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“The Most Fun I’ve Ever Had in an Accounting Class!” -- Student Reacts to Learning Lean Accounting

2/10/2016

Since 2008, the cost for a student and professor to attend the annual Lean Accounting Summit has been offset by the Lean Enterprise Institute's sponsorship of the Excellence in Lean Accounting Award.

The award, created by summit organizer Lean Frontiers, recognizes teachers and students who attended a previous summit then applied what they learned. Winners are selected by a panel of lean accounting thought leaders. The lean accounting movement seeks a shift from traditional cost accounting practices to ones that are more understandable, more accurate, and that correctly measure and motivate companies implementing lean management principles.

Professor
Professor Amal Said, PhD.

We decided to contact past award winners to see if any kind of a shift was actually happening. The first in this series of interviews was with Professor Amal Said, PhD, associate professor of accounting at the University of Toledo, and a 2014 winner.

Chet Marchwinski: Has winning LEI's Excellence in Lean Accounting award and attending the Lean Accounting Summit affected your classroom teaching or your career in any way?

Professor Amal Said: Oh absolutely. I wasn't aware about lean in general, so it was a great experience for me as an introduction to lean thinking when I attended for the first time in the fall of 2013 in Orlando.

I was really impressed by the keynote speakers and the other professional presentations. I met professionals from financial managers to executives from manufacturing and service companies. It was an eye-opening summit for me.

Since then I've been introducing the lean philosophy and thinking in accounting classes, and specifically in my management accounting classes. This past semester, I spent more than one week on lean. We discussed a case study and I showed students a video that [author and lean accounting pioneer] Jean Cunningham had about lean. We played a game -- a lean game -- and the students loved it.

CM: That's great to hear. It sounds like you don't have any barriers to introducing lean concepts into the course, but are there barriers that you or other professors face introducing lean accounting into a curriculum?

Said: There is actually. When undergraduate managerial accounting textbooks include lean, it's just one paragraph and that's it. So there is a lack of good material. I have to improvise and bring in material from different sources so students can learn about lean.

"Since I attended the summit for the first time, I've been interested in doing research. I have multiple research projects right now about lean that I hope will spark more research interest."

That's why I think the Lean Accounting Summit helped me to be aware of the different sources that are available. Trying to tweak material and make it readable for undergraduate students is a challenge. There is a lot of content that needs to be covered. You have to make sure there is time for it and that you cover all the content needed for CPAs, CMAs, and so on. I think those are the two main challenges. And finding local resources, like speakers who are implementing lean, is another challenge too.

CM: Those are good points. Do you have an example of how you, or one of your students, were able to apply lean accounting at work or in the classroom?

Said: One thing definitely is research. Since I attended the summit for the first time, I've been interested in doing research. I have multiple research projects right now about lean that I hope will spark more research interest and make a contribution to academia. Two of them are with Huilan Zhang, a doctoral student at the University of Toledo, who received the award with me in 2014. She's going to be graduating soon, so hopefully she's going to take it to her new university. Her dissertation is going to be on lean healthcare, a much needed area of research given the amount of waste in hospitals and healthcare facilities and the increased pressure to improve the quality of care while cutting cost.

This year, another student accompanied me to the summit, and she had a great experience. We're starting to look at, maybe, a small research paper to commence when she graduates next semester.

CM: Do you find that your students are interested in learning about lean management and lean accounting? Do they see any way that they or their employers may benefit from it?

Said: Absolutely. I can share with you some of the testimonials from the students. This year, after the session I did on lean, we had a reflection on online discussion boards. We discussed the game, how it changed their thinking about traditional manufacturing, and the focus on waste, quality, customer satisfaction, and, most importantly, the empowerment that employees have by using lean thinking. (See excerpted student comments below.)

CM: Finally, do you see any evidence that lean accounting principles are impacting how accounting is taught or on the accounting profession itself?

Said: I think that is one area where there still is a long road ahead. A lot of work needs to be done. There are some changes I'm seeing at small and mid-size firms, but not at large corporations yet. I think the more that research studies, hopefully, are shared with different corporations about why lean makes a difference and how it improves performance will motivate managers to implement it.

I think what LEAF [Lean Education Advancement Foundation] is doing, and the awards, hopefully, will bear fruit not only to academia, but also to the industry in general.

Chet: Another thing I wanted to share with you -- last year I was a co-chair of the Ohio regional meeting of the American Accounting Association. With the help of Sandy Richtermeyer, we were able to facilitate a tour at a company that's been using lean, Parker Hannifin, in the Cleveland area.

"I think what LEAF [Lean Education Advancement Foundation] is doing, and the awards, hopefully, will bear fruit not only to academia, but also to the industry in general."

There was a lot of interest from faculty, and the conference participants who attended. I think there were around 20 who attended the tour from different universities across Ohio. I think everyone went back and introduced lean somehow in their classes.

I'm going to be the program chair again next year, and president-elect, so I'm looking at having a lean accounting session, or another tour for our meeting at the beginning of April of 2016.

Comments from Professor Said's accounting students following a lean accounting simulation:

  • "May I just say that the lean game was the most fun I've ever had in an accounting class! One of the main takeaways from the game was that it's important to get feedback from the employees taking part in the process. Lean accounting makes the information of the business simple (direct and indirect costs; and revenues), separates variable from fixed costs, and increases value-added activities while decreasing and eliminating non-value added activities."
  • "I have realized that batch processing can lead to higher inventory cost due to excess work-in process and defective finished goods. Batch processing can also lead to longer lead time and lower performance of the supply chain team. However, lean accounting provides the firm with a more efficient and effective production cycle by decreasing lead time and increasing customer satisfaction by supplying them with high quality products. Internally, it improves teamwork between partners and provides a less stressful work environment."
  • "The standard view of accounting is that the financial statements are used by senior management and outside users that all have a decent amount of financial knowledge. Jean Cunningham talked about altering the presentation of the financial information so a production manager could make sense of it and use the information to help track costs and fix problems before they arise."
  • "The game was a way for me to physically see that lean was an improvement and gave me a point of comparison instead of just leaving the idea of lean as a big concept. The video looked at a different angle and presented the argument that accounting needs to make changes to become more aligned with lean. One of the major points that the video focused on was how accountants have to increase the readability of financial statements."

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