Customer Reviews

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

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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.

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!

"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!

"Practical Lean Accounting" is the best management accounting book I've read in 20 years - maybe more. Well written and illustrated with plenty of examples and diagrams, it adds new tools to management accounting and restores the relevance of some older ones. As such I recommend it to all management accountants and students - whether or not you are involved in lean accounting itself.

The aim of the book is to "produce a roadmap for finance managers in companies seeking to transition their organisations into lean enterprises". Lean accounting is a new approach to managing a business and, as management accountants, we have a duty to be there. As the authors say "it's never too early to start dismantling the company's transaction driven control systems. They represent huge amounts of waste and cost to the organisation !".

Specifically, lean management seeks to radically restructure the organisation into Value Streams (rather than functional departments), and this requires new management accounting tools including Value Stream performance measures, Box Scores, new methods of planning and budgeting, target costing and a whole host of other tools. The book explores all these tools in detail. The introduction of "lean" tools also allows significant reduction in transactions in the company's accounting processes, including the elimination of full-absorption costing.

Lean accounting is, therefore, designed to replace "traditional" accounting techniques which encourage inefficient practices such as building inventory, and often lead to poor management decisions (using Standard costs). Traditional measures are also too complicated for operational employees to understand easily and are often too late to be useful in shopfloor decision making. Lean accounting, by contrast, is very much focused on simple visual shopfloor measures for instant decision making, coupled with management accounting tools for longer term planning.

"Practical Lean Accounting" provides a good overview of the lean management process, and excellent linkage to management accounting activities. Highly recommended.

This book outlines the process for moderninzing manufacturing companies' accounting and control systems. U.S. manufacturing is facing stiff competition from low cost overseas companies, and Practical Lean Accounting explains how U.S. manufacturers must tranform their business to remain competitive. The book is written in easy to understand language that any manufacturing person will find easy to follow. If you work for a Lean Manufacturer, this is required reading!

This book provides a roadmap for and firms transitioning themselves into lean or as it was known in the 1990's, "just-in-time", organizations. As they make the journey, they often find their accounting and measurements systems are an obstacle to success.

It is a practitioners' book. It focuses on creating customer value, which is the key principle of lean thinking. The book can be read in the traditional fashion - front to back. The authors tell us, however, that is not how it was written. Their starting point is their "Lean Accounting Diagnostic," found in the appendix. It assesses your company's progress with Lean Accounting and helps develop a plan to implement change.

A case study runs throughout the book. It illustrates the conversion of the financial functions required at each step to support the endeavor.

The book is well-written and comprehensive. For those looking to support lean processes, it is a must read.

Based on the tenets of lean thinking, Mr. Maskell & Mr Baggaley present a powerful & practical implementation methodology that is applicable to lean accounting and all lean business practices. By integrating lean accounting with the transition to lean systems thinking, organizations now have the measurement and analysis tools to make robust business decisions at any level.

I have to think that the other reviews of this book must have been written by friends of the author because this book really is pretty poor. Lack of organization is a particular problem.

To begin the book, the authors fail to give any meaningful discussion of lean to frame the discussion for the rest of the book. Then they jump right in discussing lean MANUFACTURING, rather than lean ACCOUNTING. While "accounting for lean" receives significant discussion in the book, "lean accounting" receives only a single chapter.

Particularly troubling is how the authors constantly use terms without defining what they mean. For example, by page 41, they have used the terms "takt," "cell," "heijunka," and "5S" without telling us what they mean. None of these words are part of the vocabulary of accountants, the presumed target audience of the book.

Troubling as well is the lack of discussion of lean accounting outside of a manufacturing environment.

While the authors of this book may have considerable experience in lean, they lack the skills to effectively teach the rest of us much that is meaningful.

I've seen it (and lived it) multiple times. An Exec kicks off a Lean Initiative and the company creates a Lean Enterprise. At first, its all about training, Kaizen Blitz, 5S, prototype cells and Kanbans. The focus is about 95% shop floor processes. But after a while, the program starts to stall. Folks start seeing two sets of rules (traditional MRP and Lean), but none of the traditional goes away. So Lean start sounding and feeling like just a bunch of extra paperwork and steps without any obvious benefit to those who "live it" every day. In the end, the program fails or the Lean Enterprise is reorganized to try again, usually with similar results. This book clearly explains what is happening. It also provides a different perspective to the initial Lean implementation strategies that will help pull the organization through that first big stalling out and propel the initiative into true effectiveness. A "must read" book for anyone that is or is going to be dealing with a fledgling Lean initiative.

Best book on how to get your accoutning function to look at, use and make use of lean costing which really makes your lean projects work.