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Jean Cunningham

Jean Cunningham: Include finance/accounting in the lean product development process

By Jean Cunningham, - Last updated: Monday, February 18, 2013 - Save & Share - Leave a comment
If you have read about Lantech in the Womack and Jones, Lean Thinking, then you know that our application of lean principles in the product development processes yielded huge reductions in lead time.  And what better way to enhance margins than to have the first product to the market!
However, the recommendation I have as you launch LPD, is to include Finance/Accounting as an essential team member.  There are two reasons: first, the finance person can help gather the financial information needed for target costing and evaluate cost impact of different design alternatives. This person should help you only include the relevant costs. These costs will include materials, quality, people, freight, relevant inventory costs, and implications of off shoring. (Not the fixed costs included in the standard cost system). The decisions made in the product development process are the single most important in impacting profitability for the future of the company. While most of a companies’ metrics tend to cluster around the manufacturing process, in truth, manufacturing is merely implementing all the decisions made in product development.
The second reason to include finance/accounting in the LPD process, is that finance rarely participates in this function…other than to try to control the costs of the function itself.  However, the REAL role for finance/accounting in LPD is to understand and enable target costing, and value creation.  Maybe if we can get finance/accounting into LPD, they can regain some relevance in the organization.

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