Lean But Not Mean

Sponsored Content provided by Robert Burrus - Dean , Cameron School of Business - UNC-Wilmington

In recent years, businesses have come under intense competitive pressure for several reasons. These reasons include globalization, recent credit crises and other economic upheavals, and the continued forward march of technology. Our research has shown that about four of every 10 businesses have turned to Lean and Lean Six Sigma (LSS) as they deal with today’s competitive landscape. Why? Lean and LSS provide the means to deliver more value to the customer through reduced lead times, increased quality, and greater responsiveness to customers. According to our research, about 75 percent of surveyed organizations say that LSS impacted both financial measures and product/service quality measures. One of our surveys of top finance executives found that LSS implementations saved the organizations more than $500,000 per full-time equivalent employee dedicated to LSS.

In today’s commentary, we will focus on Lean. Lean is very much about a complete and total paradigm shift. It is a philosophy or an overarching system that one can use to make business decisions. Those who view it as a program are, unfortunately, doomed not to gain the full advantage of Lean. Lean has these major objectives:

Delivering value to the customer,
Improving flow of products/services
Eliminating waste.

These objectives are accomplished while maintaining respect for people, including both customers and employees. Lean is NOT mean! Lean is more about value and flow than eliminating waste (which is why it is listed last). Improving process flow, flows of products, services, documents and the like often leads to cost and waste reductions, but also provides enormous value to external and internal customers.

Lean organizations use a variety of tools and methodologies to increase flow and add value. Lean businesses also tend to abandon the departmental hierarchy and organize around value streams. Equipment and personnel, wherever possible, are dedicated to the value stream. Lean organizations are more flexible because many decisions are made by value-stream teams instead of at the upper levels of management.

The management accountant, through Lean Accounting – a radically new management accounting discipline – can become an important internal business adviser as he or she provides useful information to value-stream teams. Value Stream Costing (VSC) is one of the main components of Lean Accounting. On the face of it, VSC appears to abandon traditional, accrual basis accounting and generally accepted accounting principles (GAAP). However, this is only a perception. For publicly traded companies and many others that need audited financial statements, abandoning GAAP cannot be considered. VSC does recognize that the traditional accounting reports that have been around for decades do not support the new Lean philosophy. VSC responds by giving Lean leaders what they need to manage their businesses within this new paradigm, while providing a path to reconcile back to the traditional accounting numbers.

Lean and Lean Accounting are topics covered in the UNCW graduate accounting course, Management Decisions and Control (MSA 530). Unfortunately, this venue does not provide enough space for a detailed discussion of the topic and research findings. However, I hope this article has piqued your interest and I encourage you to seek out more information on Lean and Lean Accounting.

For 2014-2015, Dr. Robert T. Burrus, Jr. will serve as interim Dean of the Cameron School of Business at the University of North Carolina Wilmington. Before taking on the role of interim Dean, Burrus was the department chair for economics and finance and a professor of economics. He has been on Cameron’s faculty since 1998. The Cameron School of Business has 90 full-time faculty members and 29 administrative and staff members. The school hosts approximately 2,000 undergraduate students and 170 graduate students. International students come to study at Cameron from all over the world. The Cameron School of Business is AACSB accredited; offers capstone experiences; houses a Financial Trading Markets Room; provides for overseas learning opportunities; and is a founding member of the Trans-Atlantic Business School Alliance. To learn more about the Cameron School of Business, please visit http://csb.uncw.edu/. Questions and comments can be sent to [email protected].

	The Endowment’s Rainbow of Possibilities Daniel B Winslow - New Hanover Community Endowment

	Seven New Year’s Resolutions for Board Members: Setting Your Community Up for Success Dave Orr - Community Association Management Services

	Duke Energy Will Pay You Up to $9,000 to Go Solar with a Battery Robert Parker - Cape Fear Solar Systems

Tech Wilmington: Upcoming Events Calendar Staff Reports - Jan 15, 2025
	Epsilon Secures $115M In Tax Credits To Support Brunswick Plant Emma Dill - Jan 15, 2025
	JetBlue Coming To ILM With Boston Flight Staff Reports - Jan 15, 2025
	To Increase Local Lending, Live Oak Bank Adds New Team Jenny Callison - Jan 16, 2025
As Developers Plan Thousands Of Homes In Brunswick, Workforce Housing Trickles In Cece Nunn - Jan 16, 2025

Lean But Not Mean

Other Posts from Robert Burrus