Lean Accounting
Q1: Do the traditional accounting practices that the Topeka plant adopted in 1979 to support its mass production process have value in a lean environment? Explain the specific reasons that support your answer.
In general, we do not think that traditional accounting practices that Topeka plant adopted in 1979 to support its mass production would fit into the lean accounting environment. The differences between the two accounting methods make the traditional accounting hard to work for the lean environment. We would analyze from the following perspectives:
Goal
The goal of traditional accounting practices is to achieve the lowest possible cost per unit by maximizing employee and equipment productivity. However, the goal of the plant’s lean accounting approach is to deliver customer-driven value.
Production process
Under traditional accounting approach, the plant’s heat, treating, assembly and pack, cutting and splicing, injection molding, and extrusion molding resources were maintained in physically separated and autonomously managed. Units of production were scheduled based on a forecast of expected customer demand and then processed in large expected customer demand and then processed in large batches to minimize changeover costs. On the other hand, under lean accounting practices, resources are organized in a manner that mirrors the linked set of activities that deliver products to customers. Units of production are pulled through manufacturing cells in a one-piece flow in response to actual customer orders.
Inventory
As for traditional accounting approach, the entire work-in-process inventory was stored as needed in between workstations. However, under lean accounting approach, since it improves and reduces the inventory level, cycle counts are becoming more accurate, and there is much less time needed to perform these counts.
Financials
The traditional accounting practice was inaccurately characterizing the financial impact of operational
In general, we do not think that traditional accounting practices that Topeka plant adopted in 1979 to support its mass production would fit into the lean accounting environment. The differences between the two accounting methods make the traditional accounting hard to work for the lean environment. We would analyze from the following perspectives:
Goal
The goal of traditional accounting practices is to achieve the lowest possible cost per unit by maximizing employee and equipment productivity. However, the goal of the plant’s lean accounting approach is to deliver customer-driven value.
Production process
Under traditional accounting approach, the plant’s heat, treating, assembly and pack, cutting and splicing, injection molding, and extrusion molding resources were maintained in physically separated and autonomously managed. Units of production were scheduled based on a forecast of expected customer demand and then processed in large expected customer demand and then processed in large batches to minimize changeover costs. On the other hand, under lean accounting practices, resources are organized in a manner that mirrors the linked set of activities that deliver products to customers. Units of production are pulled through manufacturing cells in a one-piece flow in response to actual customer orders.
Inventory
As for traditional accounting approach, the entire work-in-process inventory was stored as needed in between workstations. However, under lean accounting approach, since it improves and reduces the inventory level, cycle counts are becoming more accurate, and there is much less time needed to perform these counts.
Financials
The traditional accounting practice was inaccurately characterizing the financial impact of operational