Preview To Lean Accounting Seminar 2010
15
www.leanbeans.net Copyright 2010 Lean Bean s LLC 1 Preview to “ “ Growing Revenues and Growing Revenues and Profits Profits With Lean Beans” With Lean Beans” One-Day Seminars 2010 Two-Day Workshops March & April 2010
-
Upload
lean-beans-consulting-llc -
Category
Documents
-
view
1.155 -
download
1
description
Transcript of Preview To Lean Accounting Seminar 2010
www.leanbeans.net Copyright 2010 Lean Beans LLC
1
Preview to
““Growing Revenues and ProfitsGrowing Revenues and ProfitsWith Lean Beans”With Lean Beans”
One-Day Seminars 2010Two-Day Workshops March & April 2010
www.leanbeans.net Copyright 2010 Lean Beans LLC
2
Financial Executive Research Foundation
Lean Accounting Overview
Lean Recreates the Financial System
Conclusion
11
22
33
44 Traditional Standard Cost vs Lean Target Cost
Agenda
www.leanbeans.net Copyright 2010 Lean Beans LLC
3
Traditional Accountant• “Bean Counter”
• Messenger of “Doom & Gloom”
• Concerned only with Control
• Variance Analysis / Paralysis
FERF: Financial Executive FERF: Financial Executive Research FoundationResearch Foundation
www.leanbeans.net Copyright 2010 Lean Beans LLC
4
FERF “Initiative on Organization and
Strategy in Financial Management”
• Commitment to Cultural Change
• Finance plays a major role in this Organizational Change
www.leanbeans.net Copyright 2010 Lean Beans LLC
5
“Old” Paradigms vs “New”
• MBO• What gets done &
what gets measured counts
• Vertical organization• Control• Isolated “functions”
• MBV (VALUE)• “How” we achieve
success is what really counts
• Horizontal organization• Empowerment• Integrated Teams
www.leanbeans.net Copyright 2010 Lean Beans LLC
6
Cost Accounting vs Cost Management
Cost Accounting = Transactions
= “Bean counting”
= Standards
Cost Management= Target costing
= QFD
= Cost Planning
COSTS Should COSTS Should NotNot Just HAPPEN! Just HAPPEN!
“Old Paradigm”
“New Paradigm!”
www.leanbeans.net Copyright 2010 Lean Beans LLC
7
“Themes” Found to be Truein Lean Enterprises
• Accountants must transform themselves from “bean counters” to “business partners.”“business partners.”
• Financial Statements must be in a language
that operations people can understand! • Change focus from Cost Accounting to
Cost ManagementCost Management.• Mind what you measure!• “Make-the-Month” mentality is THE barrier.
www.leanbeans.net Copyright 2010 Lean Beans LLC
8
Traditional Standard Cost System Encourages the Wrong Behavior!
• Standard Cost tells us to keep all of our people & all of our machines busy 24/7 making product to absorb overhead.
• Does not provide daily information for Continuous Improvement.
• Takes more time and effort away from actual business of satisfying the Customer.
• Measures performance monthlymonthly against last year’s “most representative” actual cost.
• Lean tells us not to “make one” until the customer “takes one.”
• Lean provides daily and hourly information in Visuals.
• Lean gives the customer what he wants, when he wants it_ not building inventory.
• Measures actual cost performance this month against this month’s “target” and last month’s actual.
www.leanbeans.net Copyright 2010 Lean Beans LLC
9
Target CostThe New Lean Cost System
A Target Cost is the allowable amount of cost that can be incurred on a product
and still earn the required profit from that product.
Target Cost = Market Price – Target Profit
www.leanbeans.net Copyright 2010 Lean Beans LLC
10
Financial ReportingAnd GAAP
Standard CostStandard Costvs.vs.
Target CostTarget Cost
Standard CostStandard Costvs.vs.
Target CostTarget Cost
Internal Performing“Stretch” Goals
InternalMeasurement
Management Accounting and
Contribution Margin
External Measurement
Ties to the “Books”
Standard Cost vs. Target Cost
www.leanbeans.net Copyright 2010 Lean Beans LLC
11
• Price is Customer driven today• Target Cost is not cost plus!• Price determines Cost• Design is key• Uses cross-functional Teams
(Cost reduction is no longer just
an accountant’s job!)• Suppliers involved early• Customer-driven
Not an achievement of standards, but “How high can we go?”Not an achievement of standards, but “How high can we go?”
Target Costing
www.leanbeans.net Copyright 2010 Lean Beans LLC
12
Traditional Standard Costing vs Lean Cost Management
• Standard Cost• Absorption• Variance Analysis
/Paralysis• O/H allocation based
on DLH & MH• Cost System =
Standard & Absorption
• Target / Actual Cost• Low/No INV, & Var Cost• Variance of Actual to
Target/ Trend Analysis• O/H allocation based on
Cycle Time• Cost System = anything
that drives the right behavior
www.leanbeans.net Copyright 2010 Lean Beans LLC
13
Traditional Standard Costing vs Lean Cost Management
• Valuing Inventory• Controlling Transactions
• Financial Metrics and MBO
• S/T Goals (Operating Income)
• Make-the-Month• Cost Accounting
• Eliminating Inventory• Controlling Processes• Non-financial Metrics
and MBV• L/T Goals (Inv Turns,
Customer Satisfaction• Cycle time = Takt time• Cost Management
www.leanbeans.net Copyright 2010 Lean Beans LLC
14
Traditional Standard Costing vs Lean Cost Management
• Cut Costs• Save Cash• ABC Cost Allocation
• Traditional Standard Cost P&L
• Cut Wastes• Create Cash• No Cost Allocation (all
costs are direct costs)
• “Checkbook style” P&L
www.leanbeans.net Copyright 2010 Lean Beans LLC
15
Register Today!Register Today!
• Lean Financial Statements
• Lean Strategic Budgeting / Target Costing
• Lean Measurements / Metrics
• Lean HR, Lean SOX, Transactional Lean
• Lean Six Sigma
View our schedule at www.leanbeans.netSeminar contains more additional information on…
