A BRIEF HISTORY OF LEAN MANUFACTURING
U.S. manufacturers have always searched for efficiency strategies that help reduce costs, improve output, establish competitive position, and increase market share. Early process oriented, mass production manufacturing methods common before World War II shifted afterwards to the results-oriented, output-focused, production systems that control most of today's manufacturing businesses.
Japanese manufacturers re-building after the Second World War were facing declining human, material, and financial resources. The problems they faced in manufacturing were vastly different from their Western counterparts. These circumstances led to the development of new, lower cost, manufacturing practices. Early Japanese leaders such as the Toyota Motor Company's Eiji Toyoda, Taiichi Ohno, and Shingeo Shingo developed a disciplined, process-focused production system now known as the "Toyota Production System", or "lean production." The objective of this system was to minimize the consumption of resources that added no value to a product.
The "lean manufacturing" concept was popularized in American factories in large part by the Massachusetts Institute of Technology study of the movement from mass production toward production as described in The Machine That Changed the World, (Womack, Jones & Roos, 1990), which discussed the significant performance gap between Western and Japanese automotive industries. This book described the important elements accounting for superior performance as lean production. The term "lean" was used because Japanese business methods used less human effort, capital investment, floor space, materials, and time in all aspects of operations. The resulting competition among U.S. and Japanese automakers over the last 25 years has lead to the adoption of these principles within all U.S. manufacturing businesses.
WHAT IS LEAN MANUFACTURING?
Lean Manufacturing can be defined as:
"A systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection."
In lean production, the value of a product is defined solely by the customer. The product must meet the customer's needs at both a specific time and price. The thousands of mundane and sophisticated things that manufacturers do to deliver a product are generally of little interest to customers. To view value from the eyes of the customer requires most companies to undergo comprehensive analysis of all their business processes. Identifying the value in lean production means to understand all the activities required to produce a specific product, and then to optimize the whole process from the view of the customer. This viewpoint is critically important because it helps identify activities that clearly add value, activities that add no value but cannot be avoided, and activities that add no value and can be avoided.
The transition to a lean environment does not occur overnight. A continuous improvement mentality is necessary to reach your company's goals. The term "continuous improvement" means incremental improvement of products, processes, or services over time, with the goal of reducing waste to improve workplace functionality, customer service, or product performance (Suzaki, 1987). Continuous improvement principles, as practiced by the most devoted manufacturers, result in astonishing improvements in performance that competitors find nearly impossible to achieve.
Lean production, applied correctly, results in the ability of an organization to learn. As in any organization, mistakes will always be made. However, mistakes are not usually repeated because this is a form of waste that the lean production philosophy and its methods seek to eliminate.
A lean manufacturing enterprise thinks more about its customers than it does about running machines fast to absorb labor and overhead. Ensuring customer input and feedback assures quality and customer satisfaction, all of which support sales.
The concept of perfection in lean production means that there are endless opportunities for improving the utilization of all types of assets. The systematic elimination of waste will reduce the costs of operating the extended enterprise and fulfills customer's desire for maximum value at the lowest price. While perfection may never be achieved, its pursuit is a goal worth striving for because it helps maintain constant vigilance against wasteful practices.
FOCUS ON WASTE
The aim of Lean Manufacturing is the elimination of waste in every area of production including customer relations, product design, supplier networks, and factory management. Its goal is to incorporate less human effort, less inventory, less time to develop products, and less space to become highly responsive to customer demand while producing top quality products in the most efficient and economical manner possible.
