Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise

This is the best management book I have read. It includes topics as how to measure performance and how the indicators are linked to specific lean objectives, how to organize your business, how to determine costs using target costing, how to allocate (or not allocate) indirect costs, how to boost improvements, how to elliminate waste, how to measure value and how to focus on cash. Additionally, it has useful tips to "bridge" lean accounting to traditional accounting in easy and innovative ways...Each page contains something to get you thinking...I have never seen such a practical approach, the book contains tables, charts, box scores, etc. as well as a suggested way and timing to calculate each indicator. You will find some alternatives for different types of organizations, but it also explains you the underlying principles, so that you can best adapt the ideas to your specific circumstances. Additionally, it contains also a "maturity path" for lean accounting, mentioning what should be in place in the shopfloor in order to elliminate a specific accounting transaction or control and how lean accounting data can help the lean production floor during each of its own maturity stages.This book will change the way you think about costs (specially standard costs), management, opportunity, relevance, and much more. Another reviewer mentions that the book does not explain lean concepts; I think it was not intended as an introduction to lean manufacturing, but really as a guide for managers and cost accountants. Don't underestimate this book's value because of the lacking concepts; if you would like to understand lean manufacturing concepts you might want to read an introductory book first. You could start with  The Gold Mine: A Novel of Lean Turnaround  and  Lean Thinking : Banish Waste and Create Wealth in Your Corporation, Revised and Updated . The approach of the first one was a bit more appealing to me. Once you decide to give lean accounting a try, take this book and let it guide you.

I've seen it (and lived it) multiple times. An Exec kicks off a Lean Initiative and the company creates a Lean Enterprise. At first, its all about training, Kaizen Blitz, 5S, prototype cells and Kanbans. The focus is about 95% shop floor processes. But after a while, the program starts to stall. Folks start seeing two sets of rules (traditional MRP and Lean), but none of the traditional goes away. So Lean start sounding and feeling like just a bunch of extra paperwork and steps without any obvious benefit to those who "live it" every day. In the end, the program fails or the Lean Enterprise is reorganized to try again, usually with similar results. This book clearly explains what is happening. It also provides a different perspective to the initial Lean implementation strategies that will help pull the organization through that first big stalling out and propel the initiative into true effectiveness. A "must read" book for anyone that is or is going to be dealing with a fledgling Lean initiative.

the book is very poor. I expected a lot more. I'm sure there is a lot more to say about lean accounting.

nice book

"Practical Lean Accounting" is the best management accounting book I've read in 20 years - maybe more. Well written and illustrated with plenty of examples and diagrams, it adds new tools to management accounting and restores the relevance of some older ones. As such I recommend it to all management accountants and students - whether or not you are involved in lean accounting itself.The aim of the book is to "produce a roadmap for finance managers in companies seeking to transition their organisations into lean enterprises". Lean accounting is a new approach to managing a business and, as management accountants, we have a duty to be there. As the authors say "it's never too early to start dismantling the company's transaction driven control systems. They represent huge amounts of waste and cost to the organisation !".Specifically, lean management seeks to radically restructure the organisation into Value Streams (rather than functional departments), and this requires new management accounting tools including Value Stream performance measures, Box Scores, new methods of planning and budgeting, target costing and a whole host of other tools. The book explores all these tools in detail. The introduction of "lean" tools also allows significant reduction in transactions in the company's accounting processes, including the elimination of full-absorption costing.Lean accounting is, therefore, designed to replace "traditional" accounting techniques which encourage inefficient practices such as building inventory, and often lead to poor management decisions (using Standard costs). Traditional measures are also too complicated for operational employees to understand easily and are often too late to be useful in shopfloor decision making. Lean accounting, by contrast, is very much focused on simple visual shopfloor measures for instant decision making, coupled with management accounting tools for longer term planning."Practical Lean Accounting" provides a good overview of the lean management process, and excellent linkage to management accounting activities. Highly recommended.

