For Ed Grinde, business unit controller for Watlow Electric Manufacturing Co.'s Hannibal, Mo., operations, lean accounting (or "value stream management," as the company calls it) has been a boon.

Over the past few years, according to Grinde, lean accounting has given Watlow-Hannibal a better understanding of its cost structure, condensed front-end processing time, broken down functional silos, provided real-time data and driven the business unit to focus on the value to the customer, among other benefits.

Grinde explains that implementation of lean accounting was a necessary step, as the company needed a simpler accounting methodology to reflect the dramatic shop-floor changes that were taking place as a result of its lean manufacturing initiatives.

"And we also knew that we needed real data, not standard cost data, to run our business, and the data had to be timely in order to be relevant and actionable," Grinde says.

St. Louis-based Watlow, which makes industrial electric heaters, sensors, controllers and software, views lean accounting in a holistic sense, reflecting the company's belief that lean accounting is "a lean management system that really effects almost every aspect of your company," according to Grinde. Consequently, Watlow calls it value stream management.

Ed Grinde, business unit controller, Watlow Electric Manufacturing Co.

"If you utilize it properly, [lean accounting] really is a lean management system, with one component being how you report the numbers and how the company uses the numbers itself," Grinde says.

Watlow is in the process of implementing value stream management companywide. With the help of lean consultant Brian Maskell, Watlow business units have been identifying their value streams and posting simplified operational and financial data for each value stream on a weekly basis.

"And even though right now the economy is down, here at Hannibal we're growing the business because we understand our costs better," Grinde says.

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