Essentially, a "waste" is anything that the customer is not willing to pay for. Typically the types of waste considered in a lean manufacturing system include:
Overproduction: to produce more than demanded or produce it before it is needed. It is visible as storage of material. It is the result of producing to speculative demand. Overproduction means making more than is required by the next process, making earlier than is required by the next process, or making faster than is required by the next process. Causes for overproduction waste include:
Misuse of automation
Long process setup
Unbalanced work load
Waiting: for a machine to process should be eliminated. The principle is to maximize the utilization/efficiency of the worker instead of maximizing the utilization of the machines. Causes of waiting waste include:
Unbalanced work load
Long process set-up times
Misuses of automation
Upstream quality problems
Inventory or Work in Process (WIP): is material between operations due to large lot production or processes with long cycle times. Causes of excess inventory include:
Protecting the company from inefficiencies and unexpected problems
Poor market forecast
Unreliable shipments by suppliers
Processing waste: should be minimized by asking why a specific processing step is needed and why a specific product is produced. All unnecessary processing steps should be eliminated. Causes for processing waste include:
Product changes without process changes
True customer requirements undefined
Over processing to accommodate downtime
Lack of communications
Extra copies/excessive information
Transportation: does not add any value to the product. Instead of improving the transportation, it should be minimized or eliminated (e.g. forming cells). Causes of transportation waste includes:
Poor plant layout
Poor understanding of the process flow for production
Large batch sizes, long lead times, and large storage areas
Motion: of the workers, machines, and transport (e.g. due to the inappropriate location of tools and parts) is waste. Instead of automating wasted motion, the operation itself should be improved. Causes of motion waste include:
Poor people/machine effectiveness
Inconsistent work methods
Unfavorable facility or cell layout
Poor workplace organization and housekeeping
Extra "busy" movements while waiting
Making defective products: is pure waste. Prevent the occurrence of defects instead of finding and repairing defects. Causes of processing waste include:
Weak process control
Unbalanced inventory level
Deficient planned maintenance
Inadequate education/training/work instructions
Customer needs not understood
Underutilizing people: not taking advantage of people's abilities. Causes of people waste include:
Old guard thinking, politics, the business culture
Poor hiring practices
Low or no investment in training
Low pay, high turnover strategy
Nearly every waste in the production process can fit into at least one of these categories. Those that understand the concept deeply view waste as the singular enemy that greatly limits business performance and threatens prosperity unless it is relentlessly eliminated over time. Lean manufacturing is an approach that eliminates waste by reducing costs in the overall production process, in operations within that process, and in the utilization of production labor. The focus is on making the entire process flow, not the improvement of one or more individual operations.
SOME BASIC ELEMENTS OF LEAN MANUFACTURING
Elimination of waste
Material flows one part at a time
Less inventory required throughout the production process, raw material, WIP, and finished goods
Lead time reduction
Stop the Line quality system
In station process control
Point of use storage
KEYS TO LEAN SUCCESS
Following are some considerations to successful lean implementation:
Prepare and motivate people
Widespread orientation to Continuous Improvement, quality, training and recruiting workers with appropriate skills
Create common understanding of need to change to lean
Push decision making and system development down to the "lowest levels"
Trained and truly empowered people
Share information and manage expectations
Identify and empower champions, particularly operations managers
Remove roadblocks (i.e. people, layout, systems)
Make it both directive yet empowering
Atmosphere of experimentation
Tolerating mistakes, patience, etc.
Willingness to take risks
Installing "enlightened" and realistic performance measures, evaluation, and reward systems
Do away with rigid performance goals during implementation
Measure results and not number activities/events
Tie improvements, long term, to key macro level performance targets (i.e. inventory turns, quality, delivery, overall cost reductions)
The need to execute pilot projects prior to rolling culture out across the organization
After early wins in operations, extend across ENTIRE organization
TRADITIONAL VS LEAN MANUFACTURING
For years manufacturers have created products in anticipation of having a market for them. Operations have traditionally been driven by sales forecasts and firms tended to stockpile inventories in case they were needed. A key difference in Lean Manufacturing is that it is based on the concept that production can and should be driven by real customer demand. Instead of producing what you hope to sell, Lean Manufacturing can produce what your customer wants...with shorter lead times. Instead of pushing product to market, it's pulled there through a system that's set up to quickly respond to customer demand.
Lean organizations are capable of producing high-quality products economically in lower volumes and bringing them to market faster than mass producers. A lean organization can make twice as much product with twice the quality and half the time and space, at half the cost, with a fraction of the normal work-in-process inventory. Lean management is about operating the most efficient and effective organization possible, with the least cost and zero waste.
