What is Lean Manufacturing?
Lean manufacturing is a production process based on an ideology of maximising productivity while simultaneously minimising waste within a manufacturing operation. The lean principle sees waste is anything that doesn’t add value that the customers are willing to pay for.
The benefits of lean manufacturing include reduced lead times and operating costs and improved product quality.
Also known as lean production, the methodology is based on a specific manufacturing principles that have influenced production systems across the world as well as those of other industries including healthcare, software and various service industries.
The core principle in implementing lean manufacturing is to eliminate waste to continually improve a process. By reducing waste to deliver process improvements, lean manufacturing sustainably delivers value to the customer.
The types of waste include processes, activities, products or services that require time, money or skills but do not create value for the customer. These can cover underused talent, excess inventories or ineffective or wasteful processes and procedures.
Removing these inefficiencies should streamline services, reduce costs and ultimately provide savings for a specific product or service through the supply chain to the customer.
Waste in industry, whether that is idle workers, poor processes or unused materials are a drain on productivity, and lean manufacturing aims to eliminate these. The motives behind this vary depending on opinion, from increasing profits to providing benefits to customers. However, whatever the over-arching motives, there are four key benefits to lean manufacture:
- Eliminate Waste: Waste is a negative factor for cost, deadlines and resources. It provides no value to products or services
- Improve Quality: Improved quality allows companies to stay competitive and meet the changing needs and wants of customers. Designing processes to meet these expectations and desires keep you ahead of the competition, keeping quality improvement at the forefront
- Reducing Costs: Overproduction or having more materials than is required creates storage costs, which can be reduced through better processes and materials management
- Reducing Time: Wasting time with inefficient working practices is a waste of money too, while more efficient practices create shorter lead times and allow for goods and services to be delivered faster
The basic ideals of lean manufacturing have arguably existed for centuries, but really became solidified with Benjamin Franklin’s writing on reducing waste in his ‘Poor Richard’s Almanack,’ where he wrote that avoiding unnecessary costs could provide more profit than increasing sales.
Franklin put down this idea and other concepts in his essay, ‘The Way to Wealth,’ which was then expanded upon by mechanical engineer Frederick Winslow Taylor in his 1911 book, ‘Principles of Scientific Management.’ Taylor codified the process, calling it scientific management and writing, “whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment."
American industrialists of the time, including Henry Ford, saw lean manufacturing as a measure to combat the influx of cheap offshore labour. The President of the American Society of Engineers, Henry Towne wrote in the foreword to Frederick Winslow Taylor’s ‘Shop Management’ (1911) that, "We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labour of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes."
However, it was Shigeo Shingo and Taiichi Ohno of the Toyota Motor Corporation who really progressed these views to become what was later dubbed lean manufacturing. Shingo revealed that he was "greatly impressed to make the study and practice of scientific management his life's work" after reading Frederick Taylor’s ‘Principles of Scientific Management’ in 1931.
Having previously been a textile company, Toyota moved into producing automobiles in 1934 and won a truck contract with the Japanese government in 1936. However, as Kiichiro Toyoda, founder of Toyota Motor Corporation, directed the engine casting work he discovered problems with their manufacturing, including wasted resources on repair of poor-quality castings. Toyoda conducted a study of each stage of the production process and created ‘Kaizen’ improvement teams to address the problems. The findings of the Kaizen teams were brought together by Taiichi Ohno to create the Toyota Production System (TPS).
By the post-war period of the later 1940s, the levels of demand in the Japanese economy were low, so Ohno determined that work schedules should be driven by actual sales rather than sales or production targets. This meant avoiding costly over-production and led Toyota to establish ‘pull’ (or build-to-order) rather than target-driven ‘push’ production scheduling.
TPS, which was known as ‘just-in-time’ manufacturing or JIT in the 1980s, developed into lean manufacturing in the later 1980s and into the 1990s. A quality engineer called John Krafcik first coined the term lean manufacturing in his 1988 article ‘Triumph of the Lean Production System’ after working on a joint venture between Toyota and General Motors in California.
Krafcik stated that lean manufacturing plants have higher levels of productivity/quality than non-Lean and, "the level of plant technology seems to have little effect on operating performance." He continued by adding that the risks of implementing lean processes can be lessened by "developing a well-trained, flexible workforce, product designs that are easy to build with high quality, and a supportive, high-performance supplier network."
The term, lean manufacturing was detailed further by James Womack, Daniel T. Jones and Daniel Roos in the 1990 book ‘The Machine that Changed the World.’ Womack and Jones further defined this in their 1996 book, ‘Lean Thinking: Banish Waste and Create Wealth in Your Corporation,’ where five key principles were laid out, “Precisely specify value by specific product, identify the value stream for each product, make value flow without interruptions, let customer pull value from the producer, and pursue perfection.”
