PRACTICAL LEAN ACCOUNTING

The methods and concepts presented in the bestselling first edition revolutionized the approach to the management and control of Lean companies. Enhanced with extensive end-of-chapter exercises and a CD-ROM with Lean accounting tools, the second edition of this preeminent practitioner’s guide is now suitable for classroom use. Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise, Second Edition explains exactly what it takes to transform a traditional accounting system to one that supports and enhances a company’s Lean efforts. Defining the fundamental principles of Lean accounting, it demonstrates how to use them to identify and eliminate wasteful transactions. The book includes coverage of cell performance measurement, use of the box score, operational and financial planning, cost targeting, Lean accounting diagnostics, and value stream mapping. Retaining the easy-to-use format thatmade the first edition a bestseller, this updated edition includes: A new section on the use of value stream performance measurements in continuous improvement A re-written Target Costing chapter that emphasizes a value-based approach to the management of the Lean value system A Lean Accounting Diagnostic tool to help you assess progress and develop a plan for implementing changes Cutting-edge examples that illustrate implementation in accounting departments A CD with data from the ECI Value Stream Cost Analysis case study included in the text, Excel templates, and end-of-chapter questions with solutions The book contains a wealth of tools that makes it ideal for company training sessions and advanced undergraduate and graduate-level courses. For each major example provided, two similar problems are included—one for instructors to guide students through and a second for students to work through on their own. An additional set of problems and questions for testing purposes are also available to instructors on the authors’ website.

Why Is Lean Accounting Important?How Standard Costing Can Drive Wrong BehaviorWe Need to Show the Financial Impact of Lean ImprovementsWe Need a Better Way to Understand Product CostsWe Need New Kinds of Lean Performance MeasurementsWe Need to Eliminate Waste from Accounting Processes and SystemsWe Need Better Ways of Making DecisionsWe Need to Focus Our Business around Customer ValueSummaryExercises and Discussion Questions Maturity Path to Lean AccountingThe Maturity PathGetting Started with Lean AccountingSummaryExercises and Discussion Questions Cell Performance MeasurementsWhat’s Wrong with Traditional Measurements?What’s Right with Lean Cell Measurements?BMA, Inc. Performance Measurement Starter SetDay-by-the-Hour ReportFirst-Time-Through ReportWIP-to-SWIP ReportOperational Equipment EffectivenessOther Support Measurements in the CellPresenting the InformationMaking the Cell Performance Measurements WorkNonproduction Cells and DepartmentsSummaryExercises and Discussion Questions Financial Benefits of Lean ManufacturingThe ProblemCreating the Box ScoreManaging CapacityMaking Money from Lean ManufacturingEliminating Wasteful TransactionsWhat Must Be in Place?Cell TransactionsLabor TrackingMaterial CostsInventory Tracking Summary Lean Financial AccountingA New Perspective on Internal Accounting ControlEliminating Waste from the Financial Accounting ProcessesUsing Lean Tools to Create Change Managing by Value StreamWhat Is a Value Stream?Different Kinds of Value StreamsWhy Do We Focus on Value Streams?Why Should We Manage the Business through the Value Streams?Continuous ImprovementThe Maturity Path to Lean Value Stream OrganizationProblems and IssuesHow Do We Identify the Value Streams?Do We Need to Change Our Organization Chart?Develop a PlanSummary Value Stream Performance MeasurementsWhat Is the Purpose of Value Stream Performance Measurements?Value Stream Continuous Improvement TeamsValue Stream Measurements and Process ControlHow Do Value Stream Measurements Differ from Traditional Metrics?Box ScoresSales per PersonAlternative MeasurementsOn-Time ShipmentDock-to-Dock TimeFirst Time ThroughAverage Cost per UnitAccounts Receivable Days OutstandingSupporting MeasurementsPresenting the InformationMaking the Value Stream Performance Measurements WorkSummary Value Stream CostingWhat Is Wrong with Traditional Standard Costing? How Does Value Stream Costing Work?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 StatementsCalculating the Cost of InventorySpecial Problems Involving InventoryGetting Started with Simpler MethodsSummary Using the Box ScoreReporting Value Stream PerformanceShowing the Effects of Lean ImprovementsShowing the Effects of Strategies and PlansSummary Calculating Product Costs—Features and CharacteristicsWhat Drives Cost in a Lean Value Stream?How to Use Features and CharacteristicsUses of Features and Characteristics CostingSummary Eliminating More Wasteful TransactionsLabor TrackingMaterial CostsInventory TrackingThe Internal Control SystemSales, Operational, and Financial Planning (SOFP)Purpose of Lean Sales, Operations, and Financial PlanningLean Financial PlanningLean Sales, Operations, and Financial PlanningValue Stream Demand PlanningValue Stream Operations PlanningSOFP Planning MeetingExecutive SOFP MeetingVariations on a ThemeMaking It HappenSummary Lean Financial Accounting IIFurther Advances in Lean AccountingSummary The Lean EnterpriseWhat Is a Lean Enterprise?What Lean Methods Support the Wider Lean Enterprise?Why Are Lean Enterprises So Hard on Themselves?Summary Target CostingHow Does Target Costing Work?Where Is Target Costing Used?What Are the Steps We Take?After Step 3Target Costing at ECI, Inc.: Steps 1 through 3Understanding Customer ValueExample of Target Costing at ECI: Steps 4 through 6Calculating the Target CostsExample of Target Costing at ECI: Steps 7 through 9Driving to Customer ValueExample of Target Costing at ECI: Steps 10 through 12Summary Expanding Value Streams Outside Our Four WallsThe Lean Value Stream RevisitedA Vision of the Expanded Value StreamExamining Value and Cost within Our Own CompanyExample of Effective Value Stream ExpansionSummary The Lean Accounting DiagnosticThe Maturity Path RevisitedOverview of the Diagnostic ToolWorking with the Diagnostic ToolSummary Performance Measurement Linkage ChartThe Performance Measurement FrameworkCreating the Performance Measurement Starter SetSteps for Developing Performance Measures in Your CompanySummary Transaction Elimination Maturity Path TableHow to Use the Maturity Path TableTransaction Elimination Process MapsSummary Value Stream Cost AnalysisWhat Is Value Stream Cost AnalysisPerforming the VSCA CalculationsStep 1: Define the Value StreamStep 2: Analyze CapacityFuture StateStep 3: Simulate Uses of CapacitySummary Value Stream MappingValue Stream Maps and Lean AccountingMore Value Stream Steps on the Value Stream MapData Box InformationSummary