Most manufacturing companies use the old style Standard Cost accounting. Lean organizations use Lean Accounting. Why do lean companies use Lean Accounting?

1. Why is Lean Accounting
Important to Lean Organizations?
Why do companies like
Toyota and many others
use Lean Accounting?

2. Why is Lean Accounting
Important to Lean Organizations?
The bottom line answer is the Bottom Line.
Lean Accounting increases sales, reduces
costs, grows the business, and greatly
improves the Company’s Bottom Line,
but I want to go into a little more detail.

3. What Does Lean Accounting Do for Us?
Timely Information
Everybody Can
Understand and Use
Increases Sales &
Reduces Costs thru
Better Decisions
Correctly Shows the
Financial Impact on
Lean Improvement
Motivates Everybody
Towards Long-Term
Lean Improvement
Simple and
Much Less Work
There are 5 issues we
need to look at.
Let’s look at them
one at a time.

4. What Does Lean Accounting Do for Us?
Timely Information
Everybody Can
Understand and Use
Information everybody
understands lead to
better results.
Almost nobody understands standard
costing. It uses complicated
accounting methods like allocations
& overhead absorption

5. What Does Lean Accounting Do for Us?
Increases Sales & Reduces
Costs thru Better Decisions
Good, timely information leads to
people making better decisions.
This brings higher sales, better
customer service, & reduced costs.
When you make decisions using a
standard cost the information is
always misleading owing to
allocations & bad assumptions.

6. What Does Lean Accounting Do for Us?
Correctly Shows the
Financial Impact of
Lean Improvement
Lean Accounting shows the true, bottom
line benefit of lean improvement.
You can plan this in advance, and check
the actual results after the changes.
There is no valid way of calculating the
financial impact of lean improvement
using standard cost accounting reports
and methods.

7. What Does Lean Accounting Do for Us?
Motivates Everybody
Towards Long-Term Lean
Improvement
Lean Accounting financial and
operational measurements motivate
lean thinking and action for everybody
in the value stream.
Traditional accounting, control, and
measurements methods actively push
back against lean improvement.

8. What Does Lean Accounting Do for Us?
Simple and Much Less Work
Much less work for the accountants, but
also for operations people, engineers,
managers, supervisors, and people
supporting the customers.
Traditional cost accounting has millions of
wasteful transactions to provide reports.
Reports lead to wasteful meetings,
reconciliations, and useless questions.

9. Please Don’t Think I Am Slamming
Standard Cost Accounting. I Am Not.
Standard costing was developed in the
1920’s when mass production was the
big idea.
Lean thinking and methods are the
opposite of mass production.
Standard Costing may be a fine system –
but it is the ENEMY OF LEAN

10. So Let’s Put All This Together
Timely Information
Everybody Can
Understand and Use
Increases Sales &
Reduces Costs thru
Better Decisions
Correctly Shows the
Financial Impact on
Lean Improvement
Motivates Everybody
Towards Long-Term
Lean Improvement
Simple and
Much Less Work
If you have these 5 attributes
of Lean Accounting
working in your company.
Then you have a recipe for
growth, bottom-line profits
and cash flow.

11. So Let’s Put All This Together
Timely Information
Everybody Can
Understand and Use
Financial & Operational
Measures Everybody
Understands Leads to Better
Processes and Lower Costs

12. So Let’s Put All This Together
Increases Sales &
Reduces Costs thru
Better Decisions
Better decisions lead to better
pricing, production, design,
low inventories, short
lead-times, better customer
service, and high productivity.

13. So Let’s Put All This Together
Correctly Shows the
Financial Impact on
Lean Improvement
If you can recognize the true financial
impact of lean improvement, then you can
pick the improvements that give you the
best results.
As you eliminate waste in your processes
you will free up a lot of capacity. You can
then use that capacity to design, make,
& sell more products at
NO ADDITIONAL COST.

14. So Let’s Put All This Together
Correctly Shows the
Financial Impact on
Lean Improvement
This leads to the
unprecedented growth,
profits, and cash flow that is
the touchstone of lean
organizations.

15. So Let’s Put All This Together
Motivates Everybody
Towards Long-Term
Lean Improvement
If you have measurements and
financials that motivate people
to on-going waste elimination,
then growth and profitability
is almost limitless.

16. So Let’s Put All This Together
Simple and
Much Less Work
Lean Accounting is Lean Itself.
When you eliminate 50% or more
waste from the accounting, control
& measurements processes;
Everyone can add more value for
long-term business success.

17. So Let’s Put All This Together
And
Lean Accounting is fully
compliant with GAAP and
all the external reporting
requirements in the US
and other countries..

18. This Is Why Lean Accounting is
Used by the Best and Most
Profitable Lean Enterprises
information@maskell.com +1 609 239 1080