Lean manufacturing entails streamlining processes and procedures to eliminate waste and thereby maximise productivity. Womack and Jones (see above) defined lean as, “a way to do more and more with less and less - less human effort, less equipment, less time, and less space - while coming closer and closer to providing customers exactly what they want."
The basis of lean is often translated into five core principles.
The five core principles of lean manufacturing are defined as value, the value stream, flow, pull and perfection. These are now used as the basis to implement lean.
1. Value: Value is determined from the perspective of the customer and relates to how much they are willing to pay for products or services. This value is then created by the manufacturer or service provider who should seek to eliminate waste and costs to meet the optimal price for the customer while also maximising profits.
2. Map the Value Stream: This principle involves analysing the materials and other resources required to produce a product or service with the aim of identifying waste and improvements. The value stream covers the entire lifecycle of a product, from raw materials to disposal. Each stage of the production cycle needs to be examined for waste and anything that doesn’t add value should be removed. Chain alignment is often recommended as a means to achieve this step.
Modern manufacturing streams are often complex, requiring the combined efforts of engineers, scientists, designers and more, with the actual manufacturing of a physical product being just one part of a wider stream of work.
3. Create Flow: Creating flow is about removing functional barriers to improve lead times. This ensures that processes flow smoothly and can be undertaken with minimal delay or other waste. Interrupted and disharmonious production processes incur costs and creating flow means ensuring a constant stream for the production or service delivery.
4. Establish a Pull System: A pull system works by only commencing work when there is demand. This is the opposite of push systems, which are used in manufacturing resource planning (MRP) systems. Push systems determine inventories in advance with production set to meet these sales or production forecasts. However, due to the inaccuracy of many forecasts, this can result in either too much or not enough of a product being produced to meet demand. This can lead to additional warehousing costs, disrupted schedules or poor customer satisfaction. A pull system only acts when there is demand and relies on flexibility, communication and efficient processes to be successfully achieved.
The pull system can involve teams only moving onto new tasks as the previous steps have been completed, allowing the team to adapt to challenges as they arise in the knowledge that the prior work is mostly still applicable to delivering the product or service.
5. Perfection: The pursuit of perfection via continued process improvements is also known as ‘Kaizen’ as created by Toyota Motor Corporation founder Kiichiro Toyoda (see ‘When and Who Invented Lean Manufacturing?’ above). Lean manufacturing requires ongoing assessment and improvement of processes and procedures to continually eliminate waste in an effort to find the perfect system for the value stream. To make a meaningful and lasting difference, the notion of continuous improvement should be integrated through the culture of an organisation and requires the measurement of metrics such as lead-times, production cycles, throughput and cumulative flow.
It is important for the culture of continuous improvement to filter through all levels of an organisation, from team members and project managers right up to the executive level, to create a collective responsibility for improvement and value creation.
The Toyota Production System originally detailed seven wastes that don’t provide value to the customer. These wastes were:
- Unnecessary transportation
- Excess inventory
- Unnecessary movement of people, equipment or machinery
- Waiting – either people or idle equipment
- Over-production of a product
- Over processing or adding unnecessary features to a product
- Defects that require costly correction
An eighth waste has since been highlighted by many lean practitioners:
- Unused talent and ingenuity
These types of waste can be broadly split into three specific types:
- Mura: Unevenness or waste as a result of fluctuating demand, whether from customer requests or new services (and thereby additional work) being added by an organisation.
- Muri: Overburden or waste due to trying to do too much. This relates to resource allocation and involves people being asked to do too much. Time can be wasted as people switch tasks or even lose motivation due to being overburdened.
- Muda: This is process-related waste and work that adds no value. If an activity doesn’t add value, or directly support one that adds value, then it is unnecessary and should be eliminated.
Lean manufacturing carries several advantages and disadvantages depending on how and where it is implemented.
1. Saves Time and Money
Cost-saving is the most obvious advantage of lean manufacture. More efficient workflows, resource allocation, production and storage can benefit businesses regardless of size or output. Time saving allows for reduced lead times and better service in providing products quickly to customers, but can also help save money through allowing for a more streamlined workforce.
2. Environmentally Friendly
Reducing waste in time and resources and removing unnecessary processes can save the costs in energy and fuel use. This has an obvious environmental benefit, as does the use of more energy efficient equipment, which can also offer cost savings.
3. Improved Customer Satisfaction
Improving the delivery of a product or service, at the right cost, to a customer improves customer satisfaction. This is essential to business success as happy customers are more likely to return or recommend your product or service to others.
1. Employee Safety and Wellbeing
Critics of lean argue that it can ignore employee safety and wellbeing. By focussing on removing waste and streamlining procedures it is possible to overlook the stresses placed on employees who are given little margin for error in the workplace. Lean has been compared to 19th Century scientific management techniques that were fought against by labour reforms and believed obsolete by the 1930s.
2. Hinders Future Development
Lean manufacturing’s inherent focus on cutting waste can lead management to cut areas of a company that are not deemed essential to current strategy. However, these may be important to a company’s legacy and future development. Lean can create an over-focus on the present and disregard the future.
3. Difficult to Standardise
Some critics point out that lean manufacturing is a culture rather than a set method, meaning that it is impossible to create a standard lean production model. This can create a perception that lean is a loose and vague technique rather than a robust one.
Lean manufacturing is used across industry for a variety of production processes, although notably, it was first seen within the automotive industry.
Creating efficient workflows and processes is important to maximising output on a production line, which in itself harks back to Adam Smith’s 1776 ‘Division of Labour,’ where he noted how the efficiency of production was vastly improved if workers were split up and given different roles in the making of pins. This was because workers could be tasked with work that suited their skills or temperament, there was no need to move them from their stations or for them to learn different skills or swap tools.
Lean manufacturing has drawn on these ideas and extended them to include removing waste from multiple processes and procedures. Lean methods can also be seen outside of production with the provision of services too.
The general meaning of lean is to identify and eliminate waste, from which quality and production times can be improved and costs reduced. This is one method of approaching lean manufacturing, but it can also be approached using the ‘Toyota Way,’ which is to focus on improving workflows rather than waste.
Both methods have the same goals, but with the Toyota Way the waste is eliminated naturally rather than being sought out as the focus. Followers of this method of implementation say it is a system-wide perspective that can benefit an entire business rather than just removing particular wastes. The Toyota Way seeks to simplify the operational structure of an organisation in order to be able to understand and manage the work environment. This method also uses mentoring known as ‘Senpai and Kohai’ (Senior and Junior) to help foster lean thinking right through an organisational structure.
However, despite the different approaches both methods share a number of principles, including:
- Continuous Improvement
- Load Levelling
- Perfect First-Time Production or Service Quality
- Production Flow and Visual Control
- Pull Processing
- Supplier Relationships
- Waste Removal
As they introduced the concepts of lean manufacturing in their writing, Womack and Jones also explained why some lean organisations succeeded while others failed. The main difference was that those who failed copied specific practices while the successful organisations sought to understand the underlying principles required to make the whole lean system work.
Becoming lean is a continuous process of change that need to be assessed and monitored. It will require frequent changes and adjustments in your working practices to maintain.
Creating a lean toolbox of methods can help simplify your lean management systems, but you should remember that lean is more of a philosophy than a standardised set of procedures.
Despite this, there are four steps that you can take to help create your own lean project management system:
1. Design a Simple Manufacturing System
The more you break down your systems into their simple, composite parts, the easier each will be to monitor and improve through eliminating waste.
2. Keep Searching for Ways to Improve
Staff at all levels should be encouraged and supported in finding ways to improve processes and procedures. It is important to have an honest overview of procedures in order to find areas for improvement. The more specific these improvements are to your particular company and processes, the more effective they will be.
3. Continuously Implement Design Improvements
It is not enough to seek out improvements. These need to be implemented through your designs, procedures and processes. It is not enough to just seek improvements, they need to be put into practice on a practical level too. Any improvements should also be backed up by improvement metrics and it is often best to make small incremental changes rather than large sweeping ones.
4. Seek Staff Buy-In
In order to effectively achieve the first three steps you need to gain the support of your staff. The whole methodology can suffer if management decides to implement it without gaining the buy-in of employees. Since waste, and therefore lean, is an overall concept across the entire business, it requires management to identify and understand the true problems that need to be solved.
Employees can block the success of lean management by pushing back, especially if the burden of managing and implementing lean is placed upon their shoulders. A good solution to this is to create a ‘lean plan’ where teams can provide feedback and suggestions to management, who then make the final decision on any changes. Coaching is also important to explain concepts and impart knowledge to employees at all levels.
There are a variety of tools that can be used to help implement a lean management system, these include:
- Control Charts – to check workflows
- Kanban Boards – to visualise the workflows
- 5S – a methodology for organising the workplace
- Multi-Process Handling
- Error Proofing (also known as ‘Poka-Yoke’)
- Rank Order Clustering – to aid production flow analysis
- Single-Point Scheduling
- Single-Minute Exchange of Die (