OVERALL ORGANIZATIONAL CHARACTERISTICS:
TRADITIONAL MASS PRODUCTION
Product-out strategy focused on exploiting economies of scale of stable product designs and non-unique technologies
Customer focused strategy focused on identifying and exploiting shifting competitive advantage.
Makes what engineers want in large quantities at statistically acceptable quality levels; dispose of unused inventory at sale prices
Makes what customers want with zero defect, when they want it, and only in the quantities they order
Leadership by executive command
Leadership by vision and broad participation
Hierarchical structures that encourage following orders and discourage the flow of vital information that highlights defects, operator errors, equipment abnormalities, and organizational deficiencies.
Flat structures that encourage initiative and encourage the flow of vital information that highlights defects, operator errors, equipment abnormalities, and organizational deficiencies.
Based on price
Based on long-term relationships
Information-weak management based on abstract reports
Information-rich management based on visual control systems maintained by all employees
Culture of loyalty and obedience, subculture of alienation and labor strife
Harmonious culture of involvement based on long-term development of human resources
Large-scale machines, functional layout, minimal skills, long production runs, massive inventories
Human-scale machines, cell-type layout, multi-skilling, one-piece flow, zero inventories
Dumb tools that assume an extreme division of labor, the following of orders, and no problem solving skills
Smart tools that assume standardized work, strength in problem identification, hypothesis generation, and experimentation
Maintenance by maintenance specialists
Equipment management by production, maintenance and engineering
"Isolated genius" model, with little input from customers and little respect for production realities.
Team-based model, with high input from customers and concurrent development of product and production process design
TRADITIONAL MASS PRODUCTION
Production schedules are based on…
Forecast — product is pushed through the facility
Customer Order — product is pulled through the facility
Products manufactured to…
Replenish finished goods inventory
Fill customer orders (immediate shipments)
Production cycle times are…
Manufacturing lot size quantities are…
Large, with large batches moving between operations; product is sent ahead of each operation
Small, and based on one-piece flow between operations
Plant and equipment layout is…
By department function
By product flow, using cells or lines for product families
Quality is assured…
Through lot sampling
100% at the production source
Workers are typically assigned…
One person per machine
With one person handling several machines
Worker empowerment is…
Low — little input into how operation is performed
High — has responsibility for identifying and implementing improvements
Inventory levels are…
High — large warehouse of finished goods, and central storeroom for in-process staging
Low — small amounts between operations, ship often
Inventory turns are…
Low — 6-9 turns pr year or less
High — 20+ turns per year
Flexibility in changing manufacturing schedules is…
Low — difficult to handle and adjust to
High — easy to adjust to and implement
Manufacturing costs are…
Rising and difficult to control
Stable/decreasing and under control
BENEFITS OF LEAN
All types of manufacturers are discovering the advantages of doing a Lean analysis and applying the principles of Lean Manufacturing to their own company. Perhaps you're faced with one, or many, of these challenges:
Missed order dates
High product cost relative to the competition
Declining market share due to delivery time or cost problems
If so, Lean Manufacturing can have an immediate, positive impact on your company. Through the process of implementing Lean Manufacturing you will be able to find ways to achieve a number of benefits. Results will vary, but here are some typical savings and improvements:
THE RELATIONSHIP OF WASTE TO PROFIT
Culture of Improvement
Lean Equipment Management
THE TRUE COSTS OF INVENTORY
Reducing inventory is an important goal of the lean organization. Carrying inventory has many costs associated with it. Obvious costs include: capital tied up in inventory and the associated loss of interest on that capita., loss due to material handling damage, increased labor costs for material handling, and increased space and storage requirement. A cost from excess inventory that is not so obvious is quality. In fact, many companies have seen quality improvements resulting from inventory reductions while not focusing on quality. The reasoning is that if an upstream process is producing parts on a machine and defects occur halfway through the batch, in an organization with low levels of inventory the next downstream process will discover the defects sooner. An organization with low inventory levels can stop the process when the defect is discovered, throw out the defective inventory, and request the previous process to start another batch. The organization with lower inventory levels will also be more effective at determining what caused the defect because the batch that the defect occurred in is fresh in the minds of both production and maintenance.
