A Kaizen Event Story

By Jean Cunningham:

Just a quick story of a kaizen event….this one was in a service company. They wanted to improve cash flow by getting receivable more quickly. By mapping the current process with a few of the sales people, the accounts receivable clerk, and two interested others, in one day we were able to see that we:

1. Did not have structure process for each activity
2. Did not have clear customer supplier relationship
3. Did not have a clear flow
4. But were willing to improve through experimentation.

We had a process that had 3 value adding steps and 30 in total. But since we looped through the process so many times, we really had about 200 steps!

So we created a clear structure of gathering all key information up front (I call that “Once and be done”) and then ensuring we made contact very early in the process with our key supplier relationship….the accounts payable clerk at the customer!

So the steps were radically reduced, but even better, the entire team now understands what work was being performed, and why the new process is better.

Time will tell if they see the cash flow improvement they expect, but they already know they want to keep using the Kaizen approach.

Updated: Free Lean Accounting Webcast

IndustryWeek : What YOU Need to Know About Lean Accounting (Hint: It's Not Just For Accountants)

Update: This is tomorrow, June 20.

Free 90-minute webcast, brought to you by Industry Week and SAP on Lean Accounting, featuring Brian Maskell and Jean Cunningham.

2007 Lean Accounting Summit "Agenda Reveal"

GoToWebinar : Link for Webinar

Click on the link above for a free web seminar about the upcoming Lean Accounting summit, including two good friends of the blog, Norman and Jean:

Lean Accounting Summit organizers are hosting a free webinar in which the 2007 Summit agenda will be revealed... live! Why join us? You'll hear from Brian Maskell, Jean Cunningham, Mark DeLuzio, and Norman Bodek!

The Old "New Manufacturing Challenge"

By Jean Cunningham:

I am just re-reading a book that I read at the beginning of my lean journey in 1992. It is The New Manufacturing Challenge: Techniques for Continuous Improvement by Kiyoshi Suzaki. It is still an excellent easy to understand book about implementing lean practices. If you are serious about some specific concepts, this is a wonderful book for a reading group at your company that is adopting lean. It was published in 1987.

Don’t jump over this important gem of a book!

Karen Wilhelm also blogged about the book on her blog.

Lean Accounting Resources

By Jean Cunningham:

The topic of Lean Accounting has been getting quite of bit of interest the last few months. The Institute of Management Accounting (www.ima.org ) had their first webinar on the topic of lean and had their largest audience. The AICPA (www.aicpa.org) had their first web cast on Lean, and again had very strong participation. The Association for Manufacturing Excellence, (www.ame.org) which is a national organization with a strong focus on lean, has had very good turnout for its events on Lean Accounting.

While we are seeing some companies actually adopting Lean Accounting, I think more important is the growing awareness that Lean is a total business system and needs appropriate measures that support lean activities. The implementation will come; even if only division by division at the start.

To learn more about Lean Accounting, you can see the webinar/webcasts from the the sites above, or plan to go to the largest event with the most speakers at the Lean Accounting Summit (www.leanaccountingsummit.com ) which will be in Orlando again this fall. The AME annual conference in Chicago will also have Lean Accounting breakout sessions.

In terms of newsletter there is a free newsletter that you can subscribe to at the Lean Accounting Summit website above, some white papers at the IMA website, and a new website called www.igetleanaccounting.com to check out.

Remember….if you have measures that contradict the lean efforts, like those found in nearly every standard cost accounting system, you will be working against yourself. Go learn more!

Lean Accounting Webcast Today, March 7

Real Numbers through Lean Accounting... The evolution of accounting in support of "lean" operations

This webcast is not free ($79) but might be worth checking out, as it includes Lean Blogger Jean Cunningham.

Live AICPA Webcast
Wednesday, March 7, 2007
1-3PM ET

Recommended CPE Credit: 2

Can't make the live event? Pre-order the Webcast on CD-ROM now.

