- Part E 5 Marks Wartlow Electric Manufacturing Company Introduced Lean Principles In 2018 And Reported A Successful I 1 (102.99 KiB) Viewed 29 times
Part (e) - 5 marks Wartlow Electric Manufacturing Company introduced lean principles in 2018 and reported a successful implementation in 2021. Wartlow began with the implementation of lean principles and then adopted value- stream management (VSM) using the value-stream income statement. As expected, the use of VSM achieved better decision making (previously the firm had treated direct labour as a pure variable cost that varied with volume; after VSM it was clear that the behavior of labour costs was far more complex), reduced inventory, reduced cycle times and improved communication and coordination among employees. It was this latter result, better communication, that surprised Wartlow management, as employees began to work as teams that focused on the key success factors for the firm. The steps taken by Wartlow to implement lean included: Identify the main value streams of the company (Wartlow selected value streams consisting of 25- 150 employees each; more than 90% of the company's employees were assigned to a value stream) Determine the key measures for achieving the company's strategic goals (these included measures of quality, safety, on-time delivery and cost) The accounting system was adapted to VSM, including changes in the accounting for materials, labour and overhead. . Required: Given the implementation of lean as described above, what do you see as the challenges ahead for Wartlow? Suggest some features of lean accounting that have yet to be implemented. (5 marks)