using a simulation game in the puls learning main principles of accounting for lean€¦ · ·...

Using a Simulation Game

in the PULS Learning

Factory for Teaching

Main Principles of

Accounting for Lean

Mathias Michalicki, M.Eng.

Prof. Dr. Markus Schneider

European Lean Educator Conference

2016 (ELEC 2016)

Buckingham, September 14th 2016

Agenda

1. Introduction to the Technology Centre PULS (Production and

Logistics Systems)

2. General overview about the simulation game "From Job Shop

Production to One-Piece-Flow“

3. Accounting for Lean module in the simulation game

4. Conclusion

05.09.2016 University of Applied Sciences Landshut, Germany 1

Agenda


Logistics Systems)

2. General overview about the simulation game „From Job Shop

Production to One-Piece-Flow“


4. Conclusion


Introduction of the Technology Centre PULS

(Production and Logistics Systems)


- Opened in April 2016

- 4 professors with doctoral

students and

administration personnel

- Intensive cooperation

with industry and science

- State of the art and best

practice centre for Lean

Production and Lean

Logistics



NETWORKSTUDIES

Teaching:

Part-time masters course

„Process management and

resource efficiency“

Part-time master course „Value

oriented production

management“

Training:

University certificate

„Expert knowledge logistics“

„Industrial procurement“

Varied course program for

further education and coaching

RESEARCH

INFRASTRUCTURE: 900 m² learning and model factory, six laboratories

Industry 4.0

Lean production systems

Real time location systems

Process oriented factory

planning

Value orientation in

production

Resource efficiency End user network

Supplier network

Research partner

Students

Lean Sustainable Value oriented


Panorama picture


Incoming goods

ManufacturingAssembly

Intralogistics

Complete production value stream

Product: logistics trolley

1.5 million € equipment

900 m² shopfloor

Agenda


Logistics Systems)

2. Simulation game „From Job Shop Production to One-Piece-

Flow“


4. Conclusion


Simulation Game „From Job Shop Production to One-

Piece-Flow“ – general overview

academic target group students, research personnel

industrial target group engineers, planners, controllers, managers

integrated departments production, engineering, logistics, accounting & controlling

main learning content

• Difference between mass production and Lean production systems

• Lean principles in production / logistics / controlling

• Difference between traditional accounting and Accounting for Lean

in a Lean environment

• Necessary unity of:

duration 4 – 6 h game time + theory units (depending on course type)

number of participants 8 – 12

product real trolley


Simulation Game

General structure

05/09/2016 University of Applied Sciences Landshut, Germany 8

Theory: Lean Management

Round 1: job shop production

Debriefing 1: job shop production

Debriefing Topics:

• Layout and flow

• Cost centre structure

• Organisational chart

• Performance indicators

• Traditional accounting

Round 2: one-piece-flow

Theory: Accounting for Lean (AfL)

Debriefing 2: one-piece-flow

Light-bulb moment: conflict between traditional

accounting and Lean

Debriefing 3: AfL in the game

Trolley production in

12.5 min game rounds

Simulation Game

Round 1: job shop production

Mass production

system

Batch production

Push system

High division of

labour and different

departments

Piece rate wages

12.5 min production

run


Pre-Assembly

QualityPackaging

Schematic layout and flow

Simulation Game


Analyzing the organisational and cost centre structure


Simulation Game


Analysing quantitative and qualitative performance indicators


Inventory days: 3

Space requirement: 100 m²

High logistics and controlling

effort

Long and instable lead times

High waste-portion

(TIMWOOD-analysis to see

waste)