Reduced scrap and waste
Reduced inventory costs
Reduced cycle time
Lower space/facility requirements
High quality & reliability
Lower overall costs
Self-directed work teams
Lead time reduction
Fast market response
Longer machine life
Improved customer communication
Improved vendor support and quality
Higher labor efficiency and quality
Improved flexibility in reacting to changes
Allows more strategic management focus
Increased shipping and billing frequencies
Lean Glossary :
Andon Board: A visual control device in a production area, typically a lighted overhead display, giving the current status of the production system and alerting team members to emerging problems.
Autonomation: Automation with a human touch. Refers to semi-automatic processes where the operator and machine work together. Autonomation allows man-machine separation. Also referred to Jidoka.
Balanced production: All operations or cells produce at the same cycle time. In a balanced system, the cell cycle time is less than takt time.
Batch-and-Queue: Producing more than one piece of an item and then moving those items forward to the next operation before that are all actually needed there. Thus, items need to wait in a queue.
Benchmarking: The process of measuring products, services, and practices against those of leading companies.
Bottleneck: Any resource whose capacity is equal to, or less than the demand placed on it.
Best-in-Class: A best-known example of performance in a particular operation. One needs to define both the class and the operation to avoid using the term loosely.
Blitz: A blitz is a fast and focused process for improving some component of business a product line, a machine, or a process. It utilizes a cross-functional team of employees for a quick problem-solving exercise, where they focus on designing solutions to meet some well-defined goals.
Capacity Constraint Resources: Where a series of non-bottlenecks, based on the sequence in which they perform their jobs can act as a constraint.
Catch-Ball: A series of discussion between managers and their employees during which data, ideas, and analysis are thrown like a ball. This opens productive dialogue throughout the entire company.
Cells: The layout of machines of different types performing different operations in a tight sequence, typically in a U-shape, to permit single piece flow and flexible deployment of human effort.
Chaku-Chaku: A method of conducting single-piece flow, where the operator proceeds from machine to machine, taking the part from one machine and loading it into the next.
Change Agent: The catalytic force moving firms and value streams out of the world of inward-looking batch-and-queue.
Changeover: The installation of a new type of tool in a metal working machine, a different paint in a painting system, a new plastic resin and new mold in an injection molding machine, new software in a computer, and so on.
Constraint: Anything that limits a system from achieving higher performance, or throughput.
Continuous Flow Production: Means that items are produced and moved from one processing step to the next one piece at a time. Each process makes only the one piece that the next process needs, and the transfer batch size is one. Also called "single-piece flow" or "one-piece flow."
Covariance: The impact of one variable upon others in the same group.
Current State Map: Helps visualize the current production process and identify sources of waste.
Cycle Time: The time required to complete one cycle of an operation.
Dependent Events: Events that occur only after a previous event.
Error Proofing: Designing a potential failure or cause of failure out of a product or process.
Five S: Five terms utilized to create a workplace suited for visual control and lean production. Sort means to separate needed tools, parts, and instruction from unneeded materials and to remove the latter. Simplify means to neatly arrange and identify parts and tools for ease of use. Scrub means to conduct a cleanup campaign. Standardize means to conduct Sort, Simplify, and Scrub at frequent intervals to maintain a workplace in perfect condition. Sustain means to form the habit of always following the first Ss.
Flow: A main objective of the lean production effort, and one of the important concepts that passed directly from Henry Ford to Toyota. Ford recognized that, ideally, production should flow continuously all the way from raw material to the customer and envisioned realizing that ideal through a production system that acted as one long conveyor.
Functional Layout: The practice of grouping machines or activities by type of operation performed.
Future State Map: A blueprint for lean implementation. Your organization¹s vision, which forms the basis of your implementation plan by helping to design how the process should operate.
Heijunka: A method of leveling production at the final assembly line that makes just-in-time production possible. This involves averaging both the volume and sequence of different model types on a mixed-model production line.
