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Five Proven Steps to Successful Lean Accounting Implementation
Lean ERP – The Essential Lean Accounting Tool
L-ERP is a strategic methodology to streamline and automate business processes in order to improve efficiencies through waste elimination.
True lean companies strive to eliminate (not minimize) all waste in the process. This rule applies when implementing lean accounting as well. Ideally, the best lean companies record only two transactions: the receipt of the customer order and the shipment of the product. All other transactions within the enterprise are considered wasteful and are candidates for elimination.
The Five Step Process to Lean Accounting:
Just how do we handle the critical elements of A/P, A/R accounting processes including sales orders, work orders, kanbans, purchase orders, shipping/receiving, value stream costing and invoicing in a waste free lean flow?
Step One: Analyze/value stream map each process then start asking the following questions until you have eliminated all waste from the process:
- Why are we doing this process?
- What value/purpose does it serve the customer?
- How can we eliminate all waste from this process?
- Map new simplified process
Step Two: Implement and Test new process (PDCA)
Step Three: Simplify the Company Chart of Accounts
- Eliminate all variance accounts
- Convert to Daily Input/Output accounting
Step Four: Implement Value Stream Costing and Resource Factoring
Step Five: Feedback – develop visual metrics to display Daily, Weekly, Monthly and Yearly progress of the company’s lean continuous improvement program.
When significant progress has been made testing and implementing in most areas we can now start looking for L-ERP systems software capable of utilizing our methodology of processing in a lean manor. Look for a system that will supply value stream costing data and compatible with your lean processes. LeanWerks and LeanTrack from ShopWerks Software are very good examples of L-ERP.
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