(Ebook) Practical lean accounting a proven system for measuring and managing the lean enterprise 2nd Edition by Brian H Maskell, Bruce Baggaley, Larry Grasso ISBN 9781439817179 1439817170

1 Why Is Lean Accounting Important?

How Standard Costing Can Drive Wrong Behavior

We Need to Show the Financial Impact of Lean Improvements

We Need a Better Way to Understand Product Costs

We Need New Kinds of Lean Performance Measurements

We Need to Eliminate Waste from Accounting Processes and Systems.

We Need Better Ways of Making Decisions

We Need to Focus Our Business around Customer Value

Summary

2 Maturity Path to Lean Accounting

The Maturity Path

Maturity Path—Stage 1

Maturity Path—Stage 2

Is Lean Accounting a Series of Methods and Tools?

Maturity Path—Stage 3

Getting Started with Lean Accounting

Summary

3 Cell Performance Measurements

What’s Wrong with Traditional Measurements?

What’s Right with Lean Cell Measurements?

BMA Inc. Performance Measurement Starter Set

Day-by-the-Hour Report

The Primary Reason the Cell Team Neglects the Day-by-the-Hour Report

Why by the Hour?

Our Cells Only Make a Few Products Each Hour and the Cycle Times Vary Considerably

Alternative Measurements

First-Time-Through Report

How Do I Measure First Time Through?

How Is the Data Collected?

How Do I Report FTT?

What Is the Number One Reason for the FTT to Fail?

Alternative Measurements to FTT

WIP-to-SWIP Report

How Is the Report Calculated?

How Is the Data Gathered?

How Do I Report WIP-to-SWIP?

Alternative Measurements to WIP-to-SWIP

Operational Equipment Effectiveness

How Do I Measure OEE?

How Do We Gather the Data?

How Do We Report OEE?

Is OEE Used for Other Things?

Alternative Measurements to OEE

Other Support Measurements in the Cell

Cross-Training Chart

Five S

Safety

Absenteeism

Setup Times

Presenting the Information

Making the Cell Performance Measurements Work

Non-production Cells and Departments

How Does This Relate to Accounting and Control?

Summary

4 Financial Benefits of Lean Manufacturing

The Problem

Creating the Box Score

Operational

Financial Information in the Box Score

Using the Box Score in Planning

The ECI Current State

ECI Future State

Managing Capacity

What We Mean by Resource Capacity

Analyzing the Capacity Freed Up

Making Money from Lean Manufacturing

Alternative 1: Eliminate the Resources

Alternative 2: Grow the Business

Summary

5 Eliminating Wasteful Transactions

What Must Be in Place?

Cell Transactions

Labor Tracking

Material Costs

Inventory Tracking

Summary

6 Lean Financial Accounting

A New Perspective on Internal Accounting Control

Eliminating Waste from the Financial Accounting Processes

Accounts Payable Process

Accounts Receivable Process

The General Ledger and Month-End Closing Process

Using Lean Tools to Create Change

Value Stream Maps and Process Maps

Step One: Assign an Improvement Team

Step Two: Start with the Customer

Step Three: Identify the Tasks within the Process

Step Four: Gather the Data

Step Five: Analyze the Data

Kaizen—Lean Continuous Improvement

Step One: Establish the Team

Step Two: Develop Performance Measurements

Step Three: Develop Future State Process Maps

Step Four: Implement the Future State

Step Five: Repeat the Process

Summary

7 Managing by Value Stream

What Is a Value Stream?

Different Kinds of Value Streams

Why Do We Focus on Value Streams?

Why Should We Manage the Business through the Value Streams?

Focus

Accountability

Simplicity

Continuous Improvement

The Maturity Path to Lean Value Stream Organization

Problems and Issues

People in More than One Value Stream

Monuments

Small Value Streams

Competition between Value Streams

What about the People Who Are Not in the Value Stream Teams?

How Do We Identify the Value Streams?

Staple Yourself to an Order

Production Flow Matrix

Size of the Value Stream

Draw the Current State Value Stream Maps

Machines and Monuments

Identify the People in the Value Stream

Do We Need to Change Our Organization Chart?

