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Let’s say right away, there is not an accounting line showing the gains made by Lean 6 Sigma activities.

Introduction

Let’s say right away, there is not an accounting line showing the gains made by Lean 6 Sigma activities. As part of a long-term vision, these activities are spread all over the accounting lines, and we can see the effect by monitoring the evolution of these lines..

The concept of “ Long Term»

It is necessary to understand that Lean 6 Sigma is part of a long-term vision, a real strategy of growth and competitiveness, where the gains made are often “fictitious”. Typically, by reducing storage space or reducing the area of ​​a workstation, this is not used for accounting purposes. Indeed, we always use the same building, so always have to heat up, pay the rent…

But in the Lean 6 Sigma vision, this gain is essential. It will integrate a new product line, increase production capacity … without having to invest in a new building. One possibility would be to revalue capital assets, which is very rare.

It’s the same with the gain of points of OEE.
On a machine already capable enough, unless our gain avoids to set up a team of Week-End or the call to temporary, this gain can not be valued at its fair value (we can only value energy gains … which are generally very low). But again, in a Lean 6 Sigma vision, this gain is important :

  • If an increase in volumes is felt, we will be able to “ cash it “
  • Or, by optimizing, it will allow us to no longer resort to outsourcing.

 

In the same way, reducing inventory levels and improving the flexibility of the means of production in the short term have little meaning in financial terms. On the other hand, in the long run, this will make it easier to respond to changes in customer demand and maintain our cash flow in difficult times..

All of this, to indicate that a purely “financial ” vision “is rarely in line with a Lean 6 Sigma vision. However, the agreement between these two services is necessary if we want the approach to work and be sustainable.

Lean 6 Sigma and Accountant Balance Sheet

Take the example of non-quality costs. There is no accounting line in the balance sheet “cost of non-quality;”. But we will be able to see it by reading some lines that exist, in this case, typically “stocks and in-process raw materials, supply;” of the assets.

By implementing the Just In Time and by reducing our inventory levels, all of the “stocks and work in progress”  lines of the asset will be impacted. This will allow us to improve our BFR is to be able to more easily invest.

In the same way, improving our quality and reducing our inventory will allow us to reduce our line ” supplier debt “.

De part du 5S or du Kanban, we will reduce our stocks and surfaces. This will decrease the value of the lines of ” fixed assets ».

To measure year-over-year evolution, we’ll need to see an asset reduction fixed asset and current asset, as well as debt. Translating an increasingly flexible and profitable business.

The effects of Lean 6 Sigma are everywhere in the balance sheet

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