value add not overhead the next 10...
TRANSCRIPT
10/13/2014
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Value Add not Overhead The Next 10 Years
with
Jean Cunningham
• Founder and president
• Lean accounting / lean business management / lean office pioneer
• Former CFO, Lantech, Inc
• Former CFO, Marshfield Door Systems
Building LEAN Beyond Manufacturing
Productivity Press, 2007 Shingo Prize, 2008
Managing Times Press, 2003 Shingo Prize, 2004
© 2014 by Jean Cunningham Consulting All rights reserved
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© 2014 by Jean Cunningham Consulting All rights reserved
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Lean Accounting Transformation
Transactions
Analysis
Consulting
Analysis
Consulting
Transactions
© 2014 by Jean Cunningham Consulting All rights reserved
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Simplify Transactions
• Simplify the transactional work
• Automate the Normal
- Intelligent Poke Yoke
- Process not functional thinking
Support
Change
Eliminate
Waste
Optimize
Information
FUTURE focus
REDUCE time and effort
ELIMINATE tasks
© 2014 by Jean Cunningham Consulting All rights reserved
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VISION: Finance/Accounting/IT/HR Value Stream
6 © 2014 by Jean Cunningham Consulting
All rights reserved
Process Improvement
Transactions
Business
Partner Infrastructure
Security
Legal Structure
Chart of Accounts
Hardware & Software
Sta
nd
ard
Wo
rk
Cash Operations
Benefits
Pay
Pro
ble
m S
olv
ing
Automation
Asset Utilization
Strategy
People Deployment
Performance Mgmt
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© 2014 by Jean Cunningham Consulting All rights reserved
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Toyota Production System
Source: Toyota
SAFETY
JUST-IN-TIME JIDOKA
Delivery Cost Quality
Standard Work
Stability (process, people) Mutual trust between employees and management
• Andon • Poka Yoke
• Continuous flow
• Takt Time • Pull system
Heijunka Kaizen Flexible manning system OEE 5S
© 2014 by Jean Cunningham Consulting All rights reserved
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Accounting Information
• Expedite fees from suppliers
• Unit of measure issues
• Stock adjustments
• Rebate corrections
• Pricing errors
• Incorrect credit card #
• Wrong sales tax
• Unauthorized pricing deductions
• Unauthorized quantity deductions
• Mis-shipments
• Expedite fees to customers
• Unauthorized early pay discounts
© 2014 by Jean Cunningham Consulting All rights reserved
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0
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Un
auth
ori
zed
pri
cin
g d
edu
ctio
ns
Un
auth
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qu
anti
ty d
edu
ctio
ns
Mis
-sh
ipm
ents
Exp
edit
e fe
es
to c
ust
om
ers
Un
auth
ori
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earl
y p
ay d
isco
un
ts
Exp
edit
e fe
es
fro
m s
up
plie
rs
Un
it o
f m
easu
reis
sues
Sto
ck a
dju
stm
ents
Reb
ate
corr
ecti
on
s
Pri
cin
g er
rors
Inco
rrec
tcr
edit
car
d #
Wro
ng
sale
s ta
x
Defects
Accounting Info to Drive Process Improvement
Jidoka/Launch Problem Solving
© 2014 by Jean Cunningham Consulting All rights reserved
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© 2014 by Jean Cunningham Consulting All rights reserved
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Quantity
• Service Design
• Service Design • Process Design • Equipment Design • Suppliers
• Service Design • Equipment Design • Operator • Scheduling
Value Add
Non-Value Add
Necessary
Oops
Quantity
Value Add
Non-Value Add
Necessary
Oops
• Bill of Material • Inspection • Purchase history
• Bill of Material • Inspection • Purchase History • Departmental Reports • Yield Factors • Setup data • Inventory
• Scrap • Obsolescence Who has responsibility
for them?
Material Cost
12 © 2014 by Jean Cunningham Consulting
All rights reserved
What are the existing Metrics?
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Conflicts Between Accounting Practices and Life-Cycle Concept
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Product Planning PreliminaryDesign
Detailed Design Production Logistics Support
Life
Cyc
le C
ost
s
Adapted from Benjamin S. Blanchard, Design and Manage to Life Cycle Costs, Portland, OR: M/A Press 1978
Life Cycle Cost
Cash Flow
Matched/ GAAP Cost
Low cash outlay in the product planning and design phases disguise their impact on total product costs
© 2014 by Jean Cunningham Consulting All rights reserved
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© 2014 by Jean Cunningham Consulting All rights reserved
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Profit Model
Invested Capital • Fixed Assets • Inventory • Receivables
$
Fixed Resources Break-even Loss
Profit
Volume
© 2014 by Jean Cunningham Consulting All rights reserved
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Profit Model
Invested Capital • Fixed Assets • Inventory • Receivables
$
Break-even Loss
Profit
Accelerated Profit
Volume
© 2014 by Jean Cunningham Consulting All rights reserved
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© 2014 by Jean Cunningham Consulting All rights reserved
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Questions & Answers
"The most dangerous kind of waste is the waste we do not recognize."
— Shigeo Shingo, engineer, teacher and author on improving manufacturing systems
© 2014 by Jean Cunningham Consulting All rights reserved
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JCC Lean Business Management
19 © 2014 by Jean Cunningham Consulting
All rights reserved
Lean Strategic Coaching
Business Process Kaizen Events
Lean Office Workshops
Lean Executive Sensei
Lean IT and IS Migration
Lean Accounting
Lean Financial Statements
Lean Metrics
Lean Human Resources
Contact
20 © 2014 by Jean Cunningham Consulting
All rights reserved
Jean Cunningham
Email: [email protected]
Phone: 224.688.3504