Develop a Plan

Summary

8 Value Stream Performance Measurements

What Is the Purpose of Value Stream Performance Measurements?

Value Stream Continuous Improvement Teams

Value Stream Measurements and Process Control

How Do Value Stream Measurements Differ from Traditional Metrics?

The Starter Set

Box Scores

Sales per Person

How Do I Measure Sales per Person?

What Should Be the Target?

Alternative Measurements

On-Time Shipment

How Do I Measure On-Time Shipment?

Alternative Measurements

Dock-to-Dock Time

How Do I Measure Dock-to-Dock Time?

How Do I Gather the Data?

How Is Dock-to-Dock Reported?

Alternative Measurements

First Time Through

How Do I Measure First Time Through?

A Word of Warning

Alternative Measurement

Average Cost per Unit

How Do I Measure the Average Cost per Unit?

How Valid Is the Average Cost?

How Is the Average Cost Used?

Alternative Measurements

Accounts Receivable Days Outstanding

How Do I Measure AR Days Outstanding?

Supporting Measurements

Safety Cross

Cross-Training

Improvement Project Participation

Presenting the Information

Making the Value Stream Performance Measurements Work

Summary

9 Value Stream Costing

What Is Wrong with Traditional Standard Costing?

How Does Value Stream Costing Work?

For What Is Value Stream Costing Used?

Why Is Value Stream Costing Simple?

How Can We Implement Value Stream Costing?

How Do We Handle Costs outside the Value Stream?

How Do We Know the Cost of a Product?

Value Stream and Plant Profit and Loss Statements

Calculating the Cost of Inventory

Special Problems Involving Inventory

Getting Started with Simpler Methods

Summary

10 Using the Box Score.:

Reporting Value Stream Performance

Showing the Effects of Lean Improvements

Showing the Effects of Strategies and Plans

Summary

11 Calculating Product Costs—Features and Characteristics.i

What Drives Cost in a Lean Value Stream?

How to Use Features and Characteristics

Step 1: Calculate the Average Product Family Cost for the Value Stream

How Average Cost Drives a Lean Approach to Inventory

Step 2: Analyze Available Capacity

Step 3: Identify the Primary Bottleneck and Pacemaker within the Value Stream

Step 4: Identify How Product Features and Characteristics Affect Use of the Bottleneck

Step 5: Calculate Conversion Costs Using Product Features and Characteristics’ Effects

Step 6: Calculate the Material Costs

Step 7: Identify Other Significant Product Features Affecting

Use of the Bottleneck Resource

Uses of Features and Characteristics Costing

Summary

12 Eliminating More Wasteful Transactions.:

Labor Tracking

Material Costs

Inventory Tracking

The Internal Control System

Summary

13 Sales, Operational, and Financial Planning (SOFP)

Purpose of Lean Sales, Operations, and Financial Planning

Lean Financial Planning

Lean Sales, Operations, and Financial Planning

SOFP Team

Value Stream Demand Planning

Planning Horizon

Who Is Responsible for Calculating the Forecast?

What If Sales Is Not a Part of the Value Stream?

What Happens If Marketing Product Groups Are Different

from Value Stream Product Families?

Forecasting Methods

Is the Forecast Accurate?

Value Stream Operations Planning

Short-Term and Long-Term Actions

Takt Time, Cycle Time, and Level Scheduling

Identifying Bottlenecks and Value Stream Cost Analysis

Manning Levels

New Product Introductions

Capacity Assumptions and Continuous Improvement

Sales Plans

Capital Acquisitions

Raw Material and Component Planning

Troublesome Components

Finished Goods Inventory and Backlog

SOFP Financial Reports and Budgets

Source of the Financial Information

SOFP Planning Meeting

Optimizing the Sales Plan

Financial Plans and Budgets

Executive SOFP Meeting

Who Should Attend the Executive SOFP Meeting?

Outcome of the Executive SOFP Meeting

Variations on a Theme

Making It Happen

Summary

14 Lean Financial Accounting II

Further Advances in Lean Accounting

Financial Accounting Processes

Accounts Payable

Accounts Receivable

General Ledger and Month-End Closing

Move toward a Cash Basis of Accounting for Expenses

How Often Do We Close?

