Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise [Paperback]

Brian H. Maskell (Author), Bruce Baggaley (Author)

Book Description

Publication Date: December 19, 2003 | ISBN-10: 1563272431 | ISBN-13: 978-1563272431

Practical Lean Accounting demonstrates the adjustments that must be made to accounting systems in service of companies implementing lean operations. The author uses a single case study to illustrate the lean accounting actions that need to occur with each stage of an organization’s transformation. In addition to recording lean activities, the financial methods taught also serve as tools to help map out and facilitate the transformation to lean. A CD-ROM is included containing detailed forms, charts, and diagrams that can be put to actual use by CFOs, controllers, accounting staff, and general managers in companies making the move to lean.

Product Details

• Paperback: 384 pages
• Publisher: Productivity Press (December 19, 2003)
• Language: English
• ISBN-10: 1563272431
• ISBN-13: 978-1563272431
• Product Dimensions: 10.9 x 8.2 x 1 inches
• Shipping Weight: 1.8 pounds
• Average Customer Review: 4.8 out of 5 stars  See all reviews (12 customer reviews)
• Amazon Best Sellers Rank: #635,204 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

19 of 21 people found the following review helpful:

5.0 out of 5 stars A Guide to Lean Operations Worth Its Weight in Diamonds!, February 7, 2004

By 

Donald Mitchell "Jesus Loves You!" (Thanks for Providing My Reviews over 110,000 Helpful Votes Globally) - See all my reviews
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This review is from: Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise (Paperback)

I cannot recall ever seeing a guide to putting in a new control and measurement process of any kind that is as good as this one.

Although its title suggests that it is about accounting only, the authors deal almost as much with how to manage perceptions, progress and processes in establishing lean operations to create a lean enterprise. In addition, the book is designed to allow you to apply its wisdom regardless of where you are in putting in learn manufacturing or services. You simply turn to chapter 18 to run a diagnostic to determine what you should be working on first . . . and what follows.

The book is like a finished diamond . . . each chapter exposes the beauty of another facet of lean accounting. While this creates a little redundancy, its necessary if readers are to be able to use this book by beginning at whatever stage is appropriate for them.

The book is also enhanced by a CD with templates of the formats discussed in the book.

I was particularly impressed with the in-depth continuing example that covers all of the subjects in the book. It made the concepts much easier to understand.

The writing is clear, crisp, and practical.

I have seldom seen lean manufacturing proceed unless it had strong support and direction from the accounting and financial staffs. Yet most such staffs are not yet trained in how to play those roles. With this book, they can.

A key early problem is that traditional accounting will show a REDUCTION in profits when lean manufacturing is first begin. This is because inventories will be reduced, so burden on the reduced production will be higher. That's the opposite of the economic reality, where costs are actually being reduced while inventories become smaller. Many programs are killed at that point without understanding that the effects are temporary. With this guide, you can prepare the organization to anticipate and understand these effects.

The book goes on to give you a good way to decide when various accounting steps can either be dropped or simplified as lean manufacturing reaches the stage of being properly in control of your processes.

I particularly liked the way the book describes how the financial staff can shift its focus to identifying opportunities to enhance profits and cash flow further through lean manufacturing. There's also a good process for how all of the functions should work together to make more progress in this way.

The book is also illustrated with many photographs of actual measurements and controls in place for lean manufacturing. Although the reproduction of these images is often not very good, I think you will get the idea.

Bravo for Mr. Maskell and Mr. Baggaley! They've written a classic.

As I finished the book, I began to think about how many other processes in companies would benefit from this kind of careful measurement and redesign. New product development should be a prime example. Perhaps the authors will take on another such subject in a future book. I hope they will.

10 of 10 people found the following review helpful:

5.0 out of 5 stars Great Tool for the Lean Enterprise, April 17, 2004

By 

Jerry Solomon (Baltimore, Maryland) - See all my reviews

This review is from: Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise (Paperback)

This book is right on target for the emerging practice of Lean accounting. It gets into the brass tacks of what you really need to do to report results that really mean something to the folks that can take action to improve the business. The entire concept of Value Stream Costing makes so much sense it's a wonder we haven't been using it for decades.
We have asked manufacturing to change, change, change in order to improve results and compete in this global market yet we have ignored the need to provide the necessary support from the accounting area. This book shows, step by step, how accounting must partner with manufacturing as well as engineering to provide actionable information in a timely manner. The old conventions of standard costing and variance analysis lead to poor decisions and this book will explain why.
A must read if you are serious about Lean manufacturing!

8 of 8 people found the following review helpful:

5.0 out of 5 stars Who' Counting & Practical Lean Accounting: 1+1>2, July 15, 2007

By 

Josef Horber (Stuttgart, Germany) - See all my reviews
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This review is from: Practical Lean Accounting: A Proven System for Measuring and Managing the Lean Enterprise (Paperback)

"Who's Counting" and "Practical Lean Accounting" are two great books on lean accounting. I wondered some time ago, which one to read and I am glad that I could not decide, so I bought and read them both. They complement each other extremely well and each one conveys the lessons of lean accounting from a different angle.

"Practical Lean Accounting" is a well structured textbook, approaching lean accounting in a systemized way. Starting from straight-forward shop-floor measurements, like the day-by-the-hour report, it gradually immerses the reader into more demanding topics, like value stream costing or lean performance measurement, culminating in the thorough description of the Sales, Operations and Financial Planning (SOFP) process, which is the way, how an entire lean enterprise is planned, controlled and measured. Lean practitioners looking for specific answers to particular questions will find it easy to navigate through the book. People with the luxury of time for reading it cover to cover will also like it, due to the gradual increase in the complexity of the topics and the many references to other chapters.

"Who's Counting" focuses more on the human side of turning the vision of lean accounting into reality. The novel format is the best way to illustrate, how strong the resistance against change will be and from how many corners of the organization it will attack back. Knowing what to do and knowing why is not enough, the issue is not capturing people's brains. The real challenge is conquering their hearts, while tearing down decades worth of wrong beliefs, bad trade-offs and political game-playing. Mike, the hero of the book teaches us through his own mistakes, that patience, tactfulness and respect for people is more helpful, then acting like a bull in a china shop. The reward is the enthusiastic desire of fellows to go his way and take ownership of the new processes. He even manages to turn Fred, a CFO who has to recognize, that most of what he built during his career was wrong, to use the 3 years until his retirement for becoming the most enthusiastic advocate of change!

Both books provide the reader with insight and incite self-reflection about "the way, we do things". There is hardly any chapter without a sacred cow being slaughtered, however this will strike the reader as plain common sense, due to the thorough description of the reasons. Deeply engrained management practices, such as approval routings, full absorption overhead allocation, standard costing or departmental budgeting will seem ridiculous, once the reader starts to open the eyes to see their fundamentally wrong assumptions.

These books will make You hate many of Your current processes!