The purpose of this article is to describe the implementation of value stream management and lean accounting at Watlow Electric Manufacturing Company. Value stream management and lean accounting are designed to support lean manufacturing where value is defined from the customer's perspective, work is organized by value stream, supply flow is defined in terms of demand pull, and employees are empowered and focused on quality and continuous improvement. Rather than organizing by functional departments (i.e., the traditional approach associated with responsibility accounting), a company using value stream management develops an organization structure based on value streams, where a value stream includes everything involved in creating value for a customer, e.g., everything associated with a product or product line. Value streams tend to include the work of many functional areas such as product design, production, marketing, sales, distribution, and cash collection. Metrics or measurements are created for each value stream. Some examples used by Watlow Electric include: safety (case incident rate), quality (defects per million), delivery (on-time to promise percentage), cost (sales per full-time equivalent), and inventory (days of inventory). Standard costs, cost allocations, and variance analysis are not used. Instead, only "directly incurred costs" are used for decisions related to the value streams. According to the article there are seven steps for implementation. The first step is to identify the main types of value streams. These include demand creation, new product development, and order fulfillment value streams. The next is identifying measurements for the different levels within the company including enterprise level, individual division/site level, value stream level, and cell level. The frequency of the measurements is different at the various levels. For