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Book part
Publication date: 28 October 2021

Lawrence P. Grasso and Thomas Tyson

This study investigates the relationship between lean manufacturing practices, management accounting and performance measurement (MAC & PM) practices, organizational strategy…

Abstract

This study investigates the relationship between lean manufacturing practices, management accounting and performance measurement (MAC & PM) practices, organizational strategy, structure, and culture, and facility performance. We extended past research by examining the relationships between lean manufacturing, MAC & PM practices and performance in a broader organizational context. Our study was performed using survey data provided by managers and executives at 368 facilities that had contacted the Shingo Institute for information or that had entered a Shingo Prize competition. Consistent with past research we found a significant positive association between lean manufacturing practices and lean MAC & PM practices. We found that greater employee empowerment, use of process performance measures, and use of lean accounting practices were driven primarily by lean strategy and secondarily by the extent of lean manufacturing practices. We also found that changes in organization structure to support lean are driven primarily by lean strategy and secondarily by lean manufacturing practices. Change toward lean culture, on the other hand, is driven by the extent of lean manufacturing practices. Further, we found that emphasizing process performance measures does not reduce emphasis on results performance measures and emphasizing results performance measures leads to improved financial performance. Process and results measures are being used in tandem and value stream costing has not replaced traditional accounting. The results of our study provide important insights for managers of companies engaged in lean transformation and for academics who teach or research lean accounting.

Article
Publication date: 17 May 2013

Patxi Ruiz‐de‐Arbulo‐Lopez, Jordi Fortuny‐Santos and Lluís Cuatrecasas‐Arbós

The purpose of this paper is to identify the shortcomings of traditional cost accounting techniques in lean companies and then it seeks to analyse the validity and convenience of…

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Abstract

Purpose

The purpose of this paper is to identify the shortcomings of traditional cost accounting techniques in lean companies and then it seeks to analyse the validity and convenience of value stream costing (VSC) as a tool in a company that has adopted some concepts of lean manufacturing.

Design/methodology/approach

The paper reviews the relevant literature in order to discuss the deficiencies of costing methods in lean manufacturing. It evaluates the requirements of VSC and provides a concrete illustration of VSC in the continuous improvement process of a point of sales terminal assembly line.

Findings

The paper evidences the possible mistakes of cost accounting. The necessity and validity of VSC in lean manufacturing are presented, followed by a case example. In order to make continuous improvement decisions, VSM, VSC and box score offer complete information on the performance of the value stream.

Research limitations/implications

Although accompanied by an application on a real case study, this is not an empirical investigation on the adoption of VSC.

Practical implications

VSC requirements agree with the fundamentals of lean management. Therefore, VSC is a valid tool for lean companies, although the applicability depends on the maturity of the lean implementation.

Originality/value

This paper contributes to the lean accounting literature because the management accounting literature still lags behind the lean transformation. This is one of the first papers on VSC in relevant journals and the first one to combine VSC and box scores with value stream mapping. The paper will be useful to academics involved in new accounting systems but also to practitioners who are implementing lean manufacturing.

Details

Industrial Management & Data Systems, vol. 113 no. 5
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 14 December 2021

Rafael Figueira Alves, Julio Vieira Neto, Daniel Luiz de Mattos Nascimento, Flavio Ezequiel de Andrade, Guilherme Luz Tortorella and Jose Arturo Garza-Reyes

The purpose of the paper is to perform a review and analyze the literature on lean accounting (LA) to develop insights into how LA research is developing, offering a critique of…

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Abstract

Purpose

The purpose of the paper is to perform a review and analyze the literature on lean accounting (LA) to develop insights into how LA research is developing, offering a critique of the research to date and underlining future research opportunities.

Design/methodology/approach

The research uses a structured literature review (SLR) to categorize and analyze 39 research articles from relevant journals with a publication date from 1996 to 2020 (September) and to answer three research questions.

Findings

Findings demonstrated that although LA seems to be the most suitable method for lean companies, it still lacks research in terms of the role of accountants in lean organizations as well as how its concepts are integrated with the generally accepted accounting principles (GAAP).

Practical implications

The paper provides both academics and practitioners with valuable insights regarding the role of management accounting and accountants in the pursuit of lean transformation, presenting meaningful themes and a complete analysis of the literature along with research gaps for future research.

Originality/value

The paper contributes to lean manufacturing literature by providing a comprehensive SLR of articles regarding LA. Also, the paper serves as a basis for developing future research agendas in management accounting practices for lean organizations.

Details

The TQM Journal, vol. 34 no. 6
Type: Research Article
ISSN: 1754-2731

Keywords

Article
Publication date: 13 April 2015

Andreas Myrelid and Jan Olhager

The purpose of this paper is to analyze the applicability of lean accounting and throughput accounting in a company with considerable investments in advanced manufacturing…

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Abstract

Purpose

The purpose of this paper is to analyze the applicability of lean accounting and throughput accounting in a company with considerable investments in advanced manufacturing technology (AMT).