Simulation Game

Debriefing 1: job shop production– cost accounting

Traditional full absorption cost accounting is performed on the shop floor

Step 1: cost type accounting


Overproduction

of five trolleys

FINANCE

selling price

selling price 50,00 € €/piece

variable costs for one trolley

frame 20,00 € €/piece

set of wheels 8,00 € €/piece

packaging material 2,00 € €/piece

fixed costs for one game round

wages & salary 36,00 € €/round

depreciation 9,00 € €/round

rent 4,00 € €/round

corporate overhead 3,00 € €/round

auxiliary material 1,00 € €/round

additional costs 1,00 € €/round

TOTAL 54,00 € €/round

thereof direct costs 25,00 € €/round

thereof overhead costs 29,00 € €/round

Inventory of trolleys

round 1 round 2

starting inventory 15 6

sales volume 10 10

ending inventory 20 6

production volume 15 10

Simulation Game



Step 2: cost centre accounting – calculation of overhead rates


Cost Distribution Sheet

total Co

st

Cen

tre 0

Maste

r / T

ota

l

Are

a

Co

st

Cen

tre 5

Ware

ho

use

Co

st

Cen

tre 1

Pre

-Assem

bly

Co

st

Cen

tre 2

Assem

bly

Co

st

Cen

tre 3

Qu

ality

Assu

ran

ce

Co

st

Cen

tre 4

Packag

ing

auxiliary material 1,00 € - € - € 0,33 € 0,33 € 0,17 € 0,17 €

rent 4,00 € 0,67 € 0,67 € 0,67 € 0,67 € 0,67 € 0,67 €

additional costs 1,00 € 0,17 € 0,17 € 0,17 € 0,17 € 0,17 € 0,17 €

depreciation 9,00 € - € - € 3,00 € 3,00 € 1,50 € 1,50 €

wages 29,00 € - € 4,00 € 8,00 € 8,00 € 5,00 € 4,00 €

salary 7,00 € 7,00 € - € - € - € - € - €

corporate overhead 3,00 € 0,50 € 0,50 € 0,50 € 0,50 € 0,50 € 0,50 €

primary cost centre overhead 29,00 € 8,33 € 5,33 € 4,67 € 4,67 € 3,00 € 3,00 €

allocation cost centre 0 8,33 € - € - € 2,54 € 2,54 € 1,63 € 1,63 €

allocation cost centre 5 5,33 € - € - € 1,62 € 1,62 € 1,04 € 1,04 €

primary & secondary costs 29,00 € - € - € 8,83 € 8,83 € 5,67 € 5,67 €

direct costs of the cost centre - - 8,00 € 8,00 € 5,00 € 4,00 €

overhead rate 110% 110% 113% 142%

primary cost centressecondary cost centres

necessary

for product

costing

Simulation Game



Step 3: cost object accounting – calculation


Product cost calculation

round 1

material costs 30,00 €

direct costs pre-assembly 0,53 €

overhead pre-assembly (110 %) 0,59 €

direct costs assembly 0,53 €

overhead assembly (110 %) 0,59 €

direct costs QA 0,33 €

overhead QA (113 %) 0,38 €

direct costs packaging 0,27 €

overhead packaging (142 %) 0,38 €

product costs 33,60 €

Income Statement

round 1

sales 500,00 €

cost of sales (units sold * product cost) 336,00 €

gross profit 164,00 €

return on sales (ROS) 33%

Simulation Game

Round 2: one-piece-flow

Lean production

system

One-piece-flow

Pull system

Heijunka

All processes

integrated in one

value stream

12.5 min production

run


Schematic layout and flow

U-shaped assembly cell

Simulation Game


Analyzing the organisational and cost centre structure

Less complex

Holistic process / value stream organisation


Simulation Game


Analysing quantitative and qualitative performance indicators


EVALUATION job shop one-piece-flow

stock 20 pcs 10 pcs

space requirement 100 m² 80 m²

logistics - intransparent

- enormous effort

- many empty runnings

- transparent

- much less effort

controlling - enormous effort

- controlling by a

massive stock

- less effort and

stock

- 100 % delivery rate

lead times long and instable defined, short lead

times

Enormously improved performance indicators in the Lean game round!

