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Articles | September 26, 2013

What Is Lean Manufacturing? Benefits & More

What is lean manufacturing? There are many definitions of lean manufacturing, depending on the author of the article. Some emphasize the word lean, and discuss the 7 wastes as...

By WorkWiseSoftware

What is lean manufacturing?

There are many definitions of lean manufacturing, depending on the author of the article. Some emphasize the word lean, and discuss the 7 wastes as the core of the definition (sounds like cost reduction). Some emphasize the word lean process, and discuss the practices of eliminating waste in the process (sounds a lot like BPM of the past). I would like to offer the following definition, which offers lean as a philosophy:

Determining the right combination of value for the customer needs, and producing that value in the most efficient and effective manner possible.

The reason that I offer this definition is to avoid the myopic view that spawns arguments about which method or technique is right or wrong. It is all about value and delivering it in the most expeditious manner possible. It is not just about inventory reduction, or leveled production, or movement studies: but is about using all the tools and techniques available to achieve the goals of value and the most effective methods of achieving that value. Lean manufacturing certainly includes a discussion of TPS, JIT, Kanban, Kaizen, and 5S, but also, in the right circumstance should include MRP, Agile, TOC, and others.

A Myopic View of Lean Manufacturing

Some people interpret the elimination of inventories as one of the core tenets of lean manufacturing. So, they begin to lower their raw, work-in-process and finished goods inventories. What they fail to realize is that one of the key items of value for this particular customer is the immediate availability of product. Lowering the inventories, in some cases, could cause stock-outs that would drive the customer to other competitors. Clearly, lean manufacturing would suggest that this inventory method would not be satisfactory. Unfortunately, many people focus on the word “lean” to the exclusion of the other principles of lean manufacturing.

Another example of where the term “lean manufacturing” is abused is in the use of a pull system of production scheduling. It is true, that where a pull system can be effectively used, it has substantial benefit. But there are places where it cannot be used, such as in a manufacturing area where demands for outputs are highly variable in quantity, timing of orders, product mix or some combination thereof.
For example, in a metal fabrication shop where unique orders are received from a large quantity of customers, and received intermittently, it is virtually impossible to set up a pull system. The products are too varied to setup uniform flows, and the expensive equipment must be used across a wide variety of different customer products.

The True Lean

When using the definition of lean manufacturing above (beginning of the article), it becomes clear on what principles, tools and methods will produce the most effective results for your business. The goal is extremely clear, the right value for the customer needs, produced in the most expedient and effective manner possible. It is hard to dispute this goal on any level. But how to achieve this goal can be subject to many paths, depending on your particular circumstances.

It All Starts with Value

One common mistake in implementing lean manufacturing is to fail to define the value that you want to offer. It should begin with an analysis of what the customer wants and needs, versus what your product/service currently has. It also needs to incorporate your competitive position to assure that you have a value proposition that will be attractive to your customer. Aiming your lean efforts on a product that doesn’t meet the market needs will only cause frustration and wasted efforts. This analysis should lead to the addition and subtraction of features, functions and options that are right for the customer and market needs.

Determining the Value Stream

Now that you have determined the right value, it is time to review your processes of delivering that value. In this step, it is important to document all the activities that are necessary to specify and build the product for the customer. It is important to capture every activity so that you may later determine which activities are value producing, and which are not. On the shop floor, you can start with the shop routings, but it is important to also capture the wait times, and queue times, if you have not already included those on your routing operations. Waiting and queue times can often represent 90-95% of your entire shop lead time, and need to be carefully included.

The 7 Deadly Lean Manufacturing Sins

With your map of the activities for both value and non-value added activities, you can now begin to look for the 7 most common problems in non-lean operations. These include:

Building the Correct Lean Processes

Once you have captured the value streams and the activities to build them, you can begin the process of defining the optimal processes for your operations. The goal is to select the lowest level process (most simple) that can still meet the needs of your customers, operations and vendors. We will break them down into three types, but remember that the plant can always be a mix of all. Use the best method for the particular circumstances.

Simple Lean Manufacturing

It is not hard to visualize this type of process. If there was a two step process, and the vendor would supply us one part at a time, and I directly handed each part I made to you (cell manufacturing) and we both worked at the same speed (level production), there would be no need for inventories, wait times, and we would both be fully utilized (no unused capacity or idle time). Of course, the customer would also need to demand our product at the same rate that we produced it without any changes. Our costs would be low, our inventories nonexistent and our plant efficiency superb.

This, in essence, is the most perfect lean manufacturing scenario. And, in every shop, each manufacturer should strive to implement this method wherever and whenever possible.

Characteristics of This Environment

Hybrid Lean Manufacturing

As soon as we change some of the parameters, the ability to use the simple lean method becomes difficult. A simple example will illustrate. In this case, we will add one step to the manufacturing process above. After process 1, we must now add a machined part that we outsource to a machine shop. The stated lead time is 3 weeks, but has varied from two to four weeks, depending how busy the machine shop is (we can’t find an alternative vendor that is better). The machine shop also has a minimum order quantity of 200 pieces. Since we make 20 parts per day, we will have to build an inventory of 10 days of parts before we can send them to the vendor.

It is at this point, that we need a system to control the stock level of the machined part. We need to bring that part in at the exact time that it is needed by process, to prevent stock-outs, or stock overages. This is where the MRP system comes into play. It is designed to bring in the machined part based on the scheduled needs of the plant. Before you complain about why an MRP system is necessary for one part, remember this is only a simple illustration. Most plants would have hundreds of these parts, and would have similar situations in raw materials, and finished goods.

Now, for a little more fun, imagine if you could add the machined part at the end of the entire process. Now you could use the simple lean method for the base product, and use the MRP system to control the machined part. You could also consider adding other optional parts at the end, and use a product configurator to control the ordering and pricing for your customer.

Characteristics

Complex Lean Manufacturing

In complex processes with little repetition, it becomes more and more difficult to use the simple lean method. Parts tend to be more custom, paths through the shop vary on many of the products, and machinery is shared across multiple products. It stills pays to look for ways to combine product families and to separate the repetitive items, but for some manufacturers, there just isn’t much commonality. A classic example is the custom fabrication shop, which make one-off orders for their customers. The most important aspect is to schedule the job thru the multitude of machines in the shop and to be able to tell the customer when the order will be available.

Characteristics

Summary

When viewed as a philosophy, lean manufacturing becomes a way to satisfy your customers, lower your costs, lower your inventories and improve your production efficiencies.

We are not suggesting that you not look for ways to drive your process to the simplest lean method possible. On the contrary, we suggest you look for ways to use a pull inventory system, a smooth production flow, and lowering wait and setup times. But we also are suggesting that you find the best method possible, considering the constraints of your situation.

This process will certainly lead you to learning new ways to become more simply lean. You may find a way to collaborate with your customers to smooth demand, you may find ways to work with your vendors to smooth parts deliveries, and you may find ways to smooth your flows to eliminate poor utilization, all great lean practices. But, there will be times when you need to combine various tools to accommodate those uncontrollable situations that just can’t be eliminated.

Remember to check your manufacturing system to make sure it can provide you the benefits of pull based production, Kanban, orderless production and backflushing, MRP, leveled scheduling, theory of constraints, and repetitive scheduling. You will then have all the tools to implement your operations in a lean fashion.

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