Design/methodology/approach

The paper compares lean accounting and throughput accounting with the traditional accounting system the company is using today. The authors investigate the differences between the three alternative approaches and use a case study approach to illustrate the effects of applying different modern accounting approaches in a complex manufacturing setting.

Findings

Pair-wise comparisons of the three approaches provide some interesting cost information as to the role of bottlenecks and value streams.

Research limitations/implications

The specific results of this study are limited to the case company, but can hopefully contribute to further research on how to combine lean and throughput accounting for mixed manufacturing environments, involving both value streams and bottlenecks.

Practical implications

Lean and throughput accounting provide other perspectives on cost information to traditional accounting, and can therefore be used in combination. The authors identify some issues and challenges involved in using lean accounting and throughput accounting in an AMT company.

Originality/value

This paper contributes with a comparison of traditional, lean, and throughput accounting in a specific industrial setting characterized by AMT and complex manufacturing.

Details

Industrial Management & Data Systems, vol. 115 no. 3
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 7 January 2021

Amanda Oliveira Fontenelle and Juliana Keiko Sagawa

Lean manufacturing (LM) has advocated gains by reducing waste and intensifying continuous improvement. As a holistic organizational policy, it must overpass the limits of the…

Abstract

Purpose

Lean manufacturing (LM) has advocated gains by reducing waste and intensifying continuous improvement. As a holistic organizational policy, it must overpass the limits of the manufacturing function. Management accounting should be aligned to lean thinking, aiming to meet the demands and goals of a lean organization. This paper aims to investigate the degree of alignment between management accounting systems and LM practices.

Design/methodology/approach

Two representative case studies were carried out in industry leaders in the implementation of LM, in Brazil. The key research constructs and were identified by means of a systematic literature review. The rhetoric and practice concerning the alignment between management accounting and LM are discussed based on the existing theory and the conducted case studies.

Findings

The analysis showed that many of the principles that form the rhetoric of lean accounting are far from the accounting practices observed in the companies. Using the theory-building function of case studies, 10 propositions to be tested in future research are proposed. The main propositions are also summarized in a framework based on analogies with optical lenses.

Originality/value

To the best of the knowledge, there are no previous in-depth studies focusing on characterizing this alignment between management accounting and LM practices. The analysis yields prescriptive directions for managers that seek to improve this alignment in their business. This study also proposes a five-stage maturity model, which can be used by the managers to assess this alignment and to set goals for reaching more advanced levels of maturity.

Details

Journal of Business & Industrial Marketing, vol. 36 no. 8
Type: Research Article
ISSN: 0885-8624

Keywords

Article
Publication date: 1 June 2012

Andrea Chiarini

Implementation of lean production introduces the problem of what kind of management accounting to use. The purpose of this paper is to analyse aberrations that are typically…

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Abstract

Purpose

Implementation of lean production introduces the problem of what kind of management accounting to use. The purpose of this paper is to analyse aberrations that are typically created when traditional accounting is used in a lean organisation. Furthermore, the purpose is to discuss whether activity‐based costing (ABC) and value stream accounting are suitable for lean production. These three accounting systems are compared under the particular conditions of a small‐to medium‐sized enterprise (SME) that is in an early stage of lean implementation.

Design/methodology/approach

The paper is based on a case study carried out within a SME illustrated by three examples. In the first and second examples the SME analyses how the introduction of improvements, by the means of lean production, can lead to cost product mistakes when traditional accounting calculations are used. The second example deals with a comparison benchmark between traditional accounting and ABC. The third example analyses value stream accounting as an alternative to ABC and discusses the implications and limits for the SME.

Findings

The results of the examples show first, the possible mistakes introduced by traditional accounting, and second, how the costing of a manufacturing lot varies when using traditional accounting and ABC. In addition, the results illustrate the interrelationships between lean production, ABC and value stream accounting. In particular, ABC seems to introduce some difficulties in terms of IT automation, and there are difficulties with value stream accounting because it requires a particular value stream‐based organisation not particularly suitable for this SME.

Research limitations/implications

The generalisability of the research findings is limited because of the use of a case study within a SME in which lean production is in an early stage of application and has a particular flexible organisation. This implies a need for further studies on other SMEs in different organisational situations.

Practical implications

The implications are useful for SMEs that are implementing lean production and are thinking of a changeover from traditional accounting. The results can guide SMEs in the selection of the most effective accounting system considering particular factors such as the state of lean implementation, whether the organisation is value stream oriented or type of products manufactured.

Originality/value

The paper discusses for the first time the implications of ABC and in particular of Value Stream Accounting inside a SME that is implementing Lean Production.

Details

Journal of Manufacturing Technology Management, vol. 23 no. 5
Type: Research Article
ISSN: 1741-038X

Keywords

Book part
Publication date: 23 August 2014

Dan Harris and Judith Cassidy

Companies that adopt lean operations and lean accounting ultimately should achieve better profitability and cash flows than similarly situated companies that do not adopt lean

Abstract

Purpose

Companies that adopt lean operations and lean accounting ultimately should achieve better profitability and cash flows than similarly situated companies that do not adopt lean operations and lean accounting.

