Warnacut Publishes “The Monetary Value of Time – Why Traditional Accounting Systems Make Customers Wait”
Of particular interest to the QRM community is a new book that examines accounting practices from the perspective of a high-mix, low-volume manufacturing environment. Author Joyce Warnacut contends that traditional accounting systems and metrics run counter to lead time reduction principals, often increasing customers wait time, rather than reducing it.
Warnacut states, “The ability to deliver a product that is made to customer specifications, at a competitive price, in the quantity needed, and at the same time quicker than the competitors is a distinct strategic advantage in many markets. However, traditional cost accounting systems will tell you that the process of creating strategic advantage in this fashion is not cost-effective.”
To substantiate her assertions, Warnacut has over 30 years of experience in manufacturing firms serving as controller, CFO and vice president. She currently serves as director of finance for Germanna College in Locust Grove, Virginia. More relevantly, in her previous recent tenure as CFO of longtime QRM member-company Nicolet Plastics in Mountain, Wisconsin, Warnacut served as the chief architect for their QRM initiative, which culminated in Nicolet being awarded the Manufacturing Leader of 2013 for Operational Excellence by the Manufacturing Leadership Council (ML100).
By applying lead time reduction strategies, combined with transitioning from traditional efficiency and utilization metrics to time-based metrics, Nicolet was able to cut lead times by 66%, reduce finished goods inventory with improved turns (from 11 to 25 times per year), increase velocity three-fold and grow both sales and bottom-line profits.
Her book examines the pitfalls of traditional accounting practices and champions Lean accounting concepts that include the elimination of standard costing, the development of a new model for product pricing and profitability, and transformation of the traditional cost-based financial statements to a simplified value-added format. The book is available for purchase on amazon.com.