Health Care -- Lean Philosophy on Cost Reduction and Quality Improvement
Lean Philosophy is initially traced back to Henry Ford's innovative assembly line, revolutionizing manufacturing while failing to provide true variety. Building on Ford's concepts Toyota management established a Lean Philosophy in the 1930's and 1940's that focused on production flow and waste elimination, resulting in rapid, low cost and high quality processes, along with simpler and more accurate management. These concepts were further elucidated by authors including James Womack, who established the Lean Enterprise Institute in 1997.
The essential elements of Lean Philosophy are 5 principles including: defining the value sought by the customer; specifying the value stream of the product satisfying that value while challenging wasted steps; making a continuous flow of product through refined steps; creating "pull" (essentially meaning "customer demand/expectation") from step-to-step for continuous flow wherever possible; continually improve and refine the process to cut the steps, time and information required in the production process. Based on these principles, proponents of Lean Philosophy established a Lean Action Plan consisting of initiation; reorganization; installation; and completion of transformation. This philosophy ideally creates a customer-oriented human system that defines value from a customer's perspective, reducing effort, cost, time and space while improving customer service.
Companies using the Lean Philosophy often found that traditional accounting concepts were anti-lean. Consequently, a Lean Accounting method was developed, also stressing customer-oriented, value-centric processes. Defined by the Lean Accounting Summit in 2005, Lean Accounting has a vision dedicated to quality improvement and cost reduction. Accordingly, Lean Accounting employs the 5 principles of: lean and simple business accounting; accounting processes supporting lean transformation; clear and timely communication; planning from a Lean perspective; and strengthening internal accounting control.
Due to the notable success of Lean Philosophy and Lean Accounting, they have spread globally to non-manufacturing industries, such as the health care industry. While the health care industry has many complex processes that benefit from Lean Philosophy and Lean Accounting, one example of muda (source of waste) that is readily responsive to Lean Accounting is the medical supplies area. Applying lean and simple business accounting, accounting processes supporting lean transformation, clear and timely communication, planning from a lean perspective and strengthening internal accounting control, Lean Accounting is able to streamline supplies processes, significantly reducing costs and improving quality.
Outline
Introduction
Analysis
Lean Philosophy
Background of Lean Philosophy
Essential Elements of Lean Philosophy
Lean Action Plan
Initiation
Reorganization
Installation
Completion of Transformation
Benefits of Lean Philosophy
Lean Accounting
Background of Lean Accounting
Vision of Lean Accounting
Principles, Practices and Tools of Lean Accounting
Lean and Simple Business Accounting
Accounting Processes Supporting Lean Transformation
Clear and Timely Communication
Planning from a Lean Perspective
Strengthen Internal Accounting Control
Application of Lean Accounting to Health Care: Supplies Areas
Lean and Simple Business Accounting
Accounting Processes Supporting Lean Transformation
Clear and Timely Communication
Planning from a Lean Perspective
Strengthen Internal Accounting Control
Conclusion
Introduction
Lean Philosophy, established and refined in the 20th Century, revolutionized manufacturing. Focused on customer-oriented value, Lean Philosophy proactively defines and eliminates waste in order to continually provide higher quality while lower costs. Though Lean Philosophy was initially attempted with traditional accounting methods, Lean proponents found that traditional accounting is bloated and anti-lean. Consequently, Lean Accounting was developed to enhance the Lean Philosophy. Due to the success of Lean Philosophy and Lean Accounting in manufacturing, these concepts have spread globally to government and service industries, including the health care industry.
Analysis
Lean Philosophy
Background of Lean Philosophy
Historians trace the Lean Philosophy's origins back to Henry Ford's innovative assembly line, invented in 1913 (Lean Enterprise Institute, 2009). Integrating the entire production process with his "flow production," consisting of interchangeable parts, standard work and moving conveyances, Ford revolutionized manufacturing. Nevertheless, Ford's flow production had a major drawback in that it did not provide true variety (Lean Enterprise Institute, 2009). Refining Ford's flow production from the 1930's through the 1940's, Toyota's Japanese management identified 7 mudas (sources of waste) in manufacturing: conveyance, motion, waiting, overprocessing, inventory, defects, and overproduction (Jimmerson, 2010, p. 3). Concentrating on eliminating waste, Toyota management placed even greater stress on the concept of flow through tailoring machines for needed volume, using self-monitoring machines, arranging machines in order of process, originating rapid set-ups to enable machines to make several parts in low volumes as necessary, and authorizing each step to notify the prior step of needed materials (Lean Enterprise Institute,...
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