What Is Lean Manufacturing?
In short, lean manufacturing is a continuous improvement philosophy promoting system-wide efficiency. Indeed, this system values balanced productivity that harmonizes across the entire value chain. If a particular line is more productive than the other parts in the value chain, it does not benefit the efficiency of production. Therefore, lean manufacturing principles adjust for overall efficiency rather than settling for individual productivity.
Lean management in manufacturing provides a sustainable competitive advantage by streamlining the production process from raw material to customer. And reduction of waste and non-value-added activity increases total system efficiency. Whereas the mass production method developed by Henry Ford might increase total output to increase profits, Toyota-inspired lean focuses on smaller batches to smooth production flow in the plant. So the result is a reduction of non-value-added activity and a subsequent increase in value-added activity. Without increasing the number of employees or adding new equipment, meaningful output is increased as a ratio to busy work.
Built on the Japanese model of efficiency, lean manufacturing seeks to continuously reduce Muda or waste. And the power of lean manufacturing lies within its ability to find processes and actions to reduce or eliminate. In turn, this creates a balanced process that reduces cycle time and waste, increases quality, and enhances customer satisfaction.
The Importance of Reducing Cycle Time
There are numerous reasons to reduce cycle time and waste, some of which are less obvious than others. Cycle time refers to the length of time it takes to convert raw materials into finished goods. And the length of this cycle determines the company’s ability to convert assets into profits. A company able to reduce cycle times more than their competitors will be able to respond more quickly to market demands and thus gain a larger market share. Some of the many benefits of reducing cycle times include:
- Innovation opportunities
- Better distribution positioning
- Increased productivity
- Higher customer satisfaction
- Advantaged profitability potential
Eight Lean Wastes
Lean production does not focus exclusively on waste reduction, but waste is minimized or eliminated more as an inevitable byproduct of better production flow. It may seem obvious that waste hurts productivity and profitability. But the importance of reducing waste is often underappreciated. There are numerous areas of waste that go overlooked. Lean manufacturing typically focuses on seven key wastes. But others expand the list to eight, represented by the acronym, DOWNTIME:
- Defects: A defective part caused by poor quality inputs, user error, or other problems is costly and easily avoided.
- Overproduction: Overproducing irrespective of demand or capacity is wasteful and not considerate of the customer.
- Waiting: Bottlenecks occur due to oversupply or undersupply and should be handled by better supply chain management and personnel management.
- Not Utilizing Talent: Waste occurs when the skills of the workforce are underutilized or misappropriated. Human talent is a highly valuable and often overlooked commodity.
- Transportation: Movement to and from docks and warehouses is an area for potential waste reduced by better layout and better aligned process flow.
- Inventory Excess: Numerous factors can lead to excessive inventory, which, in a mass production paradigm, might appear as productivity, yet does not benefit the overall process.
- Motion waste: Even the repetitive motions of employees on the assembly line can diminish productivity and contribute to waste.
- Excess Processing: Avoid redundancy and unnecessary steps.
“Waste is anything other than the minimum amount of equipment, materials, parts, and working time which is absolutely essential to add value to the product or service.” -Ohno Taiicho
The Powerful Benefits of Going Lean
While many assume lean manufacturing only benefits large, repetitive, mass-production operations, the fact is small-medium sized manufacturers can also benefit. Lean manufacturing principles can impact the average producer in a powerful way that extends beyond just financial gains. Here are some of the many powerful benefits of adopting lean manufacturing:
- Lean identifies value as defined by customer demand, thus leading to more satisfied customers.
- Lean removes wastes like inventory, transportation, and others.
- Lean shortens cycle time and increases production.
- Lean brings about greater employee morale and buy-in.
- Lean produces more per man hour.
- Lean reduces the amount of space needed for production.
- Lean increases cash on hand.
- Lean focuses on pull – or demand-based flow manufacturing – rather than push.
- Lean reduces operational costs, maximizing profits.
Lean Manufacturing Principles
Lean manufacturing is more than just a way to make products. Essentially, it is a school of thought. And while there are many lean manufacturing principles that make up this school of thought, much of the power for this system is contained in just five primary concepts. These five leading principles or values were most famously articulated in the 1990 book, “The Machine That Changed the World,” by James Womack, Daniel T. Jones, and Daniel Roos. And understanding these five lean manufacturing principles will enable you to transform your business into a lean production machine:
- Specify value as perceived by the customer: Value must be perceived through the customer’s eyes – not merely based on the product you can provide, but the end solution they actually want.
- Identify the value stream: Rather than thinking in terms of departments, companies using lean principles will visualize the value stream as an interconnected flow of processes that provide value; this does not include any processes or steps that do not directly contribute to the value.
- Make the value flow through the value stream: The focus must be on value-adding steps; if non-value-adding steps are necessary, perform them simultaneous to the value-adding steps, but never put them before.
- Pull the value from the value stream: Avoid inventory management waste by shifting to a single-piece flow that produces products on demand as needed.
- Strive for perfection: The goal is not to improve beyond your competitors but continuous improvement and perfection in every way – from order processing to logistics to customer service.