Lean Manufacturing has been around since the 80s. While lean has been around for quite some time, the underlying principles are still relevant today. In fact, there are still many businesses that can benefit from lean today.
If you are new to this term, we’ve broken down this article into 9 parts which you can jump right into after clicking on the links below:
- Lean Manufacturing by Definition
- What is Lean Manufacturing and How did it come about?
- The 5 Methodologies of Lean Manufacturing?
- What is the Purpose of Lean Manufacturing?
- Why is Lean Production Important?
- What are the Lean Principles?
- How to Implement Lean Manufacturing Methodologies?
- What is the Difference between Lean Manufacturing, Continuous Improvement and Operational Excellence?
- What is the Difference Between Traditional and Lean Manufacturing?
Lean Manufacturing by Definition
Lean Manufacturing (also known as Lean Management, Lean Enterprise, Lean Production or Lean Thinking) is a system of management developed by the Toyota Motor Corporation and adapted successfully across the world to almost every sector of manufacturing as well as a huge range of non-manufacturing sectors including Healthcare, Banking, Government & Services and even Agribusiness.
What is Lean Manufacturing and How Did it Come About?
Back in the 1980’s when western companies realised that they were rapidly losing market share to Japanese manufacturers, a number of US and European academics were sent to study the differences between Toyota and the US and European manufacturers, (most famously Womack and Jones). From these studies, the term lean manufacturing was coined to describe Toyota’s relentless focus on eliminating waste and lead time.
Lean Manufacturing or the Toyota Production System is, in fact, a practical solution developed by a medium-sized manufacturer to address its cash flow problems. Many manufacturers may be daunted by the size of automotive assembly plants and see them as a unique working environment that has little in common with their business. However, the reality is that the underlying principles of Lean Manufacturing are simple, common sense and can be applied in every manufacturing business, no matter how small.
The 5 Methodologies of Lean Manufacturing
Five core principles underly the Lean Manufacturing methodology
- Focus on Processes – Lean is focused on improving processes. This can apply to any process where inputs are converted to an output. Therefore, while Lean was developed in manufacturing processes, it can equally apply to processes in sales, supply chain, human resources or finance as well as in a huge range of non-manufacturing businesses.
- Maximise Value and Minimise Waste – In Lean, we define value as the actions or process steps that add value for the customer of that process. Everything that is not value is then defined as waste. Lean manufacturing methodologies focus on eliminating that waste, but also on increasing the value the customer receives in order to create competitive advantage.
- Standardising the Work – A key element of Lean thinking is the idea of improving the standard. However, to improve a standard, you must first have a standard. Therefore, in Lean Manufacturing, we try to standardise every task in terms of content, sequence, timing, and outcome. When we standardise work, we increase the chances of getting a consistent quality result and also, we can measure when we have improved the standard. As well as standardising the work Lean also standardises the workplace by using 5S to create a work environment where there is a place for everything and everything is in its place, safe, clean and ready for use.
- Creating Flow – A core principle of Lean manufacturing is the idea of flow. This means a process where products or services flow through every process step in a defined sequence, one by one, at the rate of customer demand. When this is achieved, we minimise the waste in the process and deliver the minimum lead time and maximum agility.
- Solving Problems – In Lean manufacturing, we welcome problems as problems give us the opportunity to learn and improve the process. However Lean manufacturing specifies that we use the scientific method to solve problems and improve the process. Rather than jumping to the solution, we first identify the root cause of the problem, develop a solution, implement the solution, check the results so we know that the solution work and then lock in the new method through new standard work. We call this the Plan-Do-Check-Act method of solving problems and it is at the core of Lean Methodology.
What is the Purpose of Lean Manufacturing?
This was summarised by a Toyota engineer called Taiichi Ohno, widely considered the father of Lean Manufacturing, when he said, “all we are trying to do is reduce the lead time”.
When we reduce lead time in a process, we eliminate waste and create a more agile and flexible process.
This means lower costs, lower working capital, better use of factory space, shorter lead times to customers (of course) and greater flexibility and agility to respond to customer needs. As the world speeds up and customers want more and more customisation in shorter and shorter lead times, then the need to reduce lead time in everything we do becomes even more important.
Unlike other improvement approaches, such as Six Sigma, Lean Manufacturing also gives us a robust management system. It provides a way to develop, maintain and improve highly efficient business processes that deliver to customers what they need when they need it with perfect quality.
It also provides a highly effective management system that enables businesses to get the best out of all their people at every level of their organisation. Importantly it gives leaders a framework for day to day leadership as well as tools to ensure alignment with strategy throughout the business.
Why is Lean Production Important?
Lean Production is an important aspect of manufacturing because it delivers a foundation business can use to build and continually improve on. Lean was developed from the Toyota Production System, so production is at the core of Lean Thinking.
However, Lean also allows a “production mindset” to be applied in a wide range of non-manufacturing processes in order to achieve consistent, standardised results and continually eliminate waste.
What are the Lean Principles?
Building on the 5 methodologies mentioned above there are 5 distinct principles to creating a Lean & Operational Excellence culture in your business.
- Eliminating Wastes – One of the key elements of a Lean manufacturing system is to eliminate anything that does not add value to the customer. Eliminating waste reduces lead times, increases revenue and increases overall customer satisfaction.
- Build Quality In – Quality control is one of the largest sources of waste, by ensuring quality control (QC) many businesses create waste. It is beneficial to develop Quality Management Systems which will help reduce production issues without the need for excessive resources on QC.
- Creating Knowledge – A Lean production system encourages Lean teams the ability to properly document and retain valuable knowledge. Creating a set of standard work instructions used on the production line for every shift is a way of creating knowledge and setting standards.
- Continuous Improvement – Continuous Improvement (CI) is the most critical principle of Lean Manufacturing, it is the constant and unchanging mindset of on continual improvement. Aiming to show that you are never truly finished improving your business, it’s processes or it’s people.
- Respect for People – One of the core pillars of Lean and Operational Excellence often neglected by leadership is respecting people. Lean Leadership helps to nurture a culture where respect for people and Continuous Improvement is encouraged and championed across teams and departments.
Value and Waste
With regard to the first principle of eliminating waste, Toyota realised that most of what happened in their factories did not add value to the product and therefore was waste. They classified this waste into seven categories. In recent years others have added more waste categories, but the original seven is a good place to start.
The Seven Wastes Are:
- INVENTORY: Inventory has value on the balance sheet of a company, but it is not value. The customer will not pay you more for your product if you hold more inventory, and will also not pay you less if you manage to meet his delivery expectations with less inventory. While inventory will often be necessary (e.g. as buffer to compensate for variation in customer demand), it should always be considered to be waste and be minimised.
- WAITING TIME: Waiting time is the unproductive time spent by employees waiting for something to happen. Often they will be waiting for another employee to complete his or her task or waiting for a machine to complete its cycle. While waiting, the worker is not adding value to the product and therefore waiting is waste.
- MOTION: In many tasks, employees will spend a lot of their time walking. Walking from one part of a production line to another, walking back and forth to collect or deliver materials, or walking around their work cells. While walking, employees are not adding value to the customer, so motion is waste.
- TRANSPORTATION: Closely related to motion is transportation time. This is the time spent moving materials and products around your plant or from location to location—a necessity if you have a large site or multi-site operation, but it does not add value to the product and is therefore categorized as waste.
- DEFECTS: Ask most manufacturing people about waste and they will talk about scrap or defects. Making scrap and defects does not add value to customers’ products, and obviously should be considered waste.
- OVER-PROCESSING: Production processes frequently incorporate processes that do not add value to the product and we should consider those processes wasteful and try to eliminate them altogether. Examples of this kind of waste include excessive inspection steps, packaging of work in progress or subassemblies that need to then be unpacked later in the process, and de-burring parts (when the drilling or cutting process that caused the burr can be redesigned to prevent the burr in the first place).
- OVER-PRODUCTION: Over-production is the opposite of just in time. Over-production is producing more than is needed sooner than needed. Over-production usually manifests itself as work-in-progress inventory. Over-production is usually caused by big batches and unbalanced processes and is in some ways the worst form of waste as it is associated with increased inventory, more transportation of materials, and often with over-processing.
How to Implement Lean Manufacturing Methodologies?
When implementing Lean there are many views on the best way to go. At TXM we have worked with hundreds of companies and seen dozens of different approaches. We have identified seven critical success factors for implementing Lean.
- Have a Clear Strategic Goal – Lean is not a strategy for your business. “Being Lean” is not an outcome. Lean is instead a methodology to deliver your business’ strategic goal. If you start with a clear goal and communicate this through your business, then leaders and teams will understand the importance of the Lean activities and be more likely to engage and sustain the improvement. It is important that the whole leadership team is aligned with this strategic goal and sees it as important rather than Lean being seen as just an activity for operations.
- Leadership “Walks the Talk” – I am always surprised by the number of organisations where the senior leaders seem to believe that the Lean initiative “does not apply to them”. Senior leaders need to demonstrate Lean leadership behaviours which means communicating a clear vision for the Lean transformation, going regularly to the place where the work is being done, showing front line employees respect and when things are not as expected, asking why rather than condemning and directing people. Remember as a leader “the standard you walk by is the standard you set” and this truism definitely applies to Lean.
- Map your Value Streams – We have discussed how Lean is about maximising value and eliminating waste. But how do you see the waste in your business and how do you decide the best way to eliminate that waste? The answer is by mapping the end to end flow of value from receiving raw materials to delivering finished goods. The way we do this is a value stream map. This enormously powerful (when used correctly) business tool can provide you a simple and clear roadmap for improving your business.
- Set Clear Standards – Standardised work and a standardised workplace are key foundations of a Lean management system. Start with 5S to standardise your workplace and then build standardised work starting with the most critical tasks in your process. This will stabilise your process and deliver more consistent results, which in turn provides a platform for improvement.
- Develop Your Front-Line Leaders – Your front-line leaders are the supervisors, team leaders and junior managers that your front-line staff directly report to. These people are the most influential in your business as they are often long-serving and have a huge influence on culture. Front line staff usually trust and listen to their immediate supervisor more than any other person in the business.
- Unfortunately, front line leaders often have no leadership tools or training and are not engaged in change processes. Giving your front-line leaders the tools and skills to lead their team effectively and drive improvement will free up more senior leaders from day to day issues. It will also maximise the likelihood that your lean transformation will be successful and sustained.
- Set Simple and Clear Measures that Can Be Improved Every Day – Often business metrics are highly complex and only get measured once per month, as part of monthly financial reporting. At the workplace, where customer value is created, there are often no measures other than getting today’s urgent order out the door.
- Instead, develop simple measures for safety, quality, delivery, output and cost that can be measured every day, are easily understood and recorded by front line teams. This will ensure that problems are addressed every day, rather than weeks after they occur when the financial results are reviewed.
- Get the Right Resources – a Lean manufacturing transformation is not easy. People in your business are probably already really busy. Therefore, you need to get the right resources to ensure that your transformation has enough momentum. This will usually consist of a mix of external resources such as TXM to provide expertise, coaching and project management along with internal resources who can drive the change and complete the key actions internally.
- Remember when implementing Lean is that we are not trying to BE Toyota. Toyota is a unique business occupying a particular position in a distinct market, the global automotive industry. Therefore, unless you are also a global automotive manufacturer seeking to dominate the mid-market for cars, then implementing Lean is not about mimicking Toyota right down to learning a whole pile of Japanese words.
- Instead successful Lean manufacturing implementation is about LEARNING from Toyota and adapting the tools, principles and philosophies to create your own system of management for your own business. And unless you are a Japanese company or operating in Japan, don’t worry too much about the Japanese words – they will just confuse and alienate people.
What is the Difference between Lean Manufacturing, Continuous Improvement and Operational Excellence?
Often, we see these three terms used interchangeably. In particular, a business leader responsible for your Lean program may be called a Lean Manager, a Continuous Improvement Manager or an Operational Excellence Manager.
So, what is the difference? Are they all the same thing or are they distinct methodologies? To resolve the confusion, the TXM perspective is:
- Lean Manufacturing is a System of Management – it is a set of tools and principles used to manage a business in order to achieve superior performance.
- Continuous improvement is an attribute of business culture – it means that the culture of your business encourages staff to always look for ways to improve performance. Lean is the approach that most companies use to create a continuous improvement culture, although Six Sigma and the older Total Quality Management approach have also been used to build a continuous improvement culture.
- Operational Excellence is an outcome. What it means is really something you define. What is excellent operational performance for your business? Lean enables you to achieve operational excellence, but it is not the only approach you might apply. For example, Industry 4.0 technologies and other improvement techniques such as Agile or Six Sigma can be applied as part of the goal of achieving operational excellence.
What is the Difference Between Traditional and Lean Manufacturing?
The overarching major difference between traditional manufacturing and Lean manufacturing encompasses a totally different mindset and way of thinking about your customers. There are several major differences between traditional and Lean Manufacturing outlined below.
Production driven by a sales forecast (Push Manufacturing).
Problems are viewed negatively
Work in process (WIP) is viewed as a normal part of operations.
Improve the system and disregard all types of waste in the process.
Management is the primary driver of change.
If a process is working there is no need to change it.
Standardized work (people performing the same task the same way) only exists in documents like SOPs, rarely in reality.
Focuses on training and relies on people to not make mistakes.
Systems thinking, often ignoring or unable to see the enormous opportunities for improvement.
Production is driven by customer demand (Pull Manufacturing)
Problems are viewed as opportunities for improvement often through root cause analysis.
WIP is a sign that a process needs improving and is a type of waste to eliminate.
Improve system by eliminating waste and improving current processes.
Everyone is empowered, trained in the principles of lean and encouraged to look for ways to improve processes.
Always looking for ways to improve processes and people.
Everyone performs the same task the exact same way until a better way is discovered; then everyone performs the task the new and improved way.
Focuses on developing processes that are error proofed.
Views the business as a series of interrelated value streams that can and should improve.