LEAN

ACCOUNTING
MEANING

Lean accounting, is a systematic approach to eliminate waste

in the accounting processes through continuous
improvement.
Waste can come in three main forms :-
1. Mura (waste due to variation)
2. Muri (waste due to overburdening people, equipment or system)
3. Muda (Transportation, waiting, overproduction, over-processing,
motion, inventory, defect, and disengagement of people)
Lean accounting may be defined as a new method of
managing a business that is built upon lean principles and
lean methods.
It is a control, measurement, and management method which enables
companies to make more money by identifying the potential financial
benefits of lean improvement and developing strategies to realize that
profit.

CUSTOMER
VALUE
LEAN REDUCE
WASTE
 PRINCIPLES OF LEAN ACCOUNTING

1. Define Value

The value should be defined in terms of a specific product, with specific capabilities,
offered at a specific price and time from the perspective of end customer.

2. Identify Value Streams

This principle denotes to identify the entire value stream for each service , product or
product family and elimination of waste.
3. Flow and Pull

The production process is designed to maximize the flow of the product through value stream.
As flow is introduced let the customer pull i.e., to provide what the customer wants only when
the customer wants it.

4. Empowerment of people

The system measurement and control provides each employee with the information and
authority to take necessary action at the time it is required.

5. Pursue Perfection

It makes Lean thinking and continuous process improvement a part of the organizational
culture. Employee must strive towards perfection while delivering products based on
customer needs
 COMPARISON
TRADITIONAL COST ACCOUNTING LEAN ACCOUNTING

1. They are large, complex, wasteful 1. They are quick, simple, and timely. It
processes which require large amount of provides accurate and timely information
non-value adding works for decision making.
2. It is difficult for people to understand 2. It is clear and easy to understand through
because of complex financial accounting plain English financial statements
system 3. Enables value based pricing
3. Enables Cost based pricing 4. Supports weakly value stream income
4. Annual income statements are prepared statements

5. Based on minimizing individual product 5. Based on maximizing value to the

customers
cost
 NEED OF LEAN ACCOUNTING
1. It provides timely information

2. It leads to better pricing, production, design, low inventories, short lead-times, better
customer service, and high productivity

3. It correctly shows the potential financial benefits

4. It eliminates wasteful transactions

5. It helps in adding value to the system

6. It leads to effective operational & financial control

7. It replaces traditional measurements

THANK YOU!