Lean accounting is used for the changes that are required to accounting systems of a company, controlling tools, measurement tools and processes of management to work side by side with lean thinking and manufacturing. Lean accounting comes in addition to the lean management system. Lean management and accounting were introduced back in 1980’s in Ford but best practiced and followed by Toyota and gave the concept of just-in-time (JIT). Ford was given credit by Toyota for initiating lean management and accounting.
Standard was set by Toyota in the market for the new management system. The lean system is a complicated system to achieve because of its long-term benefits. It is complicated because the business has to be done and customer satisfaction has to be taken care of certain resources within the organization’s reach. If an organization goes beyond its resource it will go into loss and it will be hard for the organization to recover from the loss. If an organization compromises on the budget of quality then there will be a threat of losing the potential customers, hence the profit of the organization decreases drastically.
Importance
Lean management is important for an organization because of people from different culture, race, education, level of skills and attitude work in an organization. Organizations divide people into groups according to their work, skills, knowledge of work, to do what they are capable of. Grouping is done in order to keep the work process running to produce products or provide services. A great amount of time is spent on making strategies on how to create value through the products and services. As the company grows with the passage of time, it starts focusing on increasing its domain, scope and market share through expanding its work area in different fields.
Many changes are required during the expansion period. Changes can be affected by external or internal factors. In this fast-moving, world companies get affected by different situations. In lean management it is important that a company focus on its main business, running the operations of the business in the most efficient and effective manner. In short, remove all those things which make work lengthy, monotonous and clumsy.
Lean management is important because it helps and support organizations in improving the process and their systems, moreover it helps organizations in making their products and services better. Lean management focuses on increasing the value of the customer (What is lean? 2015). The lean process also concentrates on the flow of products and services throughout the value chain across different sectors, technologies and departments.