Lean manufacturing addresses one of the worst things that can happen to any enterprise: waste. To not take full advantage of all of your resources is to lose efficiencies and, in so doing, stunt production and fail to offer value to your customers.
The manufacturing industry is, of course, rife with waste. Whether it’s idle workers, inefficient production lines or unused materials that can’t be recycled or repurposed, the results are the same: a drag on productivity.
This insistence on eliminating waste and improving the manufacturing process to maximize the value offered to customers is where the idea of the lean manufacturing system developed.
What is lean Manufacturing?
Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity.
Waste is seen as anything that customers do not believe adds value and are not willing to pay for. Some of the benefits of lean manufacturing can include reduced lead times, reduced operating costs and improved product quality.
Lean manufacturing, also known as lean production, or lean, is a practice that organizations from numerous fields can enable. Some well-known companies that use lean include Toyota, Intel, John Deere and Nike.
The approach is based on the Toyota Production System and is still used by that company, as well as myriad others. Companies that use enterprise resource planning (ERP) can also benefit from using a lean production system.
Lean manufacturing is based on a number of specific principles, such as Kaizen, or continuous improvement.
Lean manufacturing was introduced to the Western world via the 1990 publication of The Machine That Changed the World, which was based on an MIT study into the future of the automobile detailed by Toyota’s lean production system.
Since that time, lean principles have profoundly influenced manufacturing concepts throughout the world, as well as industries outside of manufacturing, including healthcare, software development and service industries.
What Are The 5 Principles of Lean Manufacturing?
The five principles of lean manufacturing are value, value streams, flow, pull, and perfection. They guide organizations on how to create the most amount of value for their customers while maximizing efficiency at the same time.
Applying lean concepts helps manufacturers to continually improve their offering and the way in which they deliver it. It’s helpful at every stage of the production process, from research and development to packaging and delivery.
This approach can be used to improve a specific product or an entire assembly line. It’s flexible enough to be applied on a small or large scale which means it can benefit a wide range of organizations. Let’s look at the principles of lean manufacturing in more detail.
#1. Identify Value from The Customer’s Perspective.
The first principle begins by identifying value to the customer. It involves isolating exactly what the customer finds valuable about your product or service from their perspective.
This is the driving force behind why they will buy from you so it’s crucial to get it right. If you don’t deliver enough value to customers, then they simply won’t purchase and your sales will suffer.
Establishing value allows companies to define a target price. This top-down approach enables you to set pricing based on the amount of value you deliver and what that is worth to the customer.
It’s a very different model to the bottom-up method of calculating your costs and then adding a fixed percentage as margin. Pricing based on value is often more profitable while still being acceptable to the end-customer.
It’s worth noting that what your company thinks is valuable and what your customers actually value may be different things. This is why it’s important to do the research and ask them rather than guessing.
Understanding their pain points, requirements, and expectations will ensure that you accurately identify value. This step is the most fundamental of all the lean manufacturing principles since it is the basis on which others are built upon.
#2. Map the value stream.
The value stream refers to the complete product or service lifecycle, from inception to disposal and every stage in between.
It encompasses the entire supply chain, source materials, production processes, features, and transport that bring about the end product. Mapping the value stream is most commonly the stage where waste is identified and improvement areas are suggested.
A key lean concept is the elimination of waste so as to keep everything as streamlined as possible. Creating value stream maps are therefore important in order to evaluate where there are opportunities for removing wasteful steps or optimizing the work in process.
Some things will be necessary to create value and others will be unavoidable due to technological limitations. But there will also be types of waste that fall into a third category these are areas that can be eliminated to improve overall efficiency.
#3. Create flow.
Flow refers to the consistent creation and movement of the value stream. It’s one of the most abstract of all these principles but is worth taking time to understand. When the value stream flow is blocked or stops moving forward, waste is created.
