MEDIA Every Angle Blog

Every Angle Blog

Getting Lean in Finance – a most sensible thing to do

Posted on: 31-07-2018 10:03:42832

Getting Lean in Finance

Probably nearly everybody in Industry knows or at least has heard about Lean Management, the philosophy that has gained its place in operations management improvement practices. The major Lean principles are:

  1. Continuously improve in all functions;
  2. Focus on customer value;
  3. Focus on processes;
  4. Eliminate waste in processes, transactions, reports and systems.

The first principle means that everybody is held to strive to improve, in all departments, in all functions at all time. That’s an easy one to say and understand, yet it can be hard to get there in practice. The second rule focuses the attention on customer value. Your priority when improving should be aimed to increase the value for the customer. The more value the customer gets for his buck, the more likely (s)he will choose to get back to you.
The third rule says ‘focus on processes’, the sets of activities that interact to get a result. The verb ‘interact’ is the most important word here. On the process level Lean specifically investigates and tries to improve the areas where the inter-process interaction isn’t optimal. The fourth rule states that one should always try to eliminate waste (or Muda as it is called in Lean, with its Japanese word).

Needless to say, the first three Lean principles are valid not only in operations management, but also in Accounting and Controlling. And that is also true for the ‘waste elimination’, be it that probably not all occurrences of waste as defined in operations can directly be found in Finance.
The traditionally used Lean categories of waste are:

  • Transport: too soon or unnecessary movement of goods that are immediately needed for production;
  • Inventory: all the stuff (raw material, semi-finished products, finished products) that are not being processed;
  • Motion: people or machines that are moving more than required for the processing;
  • Waiting: stuff that is waiting to be processed in the next production step;
  • Overproduction: stuff produced way before you need it;
  • Over-processing: time and effort spent due to bad performance of tools or bad product design;
  • Defects: time needed to inspect and correct defects.

As to me the ones most eligible for success in the Finance are Over-processing and Defects. For example, Over-processing. Just imagine how long it may take to get an overview of direct and indirect spend, or to get an overview of incorrectly taken discount percentages, or to get a correct overview of product costing. All of this because the information system is not powerful or flexible enough to hand you the results, pushing you to spend your days downloading data from your information system to Excel, and your evenings analyzing the data with your Excel skills. Time needed to inspect, and correct Defects is also a big source of Waste in Finance. Figures that just haven’t been entered properly in execution, erroneous master data generating administrative errors in invoices, and so forth.
Ideal candidates to get Lean improvement. One knows what to improve.
The one million dollar question then is… “How to improve it to get Lean?”.

Jacques Adriaansen 
Business Improvement Thought Leader

Recent Posts in Every Angle


Business Analytics (19)
Data (5)
ERP (2)
Every Angle (24)
General (1)
HANA (1)
Industry Perspective (2)
IT and business alignment (3)
Supply Chain (7)

Recent Posts

25-02-2019 08:33:01
Process Mining – the dream of many Supply Chain Improvement experts

23-01-2019 09:26:09
Top-10 BI Trends 2019 Analyzed

06-12-2018 09:27:30
The importance of lead times for business performance improvement

19-11-2018 13:54:29
Getting information out of SAP without long lead-times, a dream or reality?

27-06-2018 09:08:11
Magnitude acquires Every Angle

Most viewed

04-10-2016 16:40:17
Supply Chain Control Towers – Reporting is Not Enough...

08-09-2016 15:41:35
Big Data: Big Disappointment or Massive Success?

24-10-2016 12:26:57
IT – Business Enabler or another Functional Silo?

29-03-2016 11:12:02
Is Your Supply Chain Nearing the End of its Shelf Life?

16-03-2016 09:59:02
Gaining Supply Chain Insight Through Prescriptive Analytics

Get answers to all your business questions

Free Trial
© 2019 Every Angle BV - A Magnitude Company | Privacy policy | Disclaimer
We are social
T: +31 182 577 744 | E: