Accounting for Lean Implementation in Government Enterprise: Intended and Unintended Consequences

This research explores the effects of implementing a lean production system in a government facility. The organization’s formal accounting practices delay recognition of production savings, but informally the facility promotes its lean efforts through attention-getting, off-the-books, “innovative†accounting. The authors state three propositions relating to customer effects of the lean improvements and the financial approaches. They then state four hypotheses relating to the measures’ unintended effects within the defense logistics enterprise as workload varies, and test the hypotheses employing a system dynamics simulation. Through review of qualitative data and a system dynamics simulation, the authors identify minor effects upon customer behavior and labor rates oscillation, thereby filling gaps in the literature relating to government productivity improvements, and expanding knowledge on lean-induced labor savings, work demand, and workplace effects of lean change in a government environment. They identify the greater effects of supplemental funding provided to such facilities, and begin the discussion of alternatives to current enterprise-wide government finance practices that may promote greater transformational behavior.