I can't share the other reviewers' enthusiasm for this book. Then again, unlike at least one of them I don't work for the same lean accounting consultancy firm as the authors.The book's main weakness for me is that it sets out to show the benefits of their approach by demonstrating the weaknesses of what they refer to as 'traditional standard costing'. But the straw model that they create in order to knock down isn't so much 'traditional' as 'ridiculously simplistic'.For example they claim that under traditional standard costing a product cost is not lowered by reducing set up times. A quick inspection of their workings shows that this is because the are including set up costs in overhead rather than in the standard cost and recovering the former pro rata to direct labour costs in the latter. Well in a long and varied career I must have worked with at least a dozen standard costing systems and not one of them did it like that. I am not as familiar as perhaps I ought to be with the institute's current exam syllabus, but I rather doubt that one would achieve the highest marks by proposing that as a methodology.The authors are also very keen on backflushing as it saves the cost of collecting information. They are not so bothered that it also eliminates the possibility of learning anything from the collected information. They do say that backflushing requires accurate standards, but are not very helpful in proposing how one establishes these, or continues to validate them, without measuring anything.I think that the reality is that any standard costing system in use in the real world - certainly one being managed by someone with a reasonable level of theoretical and practical knowledge - will have been set up to reflect the particular circumstances and will not suffer the assumed shortcomings ascribed to it by the authors in order to peddle their consultancy services.Speaking of which, the ackowledgements pay tribute to one of their consultancy colleagues 'polymorphic capabilities'. Now that is something that I would be willing to pay to see.

I bought this book hoping to learn about Lean Accounting.What I got was a consultant's How To methodology. Follow this and you will get lean accounting. Oh yes?No doubt the authors have implemented systems as described but I get the feeling that it is overcomplicated and badly based.I would have liked some more reasoning behind the suggested actions. Why are building maintenance costs allocated on a square footage basis? Why some and not all? Why not allocate other costs if you arbitrarily allocate these? Why not use the opportunity cost for space costs rather than an allocation? It is clear the writers are no economists. I doubt that they are accountants either. The idea that reducing the general ledger categories somehow improves efficiency is frankly laughable; managers want to be able to drill down to the detail to explain cost movements and the better and more detailed the classification the easier this becomes. As for the Accounts Receivable recommendations the concept of counterparty risk is unknown to them.As a former CFO in the automotive engineering industry I am deeply unimpressed.Someone please tell us all what Toyota do.

"Practical Lean Accounting" is the best management accounting book I've read in 20 years - maybe more. Well written and illustrated with plenty of examples and diagrams, it adds new tools to management accounting and restores the relevance of some older ones. As such I recommend it to all management accountants and students - whether or not you are involved in lean accounting itself.The aim of the book is to "produce a roadmap for finance managers in companies seeking to transition their organisations into lean enterprises". Lean accounting is a new approach to managing a business and, as management accountants, we have a duty to be there. As the authors say "it's never too early to start dismantling the company's transaction driven control systems. They represent huge amounts of waste and cost to the organisation !".Specifically, lean management seeks to radically restructure the organisation into Value Streams (rather than functional departments), and this requires new management accounting tools including Value Stream performance measures, Box Scores, new methods of planning and budgeting, target costing and a whole host of other tools. The book explores all these tools in detail. The introduction of "lean" tools also allows significant reduction in transactions in the company's accounting processes, including the elimination of full-absorption costing.Lean accounting is, therefore, designed to replace "traditional" accounting techniques which encourage inefficient practices such as building inventory, and often lead to poor management decisions (using Standard costs). Traditional measures are also too complicated for operational employees to understand easily and are often too late to be useful in shopfloor decision making. Lean accounting, by contrast, is very much focused on simple visual shopfloor measures for instant decision making, coupled with management accounting tools for longer term planning."Practical Lean Accounting" provides a good overview of the lean management process, and excellent linkage to management accounting activities. Highly recommended.

Wow. What a book. After spending 20 years in manufacturing (some of it in cost accounting), this book really opened my eyes. If you're a fan of Lean or the Theory of Contraints, this book is for you. Take what you know about traditional accounting or operations measurement in manufacturing and chuck it out the window. These ideas require an open mind. Most of what we track and measure is not only a waste, but an impediment to success. It's not about measuring cost, it's all about measuring flow. Is it any wonder that Toyota is the number one auto manufacturer in the world? Read this book!