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Since lean manufacturing considers that “Inventory is evil”, the purpose of this paper is to find and quantify the relations between work-in-process inventory (WIP), manufacturing lead time (LT) and the operational variables they depend upon. Such relations provide guidelines and performance indicators in process management.

The authors develop equations to analyse how, in discrete deterministic serial batch processes, WIP and LT depend on parameters like performance time (of each workstation) and batch size. The authors extend those relations to processes with different lots and the authors create a multiple-lot box score.

In this paper, the relations among WIP, LT and the parameters they depend on are derived. Such relations show that when WIP increases, LT increases too, and vice versa, and the parameters they depend on. Finally, these relations provide a framework for WIP reduction and manufacturing LT reduction and agree with the empirical principles of lean manufacturing.

Quantitative results are only exact for discrete deterministic batch processes without any delays. Expected results might not be achieved in real manufacturing environments. However, qualitative results show the underlying relations amongst variables. Different expressions might be derived for other situations.

Understanding the relations between manufacturing variables allows operations managers better design, implement and control manufacturing processes. The box score, implemented on a spreadsheet, allows testing the effect of changes in different operational parameters on the manufacturing LT, total machine wait time and total lot queue time.

The paper presents a discussion about process performance based on the mutual influence between WIP and LT and other variables. The relation is quantified for the discrete deterministic case, complementing the models that exist in the literature. The box score allows mapping more complex processes.

The purpose of this paper is to identify the shortcomings of traditional cost accounting techniques in lean companies and then it seeks to analyse the validity and convenience of value stream costing (VSC) as a tool in a company that has adopted some concepts of lean manufacturing.

The paper reviews the relevant literature in order to discuss the deficiencies of costing methods in lean manufacturing. It evaluates the requirements of VSC and provides a concrete illustration of VSC in the continuous improvement process of a point of sales terminal assembly line.

The paper evidences the possible mistakes of cost accounting. The necessity and validity of VSC in lean manufacturing are presented, followed by a case example. In order to make continuous improvement decisions, VSM, VSC and box score offer complete information on the performance of the value stream.

Although accompanied by an application on a real case study, this is not an empirical investigation on the adoption of VSC.

VSC requirements agree with the fundamentals of lean management. Therefore, VSC is a valid tool for lean companies, although the applicability depends on the maturity of the lean implementation.

This paper contributes to the lean accounting literature because the management accounting literature still lags behind the lean transformation. This is one of the first papers on VSC in relevant journals and the first one to combine VSC and box scores with value stream mapping. The paper will be useful to academics involved in new accounting systems but also to practitioners who are implementing lean manufacturing.

The purpose of this paper is to obtain and to expose work organisation practices common to the factories that successfully follow lean production (LP) principles.

Analysis of the literature and interviews with experts.

An analysis of the literature reveals clear connections between work organisation practices and LP. However, general reports on LP barely deal with work organisation. A set of work organisation objectives for LP was established for the authors and interviewed experts and analysed by reviewing the literature. Similarities are found between the different sources in terms of defining a set of policies and practices covering all the aspects of work organisation. It is shown that there are indeed work organisation practices characteristic of LP.

This paper is believed to be the first complete analysis of work organisation practices for LP.

The paper tests if and to what extent lean management system adoption generates abnormal profitability, and how it accrues over time. Configurational approaches to lean management systems and “S-curve” effects in lean implementation are used to ground the paper's hypotheses and interpret its findings.

Using the emerging view of lean as enterprise-wide management systems, this quasi-experimental study uses a difference-in-differences approach to estimate the abnormal profitability (ROIC) attributable to lean management system adoption. The paper leverages a unique data set of lean adopters nested in a panel data set (19 years) of 2,088 industrial firms matched by industry and firm size. It applies a variety of regression methods (two-way fixed effect panel estimator, propensity score matching, instrumental variable two-stage-least squares) to estimate the size of the abnormal profitability attributable to lean management systems, addressing endogeneity issues related to non-random sampling, omitted variable bias and reverse causation. It also analyzes the cross-firm variability of such abnormal profitability and how it accrues over time.

For the average non-adopter in the sample (44.3 million euro revenues), lean adoption generates abnormal ROIC ranging from 1.4% to 3.9%. These results come into effect approximately three years after starting lean adoption and peak after eight years. While the average abnormal profitability attributable to lean adoption is sizable, it varies significantly across firms and over time. This significant variation is compatible with firms' diverse ability to understand the complex inner workings of lean systems, and to design and implement them so that they improve profitability.

The conceptualization of lean as enterprise-wide management system can be further refined to more effectively categorize the components of lean systems and investigate the nature of their relationships. Lean system adoption measurement can be fine-tuned to better capture cross-firm and longitudinal heterogeneity. Future work can explore other dependent variables of interest to different stakeholders including shareholders' value, employment and environmental and social sustainability.

The financial benefits of adopting lean can be reaped to the extent to which managers embrace lean as a philosophy and implement it pervasively in the organization. A firm can use the study's estimates as a basis for making calculations about the returns of investment in lean adoption. The paper also shows that “getting the lean system right” makes a significant difference in terms of abnormal profitability, which is twice as large for the best lean adopters..

Compared with the promises of many lean proponents and supporters, the paper provides a more realistic view of what to expect from lean adoption in terms of profitability. Adopting lean as a comprehensive, enterprise-wide management system is not a universal panacea, but a complex endeavor, characterized by multiple complex decisions that require considerable capabilities, coordinated efforts and consistency of action.

Differently from extant research, this study does not study the correlation between the adoption of lean operation practices and financial performance but focuses on the abnormal profitability generated by the adoption of lean as a pervasive, enterprise-wide management system. Its research design allows to identify the differential profitability attributable to lean adoption and documents that it accrues non-linearly.