The Effect of Lean Accounting Implementation on Organizational Performance

Introduction

There has recently been a growing interest among both large and small foreign companies in establishing a manufacturing production base in Thailand. Approximately 138,807 vehicle, electronic, textile, and food factories are registered with the Department of Industrial Works in the country (Department of Industrial Works, 2022). Most of them operate as industrial estates spread across Thailand. Each industrial estate has different production goals depending on its business objectives. Thailand’s readiness to develop the manufacturing industry is crucial to its economic development, and therefore, a master plan for the development of the manufacturing industry, in accordance with the volatile global economic conditions, is necessary and urgent. To achieve sustainable development, it is essential that production problems are minimized and resolved. Further, manufacturing organizations must undergo continuous development to enhance their efficiency to increase the industry’s competitive strength against both domestic and international competition.

Among Thailand’s manufacturing industries, health and medical-related industries have shown a continuous growth trend. The global medical device market’s rapid growth rate of over 6.4% per year indicates a great growth potential for the Thai medical device manufacturing industry. Although the Thai medical device market has a tendency to grow according to market demand, medical device sales in the country was predicted to grow by 3.0% in 2020, slowing down from 5.5% in 2019, according to the medical consumables group that has received a factor (Tunpaiboon, 2020). Moreover, given the demand for medical devices in the fight against COVID-19, their domestic sales are expected to grow at an average of 6.5% per year. This optimism is supported by three factors. First, morbidity, especially from heart disease, stroke, cancer, and diabetes, as well as the number of elderly people, is increasing, resulting in a demand for more technologically advanced diagnostic medical equipment. Second, rising hospital investments, in both rebuilding and expanding service areas, are increasing the demand for medical equipment and tools. Third, the government has a support policy concerning granting investment privileges to the medical device and parts manufacturing industry. However, due to raw material imports, the profitability of local medical device manufacturers and importers is low. Advances in innovation and technology, in particular, are increasing the cost of imports, putting pressure on the local medical device parts and equipment industry (Tunpaiboon, 2020).

To increase profits and add value, as well as to reduce costs and increase competitiveness, manufacturing companies must improve their processes by managing waste generated during the manufacturing process, develop their own production systems to expand their potential, and implement lean manufacturing practices. Efficiency cuts down waste in the workplace; for this reason, the lean manufacturing system, which makes such waste reduction possible, has received a lot of attention. Lean manufacturing is a management philosophy that attempts to maximize the potential of industrial operations to deliver high-quality products on time and at low cost. Many firms utilize lean manufacturing as a strategy to boost their competitiveness, which is widely and highly regarded as ensuring high production efficiency standards (Čečević & Đorđević, 2020). Accounting information should thus be able to support management’s needs for planning, regulating, and assessing performance in an effective and efficient manner.