Some Milwaukee-area manufacturers are finding that the principles of lean manufacturing – examining and implementing the most efficient and cost-effective ways to make products – also can be applied in their accounting and finance departments. Lean principles can have the same impact in the office that they do on the shop floor, said Kenneth Kortas, a practice leader in business processes and information technology practice with Wipfli LLP, an accounting and consulting firm.
“It’s helpful as you go through the evaluation to visually lay out your process flows as a group, working as a team or kaizen group,” he said. “You can look at what is value-added and what is not.”
Lean principles have helped Wipfli clients eliminate duplication of processes in accounting areas, Kortas said.
“It always boils down to a mapping of what you do today,” Kortas said.
However, there is no magic bullet for front-office lean principles. Instead, each company needs to examine its own processes and find what works best for it.
Sheboygan-based Rockline Industries Inc., a manufacturer of coffee filters and baby wipes, has implemented some lean processes on its factory floor. One lean process has made it into its accounting department, said Frank Egan, cost accounting manager for Rockline. The company has married its freight scheduling system and enterprise resource planning (ERP) payment systems into a new automated freight bill payment system.
“About 90 to 95 percent of our payments are automated that way,” Egan said. “In the finance area, we do about 150 shipments a day. This takes up the overhead and non value-added processes.”
Rockline started implementing its lean payment system about three years ago. The company has manufacturing facilities in Sheboygan, Arkansas and New Jersey, and finished implementing the system in all three facilities about three months ago. The company needs to monitor and tweak the system over the next several years before moving to another lean system, Egan said.
“I’ve always heard (that implementing lean) can be a five to 10 year journey,” he said. “We’re in the early part of that. It’s hard to tell where the road ends.”
Egan and Mark Umhoefer, chief financial officer with Milwaukee-based Helwig Carbon Products Inc., a manufacturer of carbon brushes, are members of a CFO focus group within the Brookfield-based Paranet Group, a peer advisory, coaching and networking group for manufacturing executives. Joe Maloy, senior group director with the Paranet Group who leads the CFO group, said its meetings allow CFOs and accountants to talk about how to implement lean principles in their processes.
“Manufacturing companies are going through paradigm shifts, and many CFOs are doing that too,” he said. “They see themselves as support to the departments (of their companies), and they ask themselves, ‘How can I support manufacturing, how can I help them be leaner?’”
The lean processes that Umhoefer and other accounting staff at Helwig Carbon Products have implemented are intended to support efforts on the factory floor and the needs of customers.
“We’ve done some pieces of it (lean),” he said. “We don’t create a lot of work orders for the floor. A customer order becomes a work order in our system.”
That system eliminates redundancies from the front office. By having processes that make customer orders into work orders, the factory floor does not need to wait for accounting or other staff to process work orders.
The company also uses other aspects of lean in its accounting and bookkeeping process.
Helwig provides some of its products to a small number of its customers on consignment. Although those customers are only about 1 percent of its base, the consignment relationship allows those customers to pay for parts only as they use them.
Most of Helwig’s accountants, controllers and other office workers are cross-trained, Umhoefer said, allowing them to handle multiple functions when other departments get busy.
“That’s the cell concept,” he said. “We approach these things with a common sense approach, where it makes sense for our customers and our business.”
Umhoefer estimated that Helwig would begin looking at lean accounting in the next three to five years, as the office begins aligning itself more with the lean principles being implemented in the factory.
“We’ve done some things, but we’re not where accounting needs to get financials by value stream or anything like that,” he said.
Egan is far more cautious about lean accounting, largely because of the many other constrictions that accountants need to be aware of, including the Sarbanes-Oxley Act and auditing requirements.
“It’s like anything new,” Egan said. “It works great at a presentation at a seminar, but then it’s time to get in the real world and reality gets in the way. Maybe you don’t do it 100 percent, but maybe you can do half of it in the theoretical way and you’re still getting some value out of it.”
