Many Western managers were introduced to deal with the production in 1990, with the publication of “The Machine That Changed the World,” based on a study of five years of the Toyota International Motor Vehicle Program at MIT. Since then, thousands of managers have used the principles of lean management to achieve faster cycle times, reduced rates of default and increases in on-time delivery performance. Lean Management enables a significant reduction in inventory levels in the supply chain, which should lead to better financial performance – particularly as companies realize the simultaneous reductions in manufacturing costs and service. But, as the authors point out, the transition takes time and is filled with obstacles. Foreseeable obstacle is the crisis of confidence that occurs when management is not able to improve financial results quickly. Lean transformations often have negative short-term effects on the profitability of the company (ie, things get worse before it gets better). Management must anticipate these challenges and explain clearly. To help administrators overcome financial barriers in the way of folding, the authors propose new tools to anticipate the deterioration in financial results presented as a producer will lean mass and understand the actual performance improvements that have placed during this period. His approach, called “flow of book value,” helps administrators plan for the financial impact in the short term, monitor progress, understand the operational improvements and develop strategies to maximize long-term benefit. Managers must understand that the “bad” news is not really bad -. is part of the process required to establish a stronger, more productive organization and approach authors replace the system traditional cost accounting a transparent accounting system that is used to control the flow of business value, incorporating all value-added activities and non-value added necessary to bring a product or service from beginning to end.
by
Robin Cooper,
Brian Maskell
Source: MIT Sloan Management Review
10 pages.
Publication Date: June 1, 2008. Prod #: SMR288-PDF-ENG
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