Lean Accounting

1502 words 7 pages
Essay Question 1

What are the main benefits and challenges of implementing a lean accounting system in a lean manufacturing environment? Do you anticipate interest in lean accounting will grow, the methods will change, or the concepts will fade out and be replaced with another ‘flavor of the month’? How do you perceive lean principles affecting your career? Justify your answers.

I. Lean Accounting

Lean accounting often refers to more simplified accounting practices that focuses on eliminating waste, reducing production lead time, and producing products on customer demand. But Lean accounting does not stand alone. It is enabled by lean thinking and lean production methods. And lean accounting not only needs lean
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3. Traditional Accounting System Stand in the Way For those companies who have already on the right track, it’s harmful for companies to still use the traditional accounting methods. There is a very common example of this problem. Using the traditional accounting methods do not show the financial benefit of lean manufacturing, especially when there is a sudden 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. But, 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 future for lean accounting is promising in that it saves time and energy, provides understandable information for all others besides the finance

5. Chapter 4, “Financial Benefits of Lean Manufacturing”, Practical Lean Accounting. people, and is value-added. Lean production is a model for the future—it may well become an essential element of a sustainable global strategy. As Henry Ford so aptly noted, “Customers cannot be expected to pay for waste, nor can a worker be paid very much for producing waste.”6 Lean is all about eliminating waste and creates value for both customers and the


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