Internal Control

The Role of the Accountant

Summary

15 The Lean Enterprise

What Is a Lean Enterprise?

Lean Methods

Lean Culture

Lean Partnerships

What Lean Methods Support the Wider Lean Enterprise?

Transaction Elimination

The Wider Value Streams

Target Costing

Why Are Lean Enterprises So Hard on Themselves?

Summary

16 Target Costing

How Does Target Costing Work?

Where Is Target Costing Used?

Introducing New Value Streams

Introducing New Products

Current Products in Current Value Streams

What Are the Steps We Take?

Step 1: Who Is the Customer?

Step 2: Match Customer Needs to Product Features

Step 3: Evaluate Customer Satisfaction

After Step 3

Target Costing at ECI, Inc.: Steps 1 through 3

Step 1: Who Is the Customer?

Step 2: Match Customer Needs to Product and Process Features

Step 3: Evaluate Customer Satisfaction

Understanding Customer Value

Step 4: Specifying Customers’ Needs

Step 5: Determining Customer Value

Step 6: Evaluating Cost and Value

Example of Target Costing at ECI: Steps 4 through 6

Step 4: Specifying Customer Needs

Step 5: Determining Customer Value

Step 6: Evaluating Cost and Value

Calculating the Target Costs

Step 7: Calculate Overall Target Cost

Step 8: Analyze Existing Cost by Process

Step 9: Calculate Target Costs for Major Components

Example of Target Costing at ECI: Steps 7 through 9

Step 7: Calculate Overall Target Cost

Step 8: Analyze Existing Cost by Process

Step 9: Target Costs for Major Components

Driving to Customer Value

Step 10: Develop Value versus Cost Strategy

Step 11: Identify Product Improvement Targets

Step 12: Identify Process Improvement Targets

Example of Target Costing at ECI: Steps 10 through 12

Step 10: Develop Value versus Cost Strategy

Step 11: Identify Product Improvement Targets

Step 12: Identify Process Improvement Targets

Summary

17 Expanding Value Streams outside Our Four Walls

The Lean Value Stream Revisited

Value

Value Stream

Flow and Pull

Perfection

Empowerment

A Vision of the Expanded Value Stream

Examining Value and Cost within Our Own Company

Example of Effective Value Stream Expansion

Summary

18 The Lean Accounting Diagnostic

The Maturity Path Revisited

Overview of the Diagnostic Tool

Working with the Diagnostic Tool

Summary

19 Performance Measurement Linkage Chart

The Performance Measurement Framework

Key Questions about Measurement and Control

What to Measure?

How Often to Measure?

How to Control?

The Shift in Focus

The Linkage Analysis Framework

Creating the Performance Measurement Starter Set

Lean Principles

The Linkage Chart Developed

The Resulting Measurement Set

Steps for Developing Performance Measures in Your Company

Articulating Strategy

Linking to Value Stream

Production Cell or Process Measures

Implementation Considerations

Summary

20 Transaction Elimination Maturity Path Table

How to Use the Maturity Path Table

Step 1: Describing the Lean Manufacturing Maturity Path

Step 2: Assessing Lean Manufacturing Progress

Step 3: What Transactions and Systems Can Be Eliminated?

Step 4: Develop an Action Plan

Transaction Elimination Process Maps

Summary

21 Value Stream Cost Analysis

What Is Value Stream Cost Analysis?

Performing the VSCA Calculations

Step 1: Define the Value Stream

Collect Basic Value Stream Data

Do They Have Data Boxes?

Are the Data Boxes Complete?

Create an Analytical Framework for Your Calculations

Step 2: Analyze Capacity

Current State

Gathering the Data

Posting the Data to Our Analytical Framework

Uses of Employee Capacity

Uses of Machine Capacity

Future State

Step 3: Simulate Uses of Capacity

Summary

22 Value Stream Mapping

Value Stream Maps and Lean Accounting

More Value Stream Steps on the Value Stream Map

Data Box Information

Summary

Endnotes

Index