The Lean Business Guidebook
How to Satisfy Your Customers and Maximize Your Profit
This book introduces a powerful system that explains how to run a company with a focus on continuous improvement.
The results are a satisfied customer base, evolving products and an increase in revenue and profits. These factors determine the success for any company because business transformation involves making fundamental changes in how business is conducted to cope with shifts in the market environment. This a comprehensive book for valuable guidance on framing strategy and overcoming challenges for successful and sustainable implementation of a lean production system, daily management system and lean accounting system in companies to empower the managers to serve their customers with timely delivery of quality products while maximizing profits and easing workloads. The main challenge is ensuring operations colleagues in different functions understand the link between their daily work and the profit and loss statement. In addition, it illustrates how finance personnel can assist the operations team and be a part of the transformation journey.
This book is not meant to impart theoretical knowledge of the lean production system, daily management and lean accounting, as there are many books already available that focus on the methodology instead of the implementation. This book empowers people in each function of a company, irrespective of which level they work in the company, and shows them the way to operate on a daily basis to achieve the company's strategy while simultaneously fulfilling their career goals. The book lays out a brief history of the evolution of lean concepts with a focus on lean accounting. This book guides the successful implementation and sustenance of lean and kaizen tools and provides answers to the questions:
- Who should lead the lean and kaizen implementation in the company?
- Where should the lean and kaizen journey begin?
- Which lean and kaizen tools should be implemented first?
- How important is capacity for the company?
- How much current capacity is wasted and how much free capacity is available?
- Where exactly are the resources being wasted in the company?
- How can the company reduce waste to release capacity for more production?
- Why should the daily management system and lean accounting system be implemented simultaneously with the lean production system?
- Why must managers understand the monetary value of their daily activities?
- Is there an easy way of making a profit and loss statement that is understood at each level in the company?
- Why is one-day closing of accounts important and how can it be done?
Table of Contents
1. Why is lean accounting vital for a company? .
1.1 How do we bring the change we expect?
1.2 Operational excellence for business excellence .
2. Revolutionizing the manufacturing operations: Toyota Production System
2.1 Journey of lean production system implementation .
2.2 Kaizen .
2.3 Total Productive Maintenance (TPM) .
2.4 Total Quality Maintenance (TQM) .
2.5 Toyota Production System (TPS) .
3. The lean way of doing business .
3.1 Lean culture .
3.2 Daily Management System (DMS) .
3.3. Lean Accounting .
3.4 Successful implementation of lean tools .
3.5 Why do we need external expertise to implement continuous improvement tools? .
4. Who should lead the implementation of lean strategy?
4.1 Who will lead lean strategy implementation – CEO, CFO or both? .
4.2 Barriers in lean implementation .
4.3 How can CEO and CFO ensure a smooth lean implementation journey? .
4.4 CFO’s role in implementation of lean accounting .
5. Bid adieu to standard cost accounting, welcome lean accounting .
5.1 What is standard costing? .
5.2 Why standard cost accounting is not suitable for lean companies?
5.3. Variance Analysis .
5.4. Profits and loss statements based on standard cost accounting system .
5.5. Lean Accounting – Cleaning up the Mess! .
5.7. Implementation of lean accounting .
5.8. Lean accounting ensures improved results .
5.9. What happens when the company starts implementing lean accounting? .
6. Lean measures for a lean company .
6.1 How a traditional company and a lean company differ in the organizational set up? .
6.2 Performance measurement in a lean company .
6.3. Scorecards for lean measures .
7. Value stream costing .
7.1. Value Stream costing process .
7.2. The start of the lean and kaizen journey .
7.3. What is value stream costing used for? .
7.4. Advantages of value stream costing .
8. Plant capacity assessment .
8.1 What is capacity? .
8.2 Plant capacity assessment .
8.3 Kaizen and lean tools for reduction in non-productive hours .
9. Corporate scorecard .
9.1 What is a Corporate Scorecard (CSC)? .
9.2 How to prepare corporate scorecard? .
9.3 Corporate scorecard and decision-making – A new scientific approach .
9.4 How value stream manager and functional managers use the Corporate Scorecard? .
10. Lean Performance Measurement System .
10.1 Need for Lean Performance Measurement System .
10.2 Lean Performance measurement system framework .
10.3 Implementation of Lean Performance Measurement System .
10.4 How should employees at each level utilize their time in a lean company? .
11. Finance for non-finance .
11.1 How much do your managers know about finance of the company? .
11.2 Bonding with the profit & loss statement .
11.3 Key performance responsibilities of functional managers .
12. New role of Finance Team .
12.1 Why is it difficult to onboard finance team on lean accounting journey? .
12.2 How the role of finance and accounts team transforms in lean accounting? .
12.3 How is lean accounting implemented in finance function? .
13. Budgeting .
13.1 What is a business budget plan? .
13.2 How to make a budget for a lean company? .
13.3 Responsibility for preparation of the business plan .
14. Business plan review .
14.1 What is the agenda of business plan review?
15. Lean ERP for Lean Accounting .
15.1 What is lean ERP? .
15.2 Use of lean ERP in different functions .
15.3 Benefits of lean ERP .
16. Reduction in transactions .
17. System assessment/audit .
18. Lean transformation journey of Perfect Gear Company .
MJS Bindra is a turnaround specialist who is uniquely qualified to transform multinational or regional companies, large, medium, or small, into lean enterprises. He is a professional engineer with MBA in marketing and finance from BITS Mesra and advanced management from IIM Ahmedabad. He has more than forty-five years of experience working with global organizations and thought leaders from diverse industries and fields.
In his formative days, he underwent long tenure technical training in the world’s leading companies like Wean United USA, Muller Weingarten Germany, Schloemann Siemag Germany, and Sumitomo Corporation Japan. He developed his skills in Toyota Production System at Komatsu Career Corporation, Japan in the year 2000 and visited many Japanese companies including Toyota, Komatsu, Nippon and Sumitomo Corporation. The concept of daily management was matured during his tenure with Kaizen Institute. The lean accounting principles were adapted after being trained under Brian Maskell, the USA who was at the forefront of inventing the concept of Lean accounting.
MJS Bindra has held director-level positions in sectors as diverse as capital machine-building, steel industry, electric resistance welded (ERW) tubes, and cold-drawn tube industry. He had supported and implemented lean and kaizen implementation in these companies with a focus on training executives and leaders at all levels.
Ekroop Kaur is an accomplished Chartered Accountant (ICAI) and CPA (Australia). She started her corporate career with Vodafone and has also worked with Bharti Infratel Ltd. and Avery Dennison India Ltd. While commencing her stint in Avery Dennison, a renowned manufacturing company which mostly uses traditional standard cost accounting methods, discovered MJS Bindra. After meeting him, she realized that she had already been using snippets of Lean in her previous roles and was curious to learn more. Her learnings from the corporate world about the value of customer experience, challenges in dynamic industrial environments, the role of finance in major investment decisions, and the importance of immaculate internal procedures and operational processes are what shaped her perspective.