There has been a "quiet revolution" unfolding the past few years among lean manufacturers, centered on the idea that traditional accounting measures don't accurately reflect the true results that lean delivers -- to the point that they sometimes promote the very opposite of lean. In fact, according to Brian Maskell, president of consulting firm BMA Inc., "Traditional accounting systems are actively harmful to lean organizations," necessitating an overhaul of the entire process in favor of lean accounting. Current signs indicate that the lean accounting movement is finding traction within the lean community.

There is no definitive measure to know how many manufacturers are employing lean accounting in their enterprises. However, anecdotal evidence exists that suggests interest in lean accounting is growing. For example, the Lean Accounting Summit, an annual event now in its third year, drew some 320 attendees when it launched in 2005. That grew to 520 in 2006, and according to its organizers this year the summit is expected to draw 700 for the late September event.

"The momentum on learning about lean accounting continues to grow, which makes sense," says Jean Cunningham, who heads her own consulting firm. She also is the former CFO at both Marshfield Door Systems  and Lantech Inc. At the latter Cunningham was actively involved in taking lean from the manufacturing floor to the business offices. "As lean continues to be driven at the shop floor, the accountants and leadership are curious and thirsting for breakthroughs in understanding the financial results and activities of the business."

Beyond interest in lean accounting, however, is implementation. According to Jerry Solomon, vice president of operations-Hunt Valley for packaging equipment manufacturer MarquipWardUnited, and a lean accounting instructor, "More and more of the attendees to my classes are in the midst of implementation, whereas a few years ago the attendees were just ‘kicking the tires.'"

Manufacturers such as Parker Hannifin, Ariens, Buck Knives and Textron are other manufacturers serious about lean accounting. That's only likely to spur more converts.

Born Of Frustration

The interest in lean accounting is a byproduct of interest in the entire lean movement. In a nutshell, lean seeks to improve business by focusing on what the customer wants, eliminating steps and processes (waste) that do not contribute value to the customer, and utilizing the talents of the entire workforce to continuously improve.

"Lean accounting is part of this [lean movement], just like all the other tools we deploy to help us achieve a continually improving business," says Cunningham. "Hard-to-understand financial reports, measurements that drive us to make wasteful decisions, cumbersome accounting operations and corporate ivory towers are all barriers to a lean organization. We, in finance and accounting, must do our part to strive to live lean."

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