This may be in the form of lost time, additional movement, or extra storage costs. Delays lead to customer value disruptions and also result in reduced efficiency, both of which defy the principles of lean.
In order to flow smoothly, there needs to be a shift from batching and siloed thinking to levelized production. When this happens, companies are able to launch products more quickly by taking them from concept to manufacture in significantly less time.
They can deliver products and services more quickly, improving their turnaround or cycle times from ordering. This improves efficiency and allows large companies to be nimble so they can take advantage of any opportunities that present themselves.
#4. Establish a pull system.
The traditional Western approach to manufacturing involves producing things based on forecasts. Sales teams are asked to estimate how much of a product they’ll be able to sell ahead of time.
Raw materials are ordered and manufacturing schedules are created based on these predictions so that the future orders can be met. But when sales exceed forecasts, it can be difficult for production to keep up. Conversely, when demand doesn’t meet supply, profitability suffers.
A pull system avoids this problem entirely. It helps to maintain flow by ensuring that nothing is made in advance of being ordered. This means that every item is manufactured to order based on a quantified demand from customers.
It’s one of the key manufacturing principles that ensures supply doesn’t outstrip demand. This approach reduces waste and an essential element of lean operations
However, implementing a pull system successfully isn’t always easy. It requires a manufacturing process that is flexible and speedy enough to deliver products quickly.
Lean leadership and strong internal communication are also required to ensure that every step in the value chain knows what is ahead and what’s coming up from behind.
Fortunately, the previous three principles will have helped eliminate waste and focus efforts on the truly valuable. This puts companies in the best possible position to establish pull successfully.
#5. Pursue perfection with continual process improvement, or Kaizen.
To seek perfection is one of the lean manufacturing principles that sometimes surprises people. Lean companies are not satisfied once they’ve completed the previous four stages and implemented a pull system.
They are always looking for other ways to improve and creating steps that facilitate further innovation.
As companies continue to improve, more waste is removed, and greater value is created. This results in a continual upward spiral of efficiency, profitability, and customer satisfaction.
Applying lean principles like value stream maps and pull systems is a powerful approach. It creates a distinct competitive advantage while delivering lower cost operations and increased profits.
Using lean tools can give you a huge business advantage and set you up for long-term success well into the future.
What are 8 wastes of lean manufacturing?
#1. Defects
Defects impact time, money, resources and customer satisfaction. Examples of Defects within a manufacturing environment include lack of proper documentation or standards, large variances in inventory, poor design and related design documentation changes and an overall lack of proper quality control throughout the process workflow.
Formalized document control and design change documentation, thorough and documented quality methods in all production phases and checklists that have been audited to ensure proper adherence to the BOM are effective ways to control defect waste.
And standardized work at each production cell or point in the production line will help reduce this type of waste as well.
Specific Defect causes include:
- Poor quality control at the production level
- Poor machine repair
- Lack of proper documentation
- Lack of process standards
- Not understanding your customers’ needs
- Inaccurate inventory levels
2. Excess Processing
Excess processing is a sign of a poorly designed process. This could be related to management or administrative issues such as lack of communication, duplication of data, overlapping areas of authority and human error. It may also be the result of equipment design, inadequate job station tooling or facility layout.
Process mapping is a lean waste elimination tool that helps define an optimized workflow that can eliminate over processing. As a key method within lean production, process mapping is not limited to the performance of production tasks. It also includes reporting, signoff and document control.
Examples of Excess Processing include:
- Poor communication
- Not understanding your customers’ needs
- Human error
- Slow approval process or excessive reporting
3. Overproduction
When components are produced before they are required by the next downstream process, overproduction occurs.
This has several negative effects. It creates a “caterpillar” effect in the production flow and results in the creation of excess WIP This leads to staging and therefore labor required to move the WIP additional times.
And it can hide defects that could have been caught with less scrap if processes were balanced to allow detection earlier as earlier use of the WIP components would have revealed the defect in time to correct the issue.