Methodology

Archival data is analyzed through Wilcoxon signed-ranks, matched-pairs tests.

Findings

Lean companies had greater returns on net operating assets (RNOA), returns on total assets (ROA), operating cash flows, and cash-adequacy ratios than Non-Lean companies. These results were driven by the larger Lean companies. The profit margins and financing-assets ratios also were marginally better for the Lean companies than the Non-Lean companies.

Implications

Lean companies have achieved benefits proposed by the proponents of lean operations. The present study provides a starting point for further research on the financial performance of Lean companies using archival data.

Originality/value

There is limited research on the financial performance of Lean companies that is based on archival data. The present study fills a void in the academic literature. This study measures RNOA, which does not confound operating and financing activities. Additionally, this study utilized a methodology that provides reasonable assurance of the identification of both Lean companies and Non-Lean companies from publicly available data.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78190-842-6

Keywords

Article
Publication date: 21 February 2018

Martijn Pieter van der Steen and Sandra Tillema

The purpose of this paper is to address the impact of a multidivisional structure on the implementation of lean manufacturing. It investigates how the controls employed by the…

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Abstract

Purpose

The purpose of this paper is to address the impact of a multidivisional structure on the implementation of lean manufacturing. It investigates how the controls employed by the corporate level impact the local implementation of lean manufacturing.

Design/methodology/approach

The paper reports on case studies in three subsidiaries in different multidivisional organisations.

Findings

The paper finds that lean manufacturing can be severely constrained by the accounting-based controls which are commonly in place in a multidivisional structure. Depending on the degree of centralisation, subsidiaries may be restricted to implementing lean tools in a fragmented way, rather than acting according to a coherent set of principles.

Practical implications

Companies may have to accept that being part of a multidivisional organisation can imply that their lean implementation is more gradual and piecemeal than they prefer. The paper proposes several ways to mitigate the constraints that may arise from incompatibilities between accounting-based controls and lean controls.

Originality/value

This study contributes to the literature about external constraints on production innovations, such as lean manufacturing. It highlights how the organisational context creates local conditions that may be detrimental to the implementation of lean manufacturing.

Details

International Journal of Operations & Production Management, vol. 38 no. 11
Type: Research Article
ISSN: 0144-3577

Keywords

Book part
Publication date: 28 October 2021

Matt Kaufman, Ella Mae Matsumura and Urban Wemmerlöv

This study examines challenges to the retrospective financial evaluation of continuous improvement (CI) activities. Through a review of the literature and active engagement with…

Abstract

This study examines challenges to the retrospective financial evaluation of continuous improvement (CI) activities. Through a review of the literature and active engagement with CI implementations, we identify several issues that may lead to divergence between operational and financial assessments. Out of this conflict emerges a set of concepts that we find important − the delineation of soft versus hard capacity benefits, the distinction between capacity used and capacity paid for, and the data gaps that relate to these benefits – and recognize operational improvement and financial improvement as distinct, yet interrelated, theoretical constructs. This study helps explain a series of persistent gaps in the management accounting literature: Conflict between operations and accounting managers, the divergent perspectives of Johnson and Kaplan after their publication of Relevance Lost (Johnson & Kaplan, 1987), and the need for both operational control (including detailed capacity control) and accounting control in CI firms. Instead of one control system being at odds with the other, or co-existing despite each other, each of these systems support a different component of the financial improvement process. Operational control systems in CI firms emphasize non-financial information and social and behavioral controls that empower decision-making by employees, while accounting control systems seek to motivate and translate operational gains into financial gains. Soft and hard benefits linked to capacity play an integral role in understanding the difference in focus of each control system, while data limitations help to explain why these systems remain loosely coupled in practice (or absent, as seems to be the case with detailed Capacity Management Systems).

Article
Publication date: 1 November 1996

Pär Åhlström and Christer Karlsson

Explores the role of the management accounting system in the process of adopting a complex manufacturing strategy, lean production. Finds, in a longitudinal field study, using the…

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Abstract

Explores the role of the management accounting system in the process of adopting a complex manufacturing strategy, lean production. Finds, in a longitudinal field study, using the clinical methodology, that in order to change the management accounting system to support the adoption of lean production, traditional performance measures have to reach a certain threshold. An important way to create impetus for this change is to raise the level of the unit of analysis in the management accounting system, both horizontally and vertically. Finally, the management accounting system affects the process in three concurrent ways: technically, through its design; formally, through its role in the organization; and cognitively, through the way in which actors think about and use the management accounting system. Proposes that in order for the system to be congruent with lean production principles, all three of these perspectives need to be changed.

Details

International Journal of Operations & Production Management, vol. 16 no. 11
Type: Research Article
ISSN: 0144-3577

Keywords

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