Dr. Reginald Tomas Lee is an advisor and researcher in the areas of cash flow, capacity management, and profitability. Using a deep background in engineering and math, he has created tools and models that have helped executives in businesses of all types improve the management of cash flow and other financial data.
Professionally, Reginald has worked in industry, academia, and consulting including leading global companies such as EY, GM, IBM, and Oracle.
He has advised many marquee names such as Bristol Myers Squibb, Disney, DuPont, Home Depot, Lockheed, Office Depot, Raytheon, Toyota, and United Healthcare.
Reginald has a PhD in mechanical engineering from the University of Dayton, and is the author of three books and over 40 published articles and white papers. He is a feature writer for Journal of Corporate Accounting & Finance and a contributor to the Cincinnati Business Courier.
Resources by and about Dr. Lee
Article: Making technology pay
Three reasons cost accounting is a bad practice
- Creates and forces math and relationships that don’t exist
- You lose touch with operations
- Creates meaningless numbers that people consider gospel
Accounting reports financial performance, they doesn’t model cash flow
- Cash flow is most important
- Accounting not good proxy for managing cash flow
- Idea and importance of capacity
Capacity = Largest Expenditure
- Hotels, Airlines, Cruise ships, don’t do cost accounting
- They invest in yield management—value/pricing side
You can calculate different costs from same data, and it has nothing to do with cash
- Standard, ABC, Lean, Full-Absorption, Marginal costing, all lead to different results
- Yet all methods are sanctioned by GAAP
- Segal’s Law: a man with a watch knows what time it is. A man with two watches has no idea.
- A single representation of an artificial reality
Companies are spending a lot of money managing costs that have nothing to do with money
- Dr. Lee distinguishes between: Cost C (cash) and Costs NC (non-cash)
- Cost is an opinion; cash is a fact!
Costing and cost accounting create false relationships and inappropriate use of math
- No relationship to buying time and what you do with it
- Cheaper to make 20 pens than 5? How?
- Economies of scale?
Capacity modeling: unifying concepts of finance, accounting, and operations
- Contribution margin analysis won’t predict need for additional capacity
- Overstate ROI because of Costs NC—hospital example
In his seminal book, Profit Beyond Measure: Extraordinary Results through Attention to Work and People, H. Thomas Johnson revels how Toyota doesn’t use standard cost accounting.
The Goal: A Process of Ongoing Improvement, by Eliyahu M. Goldratt. He is another critic of cost accounting, as seen in this Youtube video: