Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Lean manufacturing introduction 2 pages
Elements of lean production
The problem with lean manufacturing
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Lean manufacturing introduction 2 pages
1. Lean thinking is focused on eliminating waste throughout the company. It also places emphasis on looking through the customer’s point of view and providing value to them.
2. The five principles of lean thinking are:
a. Define value – this focuses on defining what the customer’s value in different products and services provided by the company. The emphasis is on the customer and how the company can provide value to them.
b. Identify the value streams – this requires company’s employees to see how the organization functions through the eyes of the customer. The company must identify all value added activities that go into delivering a quality product/service to the customer.
c. Make the value stream flow – rather than the traditional mass
…show more content…
Strive for perfection – this give employees empowerment to make decisions for themselves rather than having to rely on upper management. If an employee sees a flaw in the process, they are able to take the means necessary to improve it.
3. Contradiction between lean manufacturing and traditional accounting:
a. When the article talks about traditional accounting, it is referring to activity-based costing, functional costing, and/or standard costing. The characteristics of traditional accounting particularly deal with how to allocate overhead costs.
b. Three issues created from implementing a lean manufacturing system using traditional accounting were:
i. Relying heavily on variance data that was tabulated for the monthly accounting cycle – this meant that accountants were specifically focused to the month in which they were in, not future months that would help management plan production ii. Accountants provided data to management that incentivized high lot sizes and high utilization of employees in order to produce goods
…show more content…
The absorption costing method shows a decrease of income when management reduces inventory because of the need to expense the fixed overhead that was deferred as well as variances. Since both variances and fixed overhead deferrals are expensed through inventory reduction, both decreasing raw materials ending inventory and finished goods ending inventory would have an adverse effect on income.
4. Value stream cost analysis:
a. Costs are accumulated by the value stream in lean accounting.
b. Value stream analysis provides actual costs rather than standard costs to the value stream. Therefore, the focus is on a mixture of labor, materials, and other associated costs. Overhead costs are related to the value stream as a whole and not simply to labor.
c. The analysis highlights areas of waste, identifies bottlenecks in the system, and highlights opportunities to manage capacity more effectively. These factors can show improvements in company performance.
5. Value stream income statement:
a. More understandable to non-accountants due to simplicity
b. Attaches actual costs to each component of the value stream
c. Isolates the impact of inventory reductions on profits better than absorption accounting
Value Proposition is defined as "A business or marketing statement that summarizes why a consumer should buy a product or use a service”. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings." To structure a proper value proposition for a company, you must view the business model and three identifying features of the business. These three features are the Goals, Core Activities, and the Product Market Focus. The goal of a company is what it aims to accomplish. In regards to Imperial Oil ltd., their main end goal would be to create profits for their shareholders and to increase the overall value of the company. With creating more value to the company, the business can use funds to access and develop more research and advance their technology in growing the corporation. The core activities of the business are what value creating tasks will help the business run properly and how t...
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
The presentation of the material is in dollars only. Overhead is applied to products as a percent of direct labor dollar cost. Factory profit for each year is found by subtracting direct material, direct labor, and direct overhead costs from total sales. The overhead percentage is calculated at the same time budgeting and is applied as a single overhead pool throughout each model year. The consulting company used 435% of direct labor costs in 1987 for their study; the budgeted was actually 437% (OH/DL=107,954/24,682). A similar percentage applies in the following year (109890/25294=434.5%). However in the next two years, after the outsourcing of oil pans and mufflers was enacted, the allocation of overhead in...
This paper proposed to give an even minded perspective of Lean application. It shows how to look for when considering usage perspectives at every phase of the process. Both worth identification and administration quality change were characterized, and helpful empowering apparatuses, for example, RCA and Process Map-ping have been cleverly and fittingly sent with Lean Thinking. The paper investigates and clears up Lean by indicating how the procedure can be upheld to include incremental
In a high competitive world market and with the increasing rational buyers a company can only win by creating and delivering the best customer value than the others competitors do. To succeed, a company needs to use the concepts of value chain.
Marshall, M.H., McManus, W.W., Viele, V.F. (2003). Accounting: What the Numbers Mean. 6th ed. New York: McGraw-Hill Companies.
Garrison, R. H., Noreen, E. W., & Brewer, P. c. (2010). Managerial Accounting. New York: McGraw Hill/Irwin.
The contained paper has been prepared with objectives of elaborating over the three different costing methods namely, Absorption/Full Costing, Variable/Marginal Costing, and Activity Based accounting. The first segment of the report seeks to define and illustrate the costing methods based on the personal understanding of the writer gained through the class room and the academic readings. Part two of the report takes a form of short essay, written critically to evaluate the application of standard costing and variance analysis to any size of business, and concludes with a verdict that whether or not standard costing and variance analysis is applicable to each business with consideration of its costs and benefits of the system.
In its current practice, the roles and functions of cost accounting includes additional functions. More specifically, it can be described as more than an inventory tracking system. This is because cost accounting entails defining the charges of activities and goods (Horngren & Srikant, 2000). Because of its many roles and functions, this accounting method has been of great help to growth and expansion of business planning and management. Again, the reports offer assistance in the planning and growth projections for different business functions and units within the organization. The information cost accountants offer different uses, some of which aid in the controllership function, as well as the industrial
A LEAN Company is our best description and our business philosophy (creating more value for customers with less resources), which pursues to deliver what the customer wants, when they want it, at maximum value with minimum misuse.Through the application of LEAN, we achieve more fulfillment as it helps to reduce the possibility to constantly be fighting a battle against difficulties. Besides, we promote a Continuous Improvement Culture in our performance.
Reichelstein, S. (2000). Providing Managerial Incentives: Cash Flows versus Accrual Accounting. Journal of Accounting Research, 38(2), 243.
Value chain analyses a firm 's internal activities such as planning, production, and development, packaging and distribution so as to create value for clients. The function of the value chain is to identify the sources for cost reduction along with quality improvement. It means value chain is used to identify the strong and weak points, positive and negative points, the scope of improvement; in a nutshell, the advantages and disadvantages of the activities taking place in the system. The value chain is also called as a strategic analysis tool and it is a well-known concept in business management industry.
Activity-based costing is used as a supplement of traditional cost accounting in a company to support manager in internal decision making. It focus on assigning the indirect cost to direct costs in order to get a more accurate cost on products. Activity-based costing uses several cost pools instead of one in traditional cost accounting. The system is easy to implement and it provides many benefits, it allows the company to respond to inefficiency by reallocating resources to more profitable activity from areas that absorb too many resources. It also allows the company to respond to manufacturing overhead cost and assumes a more accurate selling price on products in order to make more profits. Company that do not have internal expertise to conduct activity-based costing analysis may think to hire one or ask company that provides this kind of services for help.
Explain how the company’s value-chain activities can be better linked to create value for the company.
Lean production is an approach to production developed in Japan. Toyota, the Japanese car manufacturer was the company that invented lean production. The whole aim of lean production is to reduce the quantity of resources used up in production. By doing this, lean production uses less of - factory space, materials, stocks, suppliers, labour, capital and time. Lean production reduces costs, increases efficiency and output and improves motivation. Lean production involves using a range of practices designed to reduce waste and improve productivity and quality.