A New Cost Management & Accounting Approach For Lean Enterprises

The adoption of lean principles and practices has become widespread in many industries since the early 1990’s. Companies are now beginning to realise that traditional costing and accounting methods may conflict with the lean initiatives they are implementing. Consequently, important research questions are being raised. Is a new cost management and accounting approach required for companies that adopt lean principles and practices? If so, what should this approach entail? This paper addresses these questions. The problems associated with continuing to use traditional costing and accounting methods in a lean environment are discussed and existing research in the area of costing, accounting and measurement for lean enterprises is analysed. The paper then outlines the findings of a joint academic-industrial research programme undertaken as part of the UK Lean Aerospace Initiative (UK LAI) and the resulting lean cost management and accounting proposals for the aerospace industry. The paper concludes by highlighting the academic and practical implications of this research. 1 This paper was previously presented at the Irish Academy of Management Meeting Annual Conference, Trinity College, Dublin, 2-3 September 2004. 2 Corresponding author. E-mail: [email protected]