Going lean: Hard work, high reward
There's a lot of buzz about lean operations these days. Once you learn more about lean, it's easy to see why.
A recent seminar offered by St. Louis-based CPA firm RubinBrown offered a fantastic overview of lean operations and what they can do, starting with one important point: Lean isn't just for manufacturing. In its simplest terms, said RubinBrown partner Mike Lewis, lean seeks to eliminate waste, strengthen a company's focus on customers and involve all employees in the process of improving operations. Asked Lewis: "Shouldn't we be doing these things in all areas of our businesses?"
You'd better believe it, says Jerry Solomon. A lean expert whose books have won some of the lean community's top awards, Solomon followed Lewis at the podium with an extensive look at how lean impacts a business from top to bottom. Solomon defines lean as a way of maximizing customer value "through the identification and elimination of waste throughout the entire business by way of process flow and on-demand response to the customer."
"Elimination of waste?" Hmmm ... sounds like cost reduction, right? Wrong, says Solomon. Eliminating waste doesn't mean eliminating jobs; it means reorganizing your business so wasteful processes and procedures are replaced by streamlined, efficient and -- perhaps most important -- strategic ones. "The benefits of lean are based on how these improvements are utilized," said Solomon. At its best, he said, lean is a cash-flow generator, customer service program, capacity generator and "people system."
So where does accounting come in? That's a good question because, as Solomon claimed, the benefits of lean are often invisible to traditional methods of accounting. Indeed, traditional accounting metrics often result in decidedly non-lean outcomes, he said.
According to Solomon, lean accounting should:
- "provide accurate, timely and understandable information to motivate lean transformation throughout the organization";
- "minimize the consumption of resources that add no value to a product or service in the eyes of the customer";
- "focus on eliminating transactions and reports and instead provide actionable information rather than historical data";
- "be a department of financial advisors ... who are involved in the day-to-day activities of all areas of the company"; and
- "achieve all of the above while fully complying with GAAP, external reporting regulations and internal reporting requirements."
"It's a complete paradigm shift for accounting," said Solomon, but those who get it right will help their businesses improve their cash flow, productivity, quality and customer service while producing an engaged and flexible workforce.
I wish I had more space here to devote to Solomon's eye-opening talk. I'll be interviewing Solomon soon for a podcast about lean operations; keep an eye on our CPA Spotlight podcast archive for that.
In the meantime, here are a few other lean-related resources that might prove helpful:
- View the slides from Solomon's presentation on RubinBrown's Web site.
- Who's Counting? and Accounting for World-Class Operations, Solomon's Shingo Award-winning books
- The 'skinny' on lean: What every CPA needs to know
- Top 5 reasons you need lean accounting
- Lean Accounting News
Learn more at the Expo
Solomon will discuss lean accounting and its benefits during a session at the first-ever Maryland Business and Accounting Expo, slated for June 17-18 at the Baltimore Convention Center. Get details about the Expo here, then pre-register here.