ABSTRACT
We’re transforming from “batch” manufacturing to one-piece “flow,” so it seems obvious to me that the financial standard cost system we are using for batch manufacturing will not work for Lean one-piece flow. But the main reason we cannot use our traditional financial standard cost system in our product families is that we need an “internal” system for “managing” the business as opposed to an “external” system for merely “reporting” the value of every piece of inventory and COGS (cost of goods sold). Even financial professionals have difficulty understanding the distinction between financial and managerial accounting. If every accountant were a member of the army, the financial accountant would be the guy or gal who goes out after the war has ended, counts the dead bodies, and reports those numbers to the general. The managerial accountant, on the other hand, would be the one who is in the trenches with the troops, fighting to win the war.
