Right-designing for cost management
Yasuhiro Monden, a professor of Managerial Accounting and Operations Management at the University of Tsukuba Institute of Socio-Economie Planning in Japan, has researched and published work revealing a wide variety of accounting and cost management issues. He studied Toyota's methods in accounting and production systems for many years. His work discloses a significant point for people interested in learning lean principles: the accounting system must be a subservient system to the production system. In other words, development of cost management accounting is completely dependent on the development and implementation of a lean manufacturing system or physical operation system. Monden notes: " [T]here is an increasing tendency to believe that applying accounting controls is impractical or even redundant. What is important, however, is to control the physical elements of production that can influence cost standards. Cost control in this sense implies workplace reforms."1 With this statement, Monden emphasizes that the design and operation of the production system are more important than managing the design of the cost system.
Glenn Uminger is currently the General Manager of Production Control and Logistics for Toyota Motor Manufacturing in North America and was the architect of the Toyota's Georgetown, Kentucky manufacturing facility's management accounting system. He emphasizes that the management accounting system's goal must be to rightsize and right-fit the needs of the operation.2 The system must serve the operations. Uminger learned this by spending six months in Toyota plants working in manufacturing before developing the accounting system for the Georgetown operation. This intimate, first-hand knowledge led him to design and implement a much simpler cost management system that supported the needs of the manufacturing system