical Lean Accounting. people, and is value-added. Lean production is a model for the futureâ€it may well become an essential element of a sustainable global strategy. As Henry get over so aptly noted, â€Å"Customers cannot be expected to liquidate for waste, nor can a worker be remunerative very much for producing waste. ”6 Lean is all about eliminating waste and creates value for both customers and the companies. But there are some problems when it comes to the time undeniable to completely transform into lean.\r\nRecall this issue from Who’s Counting? , it takes time to implement lean accounting and see the anticipated outcome from it. And a most critical problem is that lean accounting requires graceful environment, i. e. , a lean manufacturing en vironment, to work out. However, everything takes time and has its disadvantages. maybe some changes will be added to it and make it materialize without these problems. In a word, the best future for lean accounting will be figured out through more and more companies joining the implementation of lean accounting and those companies wanting the change.\r\nV. Lean Principles mend the Career The five lean principles, to be simplified, are 1) Customer value; 2) Define the value stream; 3) Create flow; 4) Create pull; 5) continual improvement. From my understanding, I think these principles can be cogitate by a concept in lean thinking, i. e. , PDCA (Plan-Do-Check-Act). First of all, there should be a short-term or long-term plan for my career. And the core objective is to create value for the work and the company.\r\nSecond, implement those plans sooner of just thinking; find the root cause to solve problems instead of running away from them; be proactive in work, that is to say, don’t await others to push me move forward. Third, constantly check whether I am on my way towards the ultimate goal in my career and make changes accordingly. Fourth, be exact with myself. The organization should continuously strive itself to become better and better. So do I. I have to make progress every day in order to adapt to the changing environment. Seeking perfection can be the ultimate goal both in career and in life. 6.\r\nSMA _Lean Enterprise, Conclusion, P28. Bibliography [1] Tyler Lacoma, Demand Media, Accounting Differences with Lean vs. Traditional Manufacturing [2] Dan Antony, Demand Media, Benefits of Lean Accounting in a Lean Manufacturing Company [3] Dan Woods, Lean Accounting’s Fat Problem, 07/28/2009 [4] John Cleveland, Benefits of lean in the accounting department, Feb, 2005 [5] Brain Maskell; Bruce Baggaley, Practical Lean Accounting [6] SMA _Lean Enterprise; SMA _Lean Accounting [7] Karen M. Kroll, The Lowdown on Lean Accountingâ€A new way of facial expression at the numbers, Journal of Accountancy, July 2004\r\n'