What is Lean accounting?
Lean accounting supports manufacturing, production, logistics, and every area of a manufacturing organization. It creates customer value, aligns forecasts and operations by value stream, and better decision-making.
Manufacturers experience a variety of benefits with Lean accounting:
Lean accounting methods such as Target Costing provide short-term improvements.
Target Costing involves proactive cost planning, cost management, and cost reduction practices, because costs are planned out of a product or service early in the development cycle.
Lean accounting methods such as Sales, Operations, & Financial Planning (SOFP) provide long-term improvements.
SOFP is not done by a financial planning department. It is done by the people working in the value stream, because it leads to better decisions, and communication, guides a more effective process, and empowers the value stream employees.
Lean accounting identifies waste elimination’s impact on available capacity.
Consequently, the financial impact of Lean implementations is dependent on what your company wants to do with available capacity. For example, your manufacturing company may install sales and growth initiatives or develop employee skills.
Lean accounting motivates long-term Lean improvement.
It focuses on information and measurements. For instance, financial performance measurement drives continuous improvement.
Install ERP Software Systems to Encourage Lean Accounting
It is not practical to run a manufacturing company without a dedicated enterprise resource planning (ERP) software system, and manufacturers adopting Lean principles can effectively leverage ERP software to improve Lean advancements.
ERP is an integrated business management software that helps manufacturers overcome business challenges. Likewise, ERP software plays a vital role in analyzing current business processes, restructuring them, and operating in a lean environment. ERP organizes the information manufacturers need about products, production, resources, facilities, materials, and demand — all the information needed to implement a Lean workplace.
Key benefits Lean manufacturers gain when using ERP solutions include:
• Achieving demand-driven production
• Increasing inventory replenishment efficiency
• Freeing employees for higher-value activities
• Gaining a deeper understanding of value streams by identifying improvement opportunities
Manufacturers can build on and extend Lean initiatives with ERP software solution Microsoft Dynamics AX.Microsoft Dynamics AX has built-in Lean manufacturing capabilities and provides the solutions required to streamline Lean operations for an entire organization. Below are examples of how Microsoft Dynamics AX helps manufacturers excel when meeting their Lean goals:
Next step: Sikich helps today’s manufacturers overcome business challenges with Microsoft Dynamics AX. Visit ourMicrosoft Dynamics AX ERP page to find out more.