Wednesday, April 22, 2009

Who needs accountants?

H. Thomas Johnson writes in To Become Lean, Shed Accounting, that Toyota does not allow accountants on the shop floor. It is no wonder. What would be the purpose? Everything is already under control. Accountants on the shop floor would be, well, muda or waste.

To be more specific, Toyota’s standard work controls six basic things:

exactly how each task in a process is performed,
the sequence of such tasks;
takt time (i.e., the time in which tasks must be performed to meet demand);
the work-in-process (WIP) inventory required to meet takt time;
the documentation of standard task, sequence, takt time, and standard WIP by front-line employees; and
the real-time auditing of standard work by the very people who create it.

My team of experts and instructional designers at Productivity Inc. built the first five of these elements into the Ford Motor Company’s first companywide training in standard work in 1996. The sixth element may come as a surprise. But read on.

Standard work, as defined by Toyota, integrates quality (defined by elements 1. and 2., task and sequence) on the one hand, and cost (defined by elements 3. and 4., takt time and work-in-process inventory) on the other hand. Through the rigorous application of successive quality checks, self-checks, mistake-proofing (all on the foundation of 5S and visual control), front-line employees themselves audit not only the quality performance but also the financial performance of the organization. Consequently, Toyota does not need inspectors at the end its production lines, nor does it need accountants at the end of the month to tell it whether or not it made money.

As opposed to the periodic audits of management accounting, Toyota’s employees perform what are in effect real-time audits. What could be more effective? Well, nothing. Unless you want to discover and fix problems on a monthly basis as opposed to discovering and fixing them right now.

Tom Jackson
Portland, Oregon
April 4, 2009

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