Role of Value Stream Costing for Effective Lean Management

International Journal of Production Management and Engineering, 2019

Companies around the world are under pressure to reduce their prices to be competitive. In order to keep profitability, they are adopting lean manufacturing (LM) and its tools to reduce waste and, consequently, the costs. Value stream mapping (VSM) is an efficient LM tool, identifying production flow waste. When it is possible to combine VSM with other LM tool, such as Kanban, a substantial impact in inventory reduction is reached. Additionally, the conventional account system shows limitations in the costs reduction to keep up with LM. The purpose of this paper is to present the results obtained by the application of the VSM combined with Kanban and the new account approach to measure the effectiveness of the cost reduction in the finished goods inventory. Considering that LM tools application in the textile segment has not an expressive number of researches, four hypothesis are presented and validated. The findings are discussed and finally, the research limitations and the practi...

2014

With the advent of the globalization, the rapid development in technology and the intensity of competition companies attemptto maintain competition advantages and retain customers. The traditional methods in managerial accounting become irrelevance to achieve the objectives of these companies especially with the rapid changes in modern manufacturing environment .Thus there is a need to new tools in accounting such as lean accounting, which is considered as a costing method that support creating value for the customer by costing the entire value stream, eliminating waste in the accounting process, reduced lead time, improved quality, lowered time delivery and increased available capacity. Using value stream focuses not only on the waste but also determining the sources of waste in value stream. So business manufacturing waste that occurs in the process can be easily identified. Thus the objective of the research is to bring out the concept, principles, tools and objectives of lean accounting and to discuss the issue of lean accounting as a replacement of the traditional accounting systems for cost accounting, management accounting and external financial reports. Also one of the objectives of the research is to show the procedures applied in the sample company :AL-Hayat soft drinks & Mineral Water Company. The research depends on two aspects :The Theoretical aspect which depends on references such as: books, researches ,internet and the practical aspect depends on the important formal documents of the company. This research has reached asset of conclusions of the most

IJMRAP, 2022

The primary objective of industrial institutions and businesses, in general, is to maximize profits by strengthening their position in the industry's competitive landscape and expanding their market share relative to that of other competing businesses. The purpose of this study is to demonstrate both the impact of applying lean accounting mechanisms in improving the competitive position of industrial companies and increasing the market share of these companies, as well as the role that lean accounting mechanisms play in rationalizing costs in industrial companies. This information will be gleaned from us, the authors of this study. A case study based on real data from the General Company for Rubber and Tire Industries (2016) was used to accomplish the research goals. The research findings suggested that using lean accounting processes might help the firm cut its production costs by drawing attention to unused energy and the opportunities it presents. In addition, the study demonstrated that implementing lean accounting tools, such as the value stream and target cost, has an effect on the pricing strategy of the company. This is accomplished by gaining a competitive advantage and using unused energy, leading to an optimal cost reduction. As a result, the research suggests that industrial businesses should use lean accounting techniques to effectively control their expenses and develop appropriate pricing strategies for their products.

Annals of Industrial Engineering 2012, 2013

Choosing an appropriate accounting system for manufacturing has always been a challenge for managers. In this article we try to compare three accounting systems designed since 1980 to address problems of traditional accounting system. In the first place we are going to present a short overview on background and definition of three accounting systems: Activity Based costing, Time-Driven Activity Based Costing and Lean Accounting. Comparisons are made based on the three basic roles of information generated by accounting systems: financial reporting, decision making, and operational control and improvement. The analysis in this paper reveals how decisions are made over the value stream in the companies using Lean Accounting while decisions under the ABC Accounting system are taken at individual product level, and finally we will show how TD-ABC covers both product and process levels for decision making. In addition, this paper shows the importance of nonfinancial measures for operational control and improvement under the Lean Accounting and TD-ABC methods whereas ABC relies mostly on financial measures in this context.

