In lean there are eight types of waste.  These wastes are seen within the whole organisation and within the accounting function. I have outlined the eight wastes below in Exhibit 1

Exhibit 1 The eight wastes that need tackling

Eight types of waste The eight wastes within the accounting function
1. Over-production (Building batches of products larger than the customers’ immediate need. Printing marketing brochures in advance) Our reports too large and go into too much detail
2. Waiting (Production operators waiting because a machine has gone down or a component is not available. Operators “minding” machines). The processing of batches of AP or AR transactions where these batches wait for hours or days before processing.  Also the month-end, year-end, annual planning processes have much waiting time.
3. Transportation (Moving materials around the factory. Buying raw materials and components from distant suppliers). The finance team is always shuffling information around team members.
4. Extra processing (Processes that appear productive but are unimportant to the customer. Painting and finishing components that are not seen. Designing additional features into a product that the customers do not use e.g. many features in Excel). The chart of accounts, the month-end, year-end, annual planning processes all have extra processing within them.
5. Excess inventory (Having materials, components, work-in-process, and finished goods levels above the immediate need). The way we have transferred this period’s sunk costs into next period production costs has created a blow –out in inventory.
6. Waste of motion searching for tools, parts, or forms. The finance function needs a make-over in time and motion.  We all need to know where everything is filed and be disciplined in maintaining this.
7. Defects, scrap and rework in production. Complex inspection steps to overcome poor processes or poor design. Accounting function generates many spreadsheets that have a dubious function.  They are completed because they were completed last month.
8. Unused employee creativity Based on Toyota, we would need to have 10 innovations implemented per team member per year within the finance function.
    “Most business process are 90% waste and 10% value-added work.”

Dr Jeffrey Liker

Boeing reduced over a trillion of internal transactions through adopting lean.

 

To understand more  about these wastes read Jeffrey Liker’s book,  The Toyota Way: 14 Management Principles from the World’s greatest Manufacturer. Liker’s book is well worth the read.