For years now, I have been preaching (sorry) about the need for internal auditors to cut out any activity that doesn’t create value for its customers in management and on the board.
This is an essential element in the great discipline, originally used in manufacturing by Toyota, called Lean.
James Paterson (formerly the CAE at AstraZeneca) has written a very useful book, Lean Auditing: Driving Added Value and Efficiency in Internal Audit. (Richard Chambers and I both contributed our thoughts.)
Paterson explains some of the principles in an article for the ACCA:
The overall aim of lean is to maximise customer value while minimising waste.
…key points include:
- specify value from the perspective of the end customer and always ask: would a customer pay for what is being done?
- pay careful attention to what really happens in an organisation (called Gemba or Go Look See)
- aim for a flow of valuable work and a greater understanding of waste (Muda) such as waiting, rework, duplication etc., as well as unevenness of workloads (creating lulls) as well as points of overburden (that create bottlenecks)
- create a culture of discipline to perfect and streamline processes and drive constant improvement through clear measures and other techniques (eg just in time, automation and error proofing).
Let’s think about this…
