The survey shows that the principles of lean accounting are not well understood by most UK manufacturers and this may be the reason for the low take up. ‘But at its heart lean accounting is about establishing a financial reporting system that supports, complements and enhances lean manufacturing – and therefore helps improve a company’s profitability and working capital management’, added Mr Lawton. ‘In the current difficult times this focus on profit and working capital management, particularly the reduction of inventories, is fundamental to the well managed manufacturing business.’

Just 14 per cent of UK manufacturing companies have adopted the principles of lean accounting, according to new research by accountants and business advisers BDO Stoy Hayward.

BDO Stoy Hayward’s head of manufacturing, Tom Lawton, who is based in Birmingham, said:

‘UK manufacturing continues to make great strides in adopting ideas around lean manufacturing, and we believe that this has been one of the reasons that the sector has been so successful in recent years.

However, lean accounting, which provides strong support to the lean manufacturing process, has not been widely adopted, meaning that manufacturers are not using the right financial metrics in measuring and monitoring their improvements under lean manufacturing. As a result, it could be reducing the benefits available under continuous improvement processes.’

Questions

1 What kinds of benefits might be available to manufacturers through lean accounting?
2 Why might the principles of lean accounting not be well understood?