Why do we need lean accounting and how does it work?

Abstract American manufacturers are increasingly looking to lean thinking to improve productivity, reduce costs, enhance flexibility, create better value for their customers, and raise profits, cash flow, and stock price. Since those companies choosing lean principles as their basic business model will want to do everything they can to succeed, this article offers six reasons why accounting methods need to change before companies can fully realize the benefits of their lean transformation. It also describes several primary lean accounting methods and tools that support three key aspects of a lean organization—visual management, value stream management, and continuous improvement. These methods have been successfully implemented in a wide range of companies at various stages on the journey to lean transformation. © 2007 Wiley Periodicals, Inc.