Hosin Planning (HP): Also known as Management by Policy or Strategy Deployment. A means by which goals are established and measures are created to ensure progress toward those goals. HP keeps activities at all levels of the company aligned with its overarching strategic plans. HP typically begins with the "visioning process" which addresses the key questions: Where do you want to be in the future? How do want to get there? When do you want to achieve your goal? And who will be involved in achieving the goals? HP then systematically explodes the whats, whos and hows throughout the entire organization.
Just-in-Time (JIT): Principles that are fundamental to Time-Based Competition waste elimination, process simplification, set-up and batch-size reduction, parallel processing, and layout redesign are critical skills in every facet of the lean organization. JIT is a system for producing and delivering the right items at the right time, in the right amounts. The key elements of Just-in-Time are Flow, Pull, Standard Work, and Takt Time.
Kaizen: Continuous, incremental improvement of an activity to create more value with less waste. The term Kaizen Blitz refers to a team approach to quickly tear down and rebuild a process layout to function more efficiently.
Kanban: A signaling device that gives instruction for production or conveyance of items in a pull system. Can also be used to perform kaizen by reducing the number of Kanban in circulation, which highlights line problems.
Lead Time: The total time a customer must wait to receive a product after placing an order. When a scheduling and production system is running at or below capacity, lead time and throughput time are the same. When demand exceeds the capacity of a system, there is additional waiting time before the start of scheduling and production, and lead time exceeds throughput time.
Lean: Business processes requiring less human effort, capital investment, floor space, materials, and time in all aspects of operation.
Mistake Proofing: Any change to an operation that helps the operator reduce or eliminate mistakes.
Muda: Anything that interrupts the flow of products and services through the value stream and out to the customer is designated Muda or waste.
Non-Value Added: Activities or actions taken that add no real value to the product or service making such activities or action a form of waste.
Operating Expenses: The money required the system to convert inventory into throughput.
Overproduction: Producing more, sooner or faster than is required by the next process.
PDCA (Plan, Do, Check, Act)
PLAN: Senior management should use the visioning process in the context of it Business Plan. HP translates the Business Plans to action plans, meaningful to all levels of the organization.
DO: Answer the whats, hows, and whos for the total number of tiers for your organization; remember, the fewer the number of tiers, the better. Also, this is the time to bring management together and provide them with a basic understanding of HP mechanics.
CHECK: On a periodic basis, review the measurements and note what you´ve learned that can help in the future.
ACT: Make the necessary adjustments to plans and priorities in order to ensure the success of the strategy breakthroughs.
Perfection: Always optimizing value-added activities and eliminating waste.
Poka-Yoke: A mistake-proofing device or procedure to prevent a defect during order taking or manufacture. An order-taking example is a screen for order input developed from traditional ordering patterns that question orders falling outside the pattern. The suspect orders are then examined, often leading to the discovery of inputting errors or buying based on misinformation. A manufacturing example is a set of photocells in parts containers along an assembly line to prevent components from progressing to the next stage with missing parts. A poka-yoke is sometimes called a baka-yok.
Process: The flow of material in time and space. The accumulation of sub-processes or operations that transform material from raw material to finished product.
Process Kaizen: Improvements made at an individual process or in a specific area. Sometimes called "point kaizen".
Processing Time: The time a product is actually being worked on in a machine or work area.
PULL: A system of cascading production and delivery instructions from downstream to upstream activities in which the upstream supplier waits until the downstream customer signals a need. A pull system means producing only what has been consumed by downstream activities or customers.
Pull System: One of the 3 elements of JIT. In the pull systems, the downstream process takes the product they need and pulls it from the producer. This customers pull is a signal to the producer that the product is sold. The pull system links accurate information with the process to minimize waiting and overproduction.
Push System: In contrast to the pull system, product is pushed into a process, regardless of whether it is needed. The pushed product goes into inventory, and lacking a pull signal from the customer indicating that it has been bought, more of the same product could be overproduced and put in inventory.