Lean manufacturing systems utilize several tools to combat overproduction. Takt time is used to balance production rates between cells or departments.
Measured and process-mapped jobs result in reduced setup time allowing efficient small batch flow. And in many industries, “pull” systems such as Kanban can be used to help control or eliminate WIP.
Common causes of Overproduction include:
- Unreliable process
- Unstable production schedules
- Inaccurate forecast and demand information
- Customer needs are not clear
- Poor automation
- Long or delayed set-up times
#4. Waiting
Waiting can include people, material equipment (prior runs not finished) or idle equipment (mechanical downtime or excess changeover time).
All waiting costs a company has in terms of direct labor dollars and additional overhead costs can be incurred in terms of overtime, expediting costs and parts.
Waiting may also trigger additional waste in the form of defects if the waiting triggers a flurry of activity to “catch up” that results in standard work not being followed or shortcuts being taken.
In many ways, waiting is the opposite of overproduction. However, it can be mitigated or eliminated with many of the same remedies.
Waiting is often the result of poor process design and can be addressed through proper measurement of takt time and the creation of standard work.
Common causes of Waiting include:
- Unplanned downtime or Idle equipment
- Long or delayed set-up times
- Poor process communication
- Lack of process control
- Producing to a forecast
- Idle equipment
#5. Inventory
Inventory is considered a form of waste because of the related holding costs. This is true of raw materials, WIP and finished goods. Over purchasing or poor forecasting and planning can lead to inventory waste.
It may also signal a broken or poorly designed process link between manufacturing and purchasing/scheduling. Lean Manufacturing does not just focus on the factory but also requires process optimization and communication between support functions.
Purchasing, scheduling and forecasting can have a version of standardized work in the form of defined minimums and maximums and order points that are mapped to the process flow and takt time.
Purchasing raw materials only when needed and reducing WIP and eliminating or narrowing the definition of “safety stock” will reduce this type of waste.
Common causes of Inventory Waste include:
- Overproduction of goods
- Delays in production or ‘waste of waiting’
- Inventory defects
- Excessive transportation
#6. Transportation
Poor plant design can cause waste in transportation. It can also trigger other wastes such as waiting or motion and impact overhead costs such as higher fuel and energy costs and higher overhead labor in the form of lift drivers as well as adding wear and tear on equipment.
It may also result from poorly designed processes or processes that have not been changed or updated as often as required.
Value stream mapping and partial or full changes in factory layout can reduce transportation waste. This is a full documentation of all aspects of the production flow and not just the mapping of a specific production process. This results in changes to reduce or eliminate transportation waste.
Common types of Transportation Waste:
- Poor layouts – large distance between operations
- Long material handling systems
- Large Batch sizes
- Multiple storage facilities
- Poorly design production systems
#7. Motion
Motion costs money. This not only includes raw materials but also people and equipment. It may also include excess physical motion such as reaching, lifting and bending. All unnecessary motion results in non-value-added time and increases cost.
Again, referencing core Lean Manufacturing methodology, process mapping should include facility layout and optimized workplace design that includes analysis of the distance of motion within the space as well as the location of parts, supplies and tools within the space as well.
As an effective process map is developed, proper utilization of the space can be captured with well-designed and documented standard work.
Common Motion Waste examples include:
- Poor workstation layout
- Poor production planning
- Poor process design
- Shared equipment and machines
- Siloed operations
- Lack of production standards
#8. Non-Utilized Talent
The eighth waste is the only lean manufacturing waste that is not manufacturing-process specific. This type of manufacturing waste occurs when management in a manufacturing environment fails to ensure that all their potential employee talent is being utilized.
This waste was added to allow organizations to include the development of staff into the lean ecosystem. As a waste, it may result in assigning employees the wrong tasks or tasks for which they were never properly trained. It may also be the result of poor management of communication.
