Lean’s emphasis on making one-at-a-time is in direct conflict with mass production methods, and it not surprising that measurements based upon the mass production methods would create the wrong kinds of incentives for a lean manufacturing environment. Other negative effects relate to errors in product costing and pricing under conditions of significant excess capacity created by lean, a misplaced focus product cost rather than customer value and value stream profitability, and the high cost of maintaining the systems required to create these costing statistics.

This one-day course presents and develops a new way to think about costing in a lean environment. Starting with an exploration of the problem, it develops the costing methodology and rationale that are based upon flow through the value stream, and shows how this approach supports the right incentives for a lean company, leads to better decisions, is easy to understand, and is simple and inexpensive to operate. At the end of the day participants should be able to construct a value stream cost form their accounting and operating data and take the first steps toward implementation.

The following is an outline of the one-day program

• What is the problem?
• Why is there a standard costing problem?
• What is value stream costing?
  • How it differs from standard costing
  • How to calculate value stream costs
  • How to calculate product costs using features and characteristics
• How to use value stream costs in making decisions (product rationalization, make or buy, order acceptance) and in valuing inventory.
• How to develop an implementation plan

Who Should Attend?

General Managers and presidents of lean companies, value stream managers,

CFOs, controllers, cost accountants, operations managers, lean team members and others who use or develop costing information.

Specific Learning Objectives

Upon completion of this one-day interactive session, participants will:

• Understand why standard cost do not work in a lean environment
• Understand the conditions under which value stream costing works
• Understand why value stream costing is better for a lean company
• Be able to calculate value stream costs for their companies
• Be able to identify product features and characteristics that affect cost and know how to apply these to develop product cost
• Know how to structure the evaluation of alternative organizational and costing frameworks to support value stream costing.