Putting Accountants on a Lean Diet

Peter Brewer & Frances Kennedy

I am reviewing a very good article that I read recently, which I think will be of interest to many finance people. It’s the cover article of the February 2013 edition of Strategic Finance – a journal of the Institute of Management Accountants. The authors are  Professors Frances Kennedy (Clemson University, SC) and Peter Brewer (Miami University, Ohio.) I know both of the authors and have worked with Frances on writing projects and consulting projects.

Knowing them as I do, I am sure they did not come up with the title of the article 🙂 It must have been the editorial people at the magazine. I remember – many years ago, probably 1985 – I wrote one of my first articles about (what we now call) Lean Manufacturing for a European manufacturing journal. I am not sure what title I put at the head of my piece, but when I received a copy of the magazine I was deeply chagrined to see that my opus was entitled ” Easy Peasy Japaneesy” :-((  But I digress … let’s get on with it.

What is their article about?

It’s a research piece from a (disguised) company called CIP in Reading, PA. CIP put a lot of work and emphasis on removing waste and improving the flow of their financial processes. The company was not attempting to change the processes in any fundamental way. The authors have previously written articles for Strategic Finance on the topic of Lean Accounting, showing how to create accounting, control, and measurement systems to support Lean transformation. They are quick to point out that this article is not about that. It is about streamlining CIP’s current processes using lean methods.

In my experience with customers, I have found that this can be a good way to make a start with Lean Accounting. If the financial people work on waste reduction in their own processes, then three things occur: First, the processes get better; second, the finance people learn hands-on what Lean is about; third, it results in freeing up a lot of people’s time so they can work on others things – including Lean Accounting.

Brewer and Kennedy’s article does a couple of interesting things: it describes and assesses how CIP set about removing waste from their finance and accounting processes and makes observations on what made their efforts successful.

So what did CIP do?

As recounted in the article, here are the steps they went through:

  • Some serious team building
  • Cross training to gain flexibility
  • Five S in the Finance area – both the offices and the computer hard drives.
  • Mapped their processes and identified waste
  • Defined a Lean Finance roadmap
  • Defined 10 Lean Key performance attributes for a successful transition to Lean
  • Defined an improvement roadmap with 5 levels of measurable improvement in each lean key area
  • Identified a volunteer champion for each of the 10 lean keys
  • Did process audits in each area based of their 10 lean keys
  • Gained momentum through early success, notably in their month-end close
  • Completed many continuous improvement events

Why were they successful?

The authors suggest that CIP was successful for a combination of reasons.  Their efforts were headed up by an enthusiastic leader – their Financial Controller. Team building and planning allowed the people to develop relationships and common understanding. The work was done by the people themselves; not by outside experts or people with strangely colored belts. They gained an “early win”— achieving a 5-day month end close – that built confidence and momentum. They used Continuous Improvement methods rather than big breakthrough projects.  And they gradually got better at being Lean.

Brewer and Kennedy end with a summary of CIP’s lean transformation, saying: “Finance departments need effective leaders who can define a vision of a world-class operation, motivate their employees… and then equip them with the maps and tools..”  they need to transform themselves and the company.

Great stuff!

To read the article in full go here: http://www.imanet.org/PDFs/Public/SF/2013_02/02_2013_brewer.pdf