| Summary: | The study focuses on reviewing the effects of lean transformation on the case organization’s performance measurement and capacity management. The objective of the study was to identify issues in management accounting processes from the standpoint of lean production and to develop new capacity and performance measures that support lean production in the case organization.
As a result of the study absorption-based capacity management was identified as a key barrier for lean operations and continuous improvement at Valmet’s Paper business line. As a solution the study proposes implementing new capacity related performance measures focusing on the bottleneck processes and production machines. The proposed process level measure, operational equipment effectiveness (OEE), consists of three elements: availability, performance efficiency, and quality. On a value stream level the study proposes implementing non-financial capacity management based on bottlenecks.
However, prior to implementation an outspoken definition of the case organization’s value streams is required. Together the implementation of the proposed process and value stream capacity measures, and the shift in the way of understanding capacity utilization can be viewed as a pathway guiding Valmet away from absorption-based capacity management.
For the purpose of this study a roll production workshop was used as a research subject representing a production value stream. However, in reality a value stream includes several functions such as procurement, engineering and assembly that also need to be included in the measurement of the value stream. As a part of the study also the financial aspect of measuring the value stream was examined. However, in the end the financial aspect was left out of the primary focus of the study. Yet this study provides the basis for further research on implementing value stream costing in the case organization as the lean transformation moves forward.
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