International Journal of Academic Research in Business and Social Sciences, 2014

The aim of this work is to present a new concept in accounting management: Lean Accounting. This work explains the way the lean concept was born; its benefits for the production system of the factories and the necessity of applying lean accounting in the factories which have implemented lean production, taking into account both its advantages and the boundaries of the other cost management methods in those factories.

2015

Lean manufacturing and other processes need quite different performance measurements. When old measurements are mixed with lean operations the lean changes fail to achieve their objectives. The performance measurements must be directly related to company's business strategy. Therefore in this study, theoretical information is given on befitting performance measurements for companies that use lean production system and the box score that enables monitoring of these measurements is discussed.

In the past decade due to increasing global competition US firms have radically changed their manufacturing practices to improve their competitiveness. In pursuing this goal they have adopted a number of advanced techniques, such as just-in-time, total quality management, lean manufacturing, flexible manufacturing systems, process improvement, and design for manufacturability, to name a few. The objectives of all these programmes have been to reduce cost, improve quality, reduce cycle time, and increase flexibility on the factory floor. Support systems such as finance and cost management, however, have generally not kept pace with the level of corresponding operational changes being implemented. This paper presents a case study of kaizen costing as practised by Boeing Commercial Airplane Company, IRC Division. The purpose of this study is to describe a method used to set kaizen costs which will provide relevant cost data to support lean production decisions that would be useful to practitioners.

European J. of Industrial Engineering, 2011

In this paper, a framework for assessing the cost effectiveness of lean tools is developed. The framework consists of eight phases within the plan-do-check-act (PDCA) problem solving and continuous improvement cycle. The framework was verified using a case study of a sawmill process at a wood manufacturer in Sweden. The framework enabled decision-makers to holistically assess the company's performance with respect to customer requirements, identify key process problems, and then select a cost effective lean improvement tool. The originality of the proposed framework was evident in addressing three key issues related to lean manufacturing: proposing lean techniques based on quality function deployment (QFD), developing a process lean profile using value stream mapping (VSM) and balanced scorecard (BSC), and assessing the cost effectiveness of lean tools using life cycle cost analysis (LCCA) and multiple criteria decision-making (MCDM).

International Journal of Productivity and Quality Management, 2019

Value stream mapping (VSM) is a lean tool which addresses the non-value added activities in time domain. But, it fails to address it in a cost domain. In this work, a new tool called cost value stream map (CVSM) is proposed, which addresses the problems encountered in conventional VSM and cost-time profile (CTP) and maintaining the advantages of both. The determination of work in process inventory and non-value added costs incurred by using CVSM are demonstrated by presenting a case study. An SME in Kerala, India is selected for this. Lean techniques applied on the various Cost value stream mapping as a lean assessment tool 73 non-value added activities in the order of their cost investments 27% reduction in lead time, 27%-32% reduction in WIP inventory and 40%-42% reduction in cost investment while manufacturing the product. The reductions when accounted annually there is a saving of INR.2,17,728 in the value added cost.

World Journal of Advanced Engineering Technology and Sciences, 2024

This paper focuses on the application of Value Stream Mapping (VSM) within the context of the electronics manufacturing industry, aiming to improve its operational efficiency and financial performance. The study thoroughly analyzes costs, integrating VSM to justify economic benefits. Data was collected directly from the manufacturing floor to create a current state map, enabling the identification of non-value-added activities and sources of waste. Areas for potential improvement were pinpointed to reduce or eliminate these inefficiencies. By implementing these proposed enhancements, the paper outlines a future state map for the electronics manufacturing process and presents the results of applying Value Stream Mapping. Comparing the current and future state maps, the study reveals that embracing Lean principles, in conjunction with Value Stream Mapping, can significantly benefit the electronics manufacturing industry. Specifically, it can reduce production lead times by 67.84% and decrease costs by 8.69%. This research underscores the financial implications of adopting Value Stream Mapping, illustrating that by combining Lean principles with VSM, industries can offer rapid customer responses at lower costs, a crucial factor for improving competitive performance in the existing market landscape.