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About lean manufacturing

Muda is a Japanese word that means wastefulness and uselessness, and it is important in Toyota's production activities. This definition acknowledges the desire to bring value to the goods and services in which an organization specializes without spending more energy than necessary. Since consumers are most likely to pay for product functionality and procedures that they trust, it is important to consider what is likely to convince the consumer to pay for the product. Muda's use of lean transformation and lean environments aids in the identification of inefficient procedures in the processing of raw materials into finished goods and service provision. The ultimate goal of Muda is to cut on the overall cost of production by eliminating activities which consume more resources than intended. An organization achieves this by identifying and building fast and flexible processes.

Lean accounting is one which was developed with the aim of supporting lean manufacturing as one of the business strategies in the contemporary world. Unlike traditional methods of accounting including those which are employed in the mass production environment, accounting for lean production aims at developing performance measurements. Accountants in lean environments, therefore, play a vital role in the decision-making process by helping analyze the financial impact of the lean change in an organization. Continuous involvement of a lean accountant helps the management appreciate the importance of combining various methods of lean accounting and, therefore, a firm develops a Lean Management System (LMS). Contrary to accounting in the lean environment, in the mass production environment, there are fixed accounting methods which include cost-plus pricing, unclear financial reports, standard costing, activity-based costing, and variance reporting. Such methods make it difficult for a firm to identify wasteful processes.

August 18, 2021

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