"Work Lean to Control Costs"
Manufacturing Engineering
December 2005, pp. 75-84
As a pioneer in the advocacy of activity-based accounting tools, the author takes the opportunity in this article to revise his thoughts expressed in 1989 in this same journal. He says that visits to Toyota over the last 13 years have convinced him that "the information needed to conduct current operations is inherent in the work itself, and the work itself provides all the information needed to control and assess operations."
The author argues that lean is about viewing operations in the present moment in a specific place. Abstract financial or quantitative data in reports and analyses is not sufficient.
Another argument made in the article is that driving up output (or reducing headcount) to reduce average unit costs is the wrong metric to drive operations. Toyota uses total costs, which encourages managers to pay attention to consumption of resources.
Johnson also argues that cost controls are inherent in the continuous flow process. Everyone adheres to standardized work and reports abnormalities immediately when they occur.
Finally, the author argues that the results from lean largely arise from "careful and patient building of relationships."
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