Title: A comparative analysis of management accounting systems' impact on lean implementation

Authors: Xueping Li; Rapinder Sawhney; Eric John Arendt; Karuppuchamy Ramasamy

Addresses: Department of Industrial and Information Engineering, University of Tennessee, 416 East Stadium Hall, Knoxville, TN 39776-0700, USA. ' Department of Industrial and Information Engineering, University of Tennessee, 416 East Stadium Hall, Knoxville, TN 39776-0700, USA. ' Department of Industrial and Information Engineering, University of Tennessee, 416 East Stadium Hall, Knoxville, TN 39776-0700, USA. ' Department of Industrial and Information Engineering, University of Tennessee, 416 East Stadium Hall, Knoxville, TN 39776-0700, USA

Abstract: Lean principles and practices have been widely adopted by many companies since the early 1990s. These companies are now beginning to realise that traditional costing and accounting methods may hinder the lean initiatives that they are implementing. This raises an important question: ||Which cost management and accounting approaches best support the newly implemented lean principles and practices?|| This paper examines the relative impact of three different management accounting systems on lean manufacturing implementation through simulation modelling with a single performance metric – net income. Three management accounting alternatives included in this study: traditional management accounting (TMA), activity-based costing (ABC), and value stream costing (VSC). This study compares these three management accounting alternatives using process simulation and statistically designed experimental methods. The results demonstrate that VSC appears to provide a bridge between operational views and financial views of lean, which enhances the transfer of information from shop level to management level.

Keywords: lean manufacturing; activity-based costing; ABC; lean accounting; management accounting systems; MAS; simulation; modelling; net income; value stream costing; VSC.

DOI: 10.1504/IJTM.2012.043950

International Journal of Technology Management, 2012 Vol.57 No.1/2/3, pp.33 - 48

Published online: 06 Apr 2013 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article