Lean manufacturing: costing the value stream

Patxi Ruiz de Arbulo López · Jordi Fortuny Santos · Lluı́s Cuatrecasas Arbós

102 citations0/0 files storedIndustrial Management & Data Systems

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Accounting and Organizational Management Accounting Theory and Financial Reporting Quality and Supply Management

Abstract

Purpose The purpose of this paper is to identify the shortcomings of traditional cost accounting techniques in lean companies and then it seeks to analyse the validity and convenience of value stream costing (VSC) as a tool in a company that has adopted some concepts of lean manufacturing. Design/methodology/approach The paper reviews the relevant literature in order to discuss the deficiencies of costing methods in lean manufacturing. It evaluates the requirements of VSC and provides a concrete illustration of VSC in the continuous improvement process of a point of sales terminal assembly line. Findings The paper evidences the possible mistakes of cost accounting. The necessity and validity of VSC in lean manufacturing are presented, followed by a case example. In order to make continuous improvement decisions, VSM, VSC and box score offer complete information on the performance of the value stream. Research limitations/implications Although accompanied by an application on a real case study, this is not an empirical investigation on the adoption of VSC. Practical implications VSC requirements agree with the fundamentals of lean management. Therefore, VSC is a valid tool for lean companies, although the applicability depends on the maturity of the lean implementation. Originality/value This paper contributes to the lean accounting literature because the management accounting literature still lags behind the lean transformation. This is one of the first papers on VSC in relevant journals and the first one to combine VSC and box scores with value stream mapping. The paper will be useful to academics involved in new accounting systems but also to practitioners who are implementing lean manufacturing.

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References

1992The machine that changed the world 1997Lean Thinking—Banish Waste and Create Wealth in your Corporation 1995Performance measurement system design 1987Relevance Lost: The Rise and Fall of Management Accounting 2002Lean manufacturing: context, practice bundles, and performance 1977Toyota production system and Kanban system Materialization of just-in-time and respect-for-human system 2001Relationships between implementation of TQM, JIT, and TPM and manufacturing performance 2004Doing Case Study Research

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