By engaging employees and incorporating their ideas, providing training and growth opportunities and involving them in the creation of process improvements that reflect the reality they experience and the skills they possess, overall operational effectiveness is improved. The elimination of this type of waste can improve all others.
Examples of Non-Utilized Talent:
- Poor communication
- Failure to involve people in workplace design and development
- Lack of or inappropriate policies
- Incomplete measures
- Poor management
- Lack of team training
How to Implement a Lean Manufacturing System
Keeping that in mind, consider the following eight steps for applying lean manufacturing to your business operation:
#1. Start by eliminating waste.
This is one of the core principles of lean manufacturing. Typically, you may use a value stream analysis to identify wasteful activities occurring at the plant. At the same time, you can intensify efforts to find more efficient ways to add value to the company’s product line. (See right-hand box for examples of waste.)
#2. Reduce unnecessary inventory.
The cost of maintaining excess inventory generally outweighs the potential benefits you might realize. It can tie up resources, slow down response time and complicate quality-control issues. Overstocking may become particularly problematic if some of the inventory eventually becomes obsolete-which is often the case.
#3. Shorten production cycles.
What used to take days or even weeks to complete can now often be accomplished in a matter of hours. Utilize the technological capabilities currently at your disposal. Disciples of lean manufacturing preach the production of small batches where you can add “bells and whistles” to later product versions.
#4. Speed up response time.
For years, manufacturers emphasized the need for making accurate forecasts of market requirements. However, this is not always the optimal approach in a fast-paced environment. Alternatively, it may be preferable to develop a system that can react swiftly so you can capitalize on market changes.
#5. Ensure that all product components have been quality-tested.
Develop testing procedures and controls at several check-points in the process to detect problems at the earliest possible stage. Fine-tune the system to identify problems, make the necessary corrections or improvements and move forward.
#6. Extend employee autonomy.
Give more employees authority to make decisions and provide them with the tools and methodology for doing so. You can take this step even further by establishing teams to measure work progress and improve techniques. Frequently, companies find that viable solutions may be presented by employees below the management level. Plus, this kind of involvement can improve morale and performance.
#7. Solicit customer feedback.
After developing core product features, use a systematic approach for obtaining input from customers. The system should be designed to adapt to changes over its lifespan. Taking this step can enable you to satisfy customer needs within your basic framework
#8. Reach out to suppliers.
When it is appropriate, make suppliers “partners” in the lean manufacturing process. By combining cooperation from suppliers with implementation of lean manufacturing principles, benefits can be realized by all parties. This also helps strengthen existing relationships vital to your manufacturing operation.
For many companies, adopting a lean manufacturing approach requires a drastic change in corporate culture. But consider the possible long-term repercussions if your company is not willing to adapt. Discuss the implementation of this approach with your business advisors.
7 lean manufacturing tools and concepts
Lean manufacturing requires a relentless pursuit of reducing anything that does not add value to a product, meaning waste. This makes continuous improvement, which lies at the heart of lean manufacturing, a must.
Other important concepts and processes lean relies on include:
- Heijunka: production leveling or smoothing that seeks to produce a continuous flow of production, releasing work to the plant at the required rate and avoiding interruptions.
- 5S: A set of practices for organizing workspaces to create efficient, effective and safe areas for workers and which prevent wasted effort and time. 5S emphasizes organization and cleanliness.
- Kanban: a signal used to streamline processes and create just-in-time delivery. Signals can either be physical, such as a tag or empty bin, or electronically sent through a system.
- Jidoka: A method that defines an outline for detecting an abnormality, stopping work until it can be corrected, solving the problem, then investigating the root cause.
- Andon: A visual aid, such as a flashing light, that alerts workers to a problem.
- Poka-yoke: A mechanism that safeguards against human error, such as an indicator light that turns on if a necessary step was missed, a sign given when a bolt was tightened the correct number of times or a system that blocks a next step until all the previous steps are completed.
- Cycle time: How long it takes to produce a part or complete a process.