Quality Function Deployment (QFD): A visual decision-making procedure for multi-skilled project teams which develops a common understanding of the voice of the customer and a consensus on the final engineering specifications of the product that has the commitment of the entire team. QFD integrates the perspectives of team members from different disciplines, ensures that their efforts are focused on resolving key trade-offs in a consistent manner against measurable performance targets for the product, and deploys these decisions through successive levels of detail. The use of QFD eliminates expensive backflows and rework as projects near launch.
Quick Changeover: The ability to change tooling and fixtures rapidly (usually minutes), so multiple products can be run on the same machine.
Queue Time: The time a product spends in a line awaiting the next design, order processing, or fabrication step.
Reengineering: The engine that drives Time-Based Competition. To gain speed, firms must apply the principles of reengineering to rethink and redesign every process and move it closer to the customer.
Resource Utilization: Using a resource in a way that increases throughput.
Sensei: An outside master or teacher that assists in implementing lean practices.
Sequential Changeover: Also sequential set-up. When changeover times are within Takt time, changeovers can be performed one after another in a flow line. Sequential changeover assures that the lost time for each process in the line is minimized to one Takt beat. A set-up team or expert follows the operator, so that by the time the operator has made one round of the flow line (at Takt time), it has been completely changed over to the next product.
Seven wastes: Taiichi Ohno¹s original catalog of the wastes commonly found in physical production. These are overproduction ahead of demand, waiting for the next processing stop, unnecessary transport of materials, overprocessing of parts due to poor tool and product design, inventories more than the absolute minimum, unnecessary movement by employees during the course of their work, and production of defective parts.
Single Minute Exchange of Dies (SMED): A series of techniques designed for changeovers of production machinery in less than ten minutes. Obviously, the long-term objective is always Zero Setup, in which changeovers are instantaneous and do not interfere in any way with continuous flow.
Single-Piece Flow: A situation in which products proceed, one complete product at a time, through various operations in design, order taking, and production, without interruptions, backflows, or scrap.
Standards: These involve comparison with accepted norms, such as are set by regulatory bodies.
Standard Work: A precise description of each work activity specifying cycle time, takt time, the work sequence of specific tasks, and the minimum inventory of parts on hand needed to conduct the activity.
System Kaizen: Improvement aimed at an entire value stream.
Sub-Optimization: A condition where gains made in one activity are offset by losses in another activity or activities, created by the same actions crating gains in the first activity.
Takt Time: The available production time divided by the rate of customer demand. For example, if customers demand 240 widgets per day and the factory operations 480 minutes per day, takt time is two minutes; if customers want two new products designed per month, takt time is two weeks. Takt time sets the pace of production to match the rate of customer demand and becomes the heartbeat of any lean system.
Theory of Constraints: A lean management philosophy that stresses removal of constraints to increase throughput while decreasing inventory and operating expenses.
Throughput Time: The time required for a product to proceed from concept to launch, order to delivery, or raw materials into the hands of the customer. This includes both processing and queue time.
Total Productive Maintenance (TPM): A series of methods, originally pioneered to ensure that every machine in a production process is always able to perform its required tasks so that production is never interrupted.
Value: A capability provided to a customer at the right time at an appropriate price, as defined in each case by the customer.
Value-Added Analysis: With this activity, a process improvement team strips the process down to it essential elements. The team isolates the activities that in the eyes of the customer actually add value to the product or service. The remaining non-value adding activities ("waste" are targeted for extinction.
Value Chain: Activities outside of your organization that add value to your final product, such as the value adding activities of your suppliers.
Value Stream: The specific activities required to design, order and provide a specific product, from concept to launch, order to delivery, and raw materials into the hands of the customer.
Value Stream Mapping: Highlights the sources of waste and eliminates them by implementing a future state value stream that can become reality within a short time.
Visual Control: The placement in plain view of all tools, parts, production activities, and indicators of production system performance so everyone involved can understand the status of the system at a glance.
Waste: Anything that uses resources, but does not add real value to the product or service.
Work in Progress (WIP): Product or inventory in various stages of completion throughout the plant, from raw material to completed product.
Yield: Produced product related to scheduled product.