From the course: Applying Managerial Accounting
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Lean accounting
- I remember once trying to explain the concept of lean accounting to a good friend of mine. Being a relatively new managerial accounting technique, I thought that his eyes would glaze over, but without hesitation, he said to me, lean accounting, it kind of sounds like a steak with no fat. At first I chuckled, but then I paused and thought, well, hang on, that's pretty much right. The concept of lean was coined in the manufacturing sector back in the '80s, and the principles are largely based on something known as the Toyota Production System. The premise of Lean is to remove waste or fat in the production process by focusing on what adds value to the customer. A simple example of customer value here might be the time to order fulfillment. Okay, at this point, you're probably wondering, so if Lean is about what derives value to the customer, where on earth does accounting fit in? Great question. Well, firstly, one must…
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