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Lean and the Accountant – how the finance professional can add value

by Chris Cooley

Lean, whether it is in the guise of TPS, TOC, Six Sigma or any other philosophy is generally seen as the remit of the operational leadership of the business.Lean six sigma What does this mean for the finance professional who wants to be a true lean accountant.

As a qualified management accountant (ACMA) who made the jump into General Management within a large manufacturing company, I am disappointed that the most difficult aspect of all of the lean initiatives I have been involved in or lead, has been how to fully engage the Finance Department in the project. Maybe, this has been one-off, and in other companies finance play a leading role, although I tend to think this is not the case.

Finance professionals are missing out on a great opportunity. The accountant has a big advantage, and their position and skills could be more fully utilised to spread the continuous improvement cycle to the whole company. Apart from the General Manager, the accountant has this unique whole business view which should enable him to ensure that the lean project is not just confined to manufacturing processes. The lean accountant can ensure it is properly and sustainably implemented in manufacturing and then the lessons learned are spread to all other areas.

Practically, to actively participate, the lean accountant cannot do this from their desk – they must practice “genchi genbutsu”, in other words “go and see” – spend time on the shopfloor, join the project meetings, view how the admin functions operate and see how the departments link up into the business processes.

Lean cycle

Lean continuous improvement cycle

Stabilise
The lean accountant can:
– Communicate the elements of cost and losses as a result of
unstable processes
– Own and review the stability measures required before attempting to create flow
– Control strategic stock where it is used to create artificial stability whilst longer term problems are being fixed

Creating Flow
The lean accountant can:
– Ensure that when workflow is balanced, the spare capacity released is fully utilised elsewhere rather than allowed to become a different kind of waste
– Provide measures for the constraint on a cost/unit basis to track and take corrective actions to ensure that the constraint is the focus

Standardise
The lean accountant can:
– Understand the standard and support to ensure that the standard is consistently followed
– Audit the standard – through 5S audit, KPI review and visual control checking
– Champion practical problem solving to ensure a practical and structured approach to root cause identification and counter-measure implementation

Level Incrementally
The lean accountant can:
– Create real-time costings to check the product cost based on variable customer demand
– Measure and track the real cost of changeovers
– Link the whole lean implementation KPI’s to the company financial statements

The wider organisation

Creating a lean organisation is critical to being a successful organisation.

A business should consist of a number of processes, rather than just departments.

By taking a fully active part in the manufacturing lean implementation, the lean accountant, should have or should develop the skills to translate the learning from a successful manufacturing lean implementation to the rest of the organisation. By using their core skills and wider business sense, they can lead the implementation of lean throughout the business and measure the financial results.

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