Lean Accounting Lean IT Lean Accounting 8/29/2017 What to Measure? Lean Initiative or Outcome of Lean Strategy with Jean Cunningham Building LEAN Beyond Manufacturing Managing Times Press, 2003 Shingo Prize, 2004 Productivity Press, 2007 Shingo Prize, 2008 Wiley Publishing, 2008 2 1
Why Adopt Lean thinking? H Need to justify Lean L Understands Lean as a way to achieve results H 3 Lean Transformation Core Actions Active Daily Improvement (reduce waste) Lean Transformation Executive Responsibility, True North Huddles Andon Boards Continuous Improvement Problem Solving Manage for Daily Improvement (MDI) Strategic Deployment Hoshin Kanri Value Stream Management Kaizen Events Flow: Cross-silo customer value Fixed Resources 4 2
Five Sources of Lean Financial Value What are they? How are they different? 5 Model Fixed Resources Invested Capital Fixed Assets Inventory Receivables 6 3
Model Accelerated Invested Capital Fixed Assets Inventory Receivables 7 1. Reduce Costs Model Accelerated 8 4
2. Create Capacity Model Potential 9 3. Increase Demand Model Accelerated 10 5
4. Improve Contribution to Margin Model Accelerated 11 Contribution Margin Revenue 10,000 Variable Costs 3,000 Contribution Margin 7,000 Margin % 70% Contributors to Margin: - Pricing - Quantity of Materials - Price of Materials 12 6
Model 5. Improve capital structure for all the accountants out there! Fixed Resources Invested Capital Fixed Assets Inventory Receivables 13 Model: with Traditional Outcome Linkage Sales Operating Margin % Working Capital Return on Invested Capital Fixed Resources Invested Capital Fixed Assets Inventory Receivables 14 7
Check Out the Spreadsheet! Give me your card if you would like it 15 Financial Impact Depends Depth of the initiative(s) Breadth Speed of change Size of organization Financial situation Strategic focus Commitment Investment Drive Senior leadership Current culture And so many more 16 8
Experimenting, Actions and Learning Process Performance Safety: Customers, Employees, Visitors Quality: Performs, Right the First Time, Delivery: Reduce lead time for everything! Outcomes Employee stability Vendor performance Customer delight Better than last year Financial security Cost: Spending on value creation 17 It is not about what to do. It is about the environment you create for progress. 18 9
19 What does this mean for your organization? 20 10
Creating A Lean Culture Support Change Optimize Information Eliminate Waste START TODAY! 21 Building LEAN Beyond Manufacturing JCC founder and president Lean Accounting, Lean Business Management, Lean Office pioneer Original Thought Leader for Lean Accounting, Lean IT, Lean HR Summits Lean accounting lecturer for The Ohio State University, Masters of Business Operations Excellence program Board member: Lean Enterprise Institute Lean Education Advancement Foundation Former CFO: Lantech, Inc. Marshfield Door Systems Association of Manufacturing Excellence Stiles Associates 22 11
Contact Jean Cunningham Email: jean.cunningham@leanjcc.com Phone: 224.688.3504 23 What to Measure? Lean Initiative or Outcome of Lean Strategy Material is Copyrighted 12