Inventory of trolleys

round 1 round 2

starting inventory 15 6

sales volume 10 10

ending inventory 20 6

production volume 15 10

Simulation Game

Debriefing 2: one-piece-flow – cost accounting

Step 3: cost object accounting – calculation of both rounds


Round 1: Overproduction

Round 2: Production according to customer demand

same sales

volume

different

production

volume

Product cost calculation

round 1 round 2

material costs 30,00 € 30,00 €

direct costs pre-assembly 0,53 € 0,80 €

overhead pre-assembly (110 %) 0,59 € 0,88 €

direct costs assembly 0,53 € 0,80 €

overhead assembly (110 %) 0,59 € 0,88 €

direct costs QA 0,33 € 0,50 €

overhead QA (113 %) 0,38 € 0,57 €

direct costs packaging 0,27 € 0,40 €

overhead packaging (142 %) 0,38 € 0,57 €

product costs 33,60 € 35,40 €

Simulation Game

Debriefing 2: one-piece-flow – cost accounting

Step 3: cost object accounting – calculation of both rounds


Higher product costs

Less return on sales

Traditional accounting supports

overproduction and seems anti-

Lean

Enormously improved performance indicators in the Lean game round!

Income Statement

round 1 round 2

sales 500,00 € 500,00 €

cost of sales (units sold * product cost) 336,00 € 354,00 €

gross profit 164,00 € 146,00 €

return on sales (ROS) 33% 29%

Agenda


Logistics Systems)

2. Simulation game „From Job Shop Production to One-Piece-Flow“


4. Conclusion


round 1 round 2

sales 500,00 € 500,00 €

material costs 450,00 € 300,00 €

wages & salary 36,00 € 36,00 €

machine costs 9,00 € 9,00 €

auxiliary material 1,00 € 1,00 €

rent 4,00 € 4,00 €

additional costs 1,00 € 1,00 €

total value stream costs 501,00 € 351,00 €

value stream profit 1,00 €- 149,00 €

return on sales (ROS) -0,2% 29,8%

adjustment to external financial rules

corporate overhead 3,00 € 3,00 €

inventory change 168,00 € - €

gross profit 164,00 € 146,00 €

Accounting for Lean module in the simulation game

Debriefing 3: value stream costing & statement

Simple direct costing of the value

stream using actual costs on a cash

basis (no accrual basis)

Non-material costs are treated as

fixed costs of the period

No complicated allocation of

overhead

Easy to understand

Support of Lean Thinking

Adjustable to external financial rules

(German HGB, US-GAAP)05.09.2016 University of Applied Sciences Landshut, Germany 21

Use of a Value Stream Statement for comparing both rounds again:

Accounting for Lean module in the simulation game

Debriefing 3: detailing of value stream statements


Introduction of new Lean cost types:

Cost of added value

Cost of current needed waste

Cost of waste

To define the new cost types

following tools are introduced:

Operator balance chart

Standard work instructions

and value adding analysis

Data from shop floor management

VALUE STREAM DIRECT COSTING

sales 500,00 €

cost of added value 336,39 €

material costs 300,00 €

wages & salary 21,39 €

depreciation 9,00 €

auxiliary material 1,00 €

rent 4,00 €

additional costs 1,00 €

contribution margin I 163,61 €

cost of current needed waste 14,19 €

transport - logistics 4,00 €

waiting - wages 2,94 €

unnecessary movements - wages 4,17 €

non value adding work - salary 3,08 €

contribution margin II 149,42 €

cost of waste 0,42 €

defects (rework) - salary 0,42 €

value stream profit 149,00 €

Agenda


Logistics Systems)

2. Simulation game „From Job Shop Production to One-Piece-Flow“


4. Conclusion


Conclusion

A simulation game is used to show the differences between a mass

production system and a Lean production system

Traditional accounting does not support the Lean system

Introduction of value stream statements using simple direct value

stream costing on a cash basis (instead of accrual basis)

Awareness for creating a holistic Lean management system


production

system

organisational

structure

accounting

system

Technology Centre PULS

(Production and Logistics Systems)

Bräuhausgasse 33 ∙ D-84130 Dingolfing

www.tz-puls.de

Prof. Dr. Markus Schneider

Scientific Director of

Technology Centre PULS

Mathias Michalicki, M.Eng.

Research Assistant and

doctoral candidate on the

field of Controlling for Lean

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