How to Talk to Accounting about Lean*. Dave Turbide, CFPIM, CMfgE, CIRM, CSCP [email protected] www.daveturbide.com. * Version 3. Version 1. I’m not an accountant I can’t expect to make you all accountants in one hour It would be boring. Talk about overhead and overhead allocation
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100 years ago
OH Rate 25% of labor
OH Rate 300% of labor
MBA Programs teach students:
if we produce more than the customer wants, we are allowed to "defer" the costs of those products we do not sell to the Balance Sheet as assets – making ourselves look really good this month.
Fact: significant quality-related costs are NOT captured by most accounting systems
LEAD TIME =
WIP / AVERAGE COMPLETION RATE.
To reduce lead time, either decrease WIP or increase completion rate
How does accounting view this?
Revenues / number of Employees
To increase productivity, increase revenue or decrease number of employees