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Lacuna in Traditional Accounting

2 Comments

Traditional Accounting Lacuna’s

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The difference in Thinking!

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So as the lean journey Proceeds

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Result from Traditional accounting

  1. Due to higher labor input on drilling machine, the overhead cost and hence the total product cost will show an increase.
  2. Reduced inventory may give a short-term negative impact.
  3. Could lead to additional cost for monitoring and tracking higher number of small batches

 

But traditional accounting will not show:

  1. Created additional capacity on CNC machines
  2. Reduced lead time and increased on time delivery
  3. Enhanced flexibility for product change due to reduced batch size
  4. The impact of enhanced cash flow due to reduced inventory on the product cost

Acknowledgement: Brian Maskell

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Author: Kaizen Institute - India!

Kaizen Institute – India is part of the Global Kaizen Institute operations. Kaizen Institute was established by Sensei Masaaki Imai, the GURU of Kaizen. He wrote the 1st book 28 yrs ago and that is when it all started . We operate in 30+ countries today and have over 400+ coaches helping more then 600 organizations Learn, Apply, Sustain – Kaizen/ Operational Excellence. In India we have two physical offices – Pune & Ahmedabad and 27 coaches in all.

2 thoughts on “Lacuna in Traditional Accounting

  1. Cudos for making such a visual presentation that is so intuitive. Explains Lean accounting practices to both neophytes and professionals alike. Nicely done.

  2. Great to see yet another example of Lean in action….and some still think that it only applies to manufacturing!

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