How Lean Manufacturing Improves Business, Saves Money

The lean approach to manufacturing represents a potential gold mine because it increases productivity and quality, decreases waste and costs, and maximizes profits along with customer satisfaction.

Lean manufacturing is more than a set of tools for identifying and eliminating waste. It is a total business philosophy that you can apply to all types and aspects of manufacturing.

One thing must be remembered, however. Lean is an approach rather than a set of processes, so it must be embraced for the long term rather than as a one-time activity. Going lean can create more quality and value with less work, but only when it as an ongoing “way of life” rather than a once-in-while test of waste and productivity. If allowed to run their course, lean techniques can improve supply chains while creating better distributor, employee, and customer relations.

The Toyota Production System

The basic concepts of lean manufacturing come from Japan's Toyota production system. Driven by need, Toyota devised a system stressing quality and value rather than mediocrity and quotas. It improved each step of the production process by building on previous ideas and formulating a way of thinking that states that every part should be centered on the customer, and everything else is waste and should be eliminated. It used this approach to create the No. 1 automobile company in the world.

Two concepts that form the cornerstone to Toyota’s system and lean manufacturing are “just-in-time,” which deals with flow, and “autonomation,” which deals with smart automation. Flow and smart automation bring about the reduction of waste, another key component in lean manufacturing. With the elimination of waste, quality improves while production time and costs are reduced, but it must be something the company carries out on a regular basis.

According to the Toyota system, the following Japanese terms represent the three basic types of waste that occur in production:

• Muri: This has to do with overburden, which is all the unreasonable work that management assigns to workers and machines because of poor organization. Muri has to do with the planning and design phase of production.
• Mura: This has to do with unevenness and fluctuations in the implementation and operations phase of production. Waste occurs when there are fluctuations in volume and quality.
• Muda: This has to do with waste elimination and is done at the end of the production process. Management oversees muda and uses what they learn to eliminate the deeper problems in muri and mura.

The Lean Approach

Poor arrangement of the workplace in terms of workers and machinery and doing jobs inefficiently out of habit are major forms of waste in modern manufacturing. Because of this, lean manufacturing requires a new, nontraditional way of looking at things. This involves adopting the philosophy and culture of lean. Unfortunately, most lean manufacturers in North America focus on lean tools and methods, which leads to problems in becoming truly lean. The tools are workarounds to help implement a lean approach to business.

When you begin a lean approach to business, it needs to be an ongoing task. It’s not another exercise in cost cutting but an attitude toward business where the customer and employees are an important part of the lean manufacturing approach. It’s an approach that not only finds its beginning in Toyota but in the ideas of Henry Ford, who started the Ford Motor Company.

The following are five essential principles that characterize a lean approach to business:

1. Specify value: Value represents the starting point in lean thinking, and the ultimate customer defines this value in terms of a specific product that meets the customer’s needs at a specific price and time.
2. Identify the value stream: The value stream details the steps needed to bring a product from concept and design to production and sale to the customer. Identifying the value stream exposes areas of waste.
3. Flow: Once you specify value and identify the stream, the task is to make the remaining value-creating steps flow. This usually requires a shift in thinking by everyone involved in the process.
4. Pull: After implementation of the first three principles, the lean business can let the customer pull the product rather than the business push the products at the customer. This cuts the need for large inventories.
5. Pursue perfection: With the implementation of lean principles, you begin to reduce effort, time, space, cost, and mistakes while improving the product, making it more of what the customer wants. This leads to greater perfection.

Lean Manufacturing Tools

Lean manufacturing tools are adapted to help businesses with the process of becoming lean. These tools include the following:

• Five S: The name derives from five Japanese words beginning with “S.” The purpose of this tool is to simplify your work environment, reduce waste, and improve safety, quality, and efficiency.
• Kanban: This tool is used in pull systems as a signaling device to trigger action. Traditionally it used cards to signal the need for an item. It can trigger the movement, production, or supply of a unit in a production chain.
• Poka-yoke: This is a mechanism that helps an equipment operator avoid mistakes. Its objective is to eliminate product defects by preventing, correcting, or drawing attention to human errors as they occur.
• Heijunka: This is a system designed to level the production volume and production by product type. A heijunka box is basically a board with boxes that lays out times with cards that let employees know what they are doing at specific times during the production schedule.

Several workbooks, simulations, and computer software programs are available to help facilitate your move to lean. They include the Learning to See workbook, the Manufacturing Simulation Game, Lean Workshops, and Lean Manufacturing Software Solutions from Microsoft Partners.