Question

What is lean accounting? How does it differ from traditional accounting?

Answer 1

Lean accounting is the collection of principles and processes that provide numerical feedback for manufacturers implementing lean manufacturing and lean inventory practices. When you make changes to operations, such as organizing processes in different ways or shifting the ways you use your workers' time, it may be difficult to tell from simply observing workflow how much of a difference these adjustments have made. Production may seem smoother and easier and customers may seem more satisfied, but quantifying these results provides relevant, high-quality information, allowing managers to actually see the consequences of different approaches to workflow and to compare results. The information you receive from lean accounting can provide the basis for making further changes and adjustments, which your lean accounting system can also measure and evaluate.

Traditional Accounting:
• Productive capacity as idle production lines.
• Existence of inventory as an asset.
• Extract reports and information with large time intervals (monthly, weekly)
• It focuses on the cost of goods sold (Cogs).This includes, for example, the cost of kick off meetings, catering services, annual Convention.

-Lean Accounting:
• Once structured and defined, Lean Accounting provides cost analysisin real time…
• Lean accounting reviews the costs and benefits of the value chain, providing an accurate picture of the cost and benefit of each step in the provision of value to the client.• Productive capacity is considered to be an asset, not as a liability.
• Existence of inventory as an obligation or waste, if excessive, that has to be stored, maintained, and monitored.

Applying Lean Accounting means saving time. Accountants serve as quality controllers, and provide useful reports, such as increased costs that are part of the specific steps of the value chain. They find opportunities for cost reduction in transportation, which is one of the seven major wastes…

The main benefit of Lean Accounting is that it is less complex and less expensive than the traditional accounting statements. Iteliminates unnecessary reports and reflects what is actually happening in the shop floor…