Overview:
The business enterprise has evolved dramatically over the past 100 years. Many claim that traditional accounting practices have not evolved and no longer support modern operations. This has most clearly been demonstrated in manufacturing, where manufacturers have moved from batch processing to single-piece flow processing, a result of applying lean principles. Modern operations - and "lean" operations specifically - have now taken root in most industries. Healthcare, service, construction, government, and countless other industries successfully apply lean concepts to eliminate waste and get more from fewer resources.

So why are accounting and operations at odds and how can you overcome this?

Find out on March 7th. See how three former CFOs became change agents and aligned accounting with lean operations. You'll learn about the financial impact that resulted as they share lessons learned and provide practical recommendations to start your own lean accounting journey.

Register now and join the thousands of CPAs who already have participated in an AICPA Webcast and see firsthand why they are a TERRIFIC way to stay current on today's professional issues.

Presenters:
Jean Cunningham, MBA
President
Jean Cunningham Consulting

Mark Deluzio, MBA, CMA, CPIM
President
Lean Horizons Consulting

Jerrold M. Solomon, MBA
Vice President of Operations
MarquipWardUnited

Moderator:
John F. Hudson, CPA
President
Hudson Consulting Group, LLC

Kanban for Shared Resource

By Jean Cunningham:

Normally when I think of Kanban, I think of external Kanban between the manufacturing cell and the external supplier. However, kanban within the plant when there are shared resources is very common too. (At least until all equipment/resources are able to be dedicated to product lines.)

For shared resources using Kanban we had to figure out a way to prioritize different kanban signals coming to the shared resource. The method I am most familar with is to segment the time available for the shared resource into time slots that each product line could utilize. This worked really well with a paint line, or pallet building area.

I would like to hear from some of our readers on visual methods used to schedule a machine shop which is shared by multiple assembly product lines. While we would like to have dedicated equipment, the shop isn't big enough yet; therefore we have to find a good way to help the machine shop to prioritize the various signals coming to them.

What have you tried successfully?

Initiating Lean with 5S?

By Jean Cunningham:

Mark's note: Here is the first post from Jean Cunningham. I'm looking forward to her future contributions to the blog. For more about Jean and her lean experience, click here. She brings a unique perspective to the Lean Blog, having been a CFO and having led lean efforts from the executive level. Please welcome Jean to the Lean Blog!

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It would be impossible to find a description of Lean without a focus on 5S. After all, who has not heard, “Without standards there can be no improvement.”

But in my experience with Lean, our company did not learn about 5S from our consultants until after more than a year into our Lean Journey. By that time we had our entire product portfolio organized by 7 product lines (or value streams) with product being manufactured in one piece flow to the demand rate of the customer.

So it continues to surprise me when I visit companies who initiate their Lean efforts with 5S. My first experience with this focus on 5S as a standalone activity was with a company that had decided that everyone in the company had to be “doing Lean” by holding 5S events. The result was office people cleaning up and creating taped off desk areas and labeling of files. As important as it is to use the 5S techniques, the goal is to actually eliminate activities that do not support customer value. It was a pretty hard stretch for people to see the connection between taping off desks, and cleaning up areas and the creation of customer value. Because the connection was so tenuous, the focus on Lean seemed trivial to people.

Recently, I discussed this dilemma with a CEO who was verbally committed to Lean. He had hired a consultant that started their company off with 5S events. I asked him what he thought about this approach now that they committed to this direction. He said that initially he was very concerned that the results would not flow to the customer; however, his opinion was mollified when he saw that the teams, while cleaning up, and creating standards in 5S events also took action to change some of the processes that were causing some of the wastes. (He continued to be eager to get to the “real Lean” activities.)

This was a good perspective for me to hear, as a critic of starting with 5S. Because it was true that more people could get involved more quickly with 5S (than focusing entirely in manufacturing to create one piece flow cellular product lines.) And if empowered to make changes to the processes, as they implemented 5S, they could launch the power of the collective genius of more people.

So have I converted by view on initiating Lean with 5S? Well, no. I still believe that focusing on processes, eliminating waste, increasing flow, and reducing batch sizes using cross functional teams of empowered employees is best. I view 5S as an excellent support process, but find 5S too inwardly focused if used as standalone activities. But I do know acknowledge that, 5S, when combined with process improvements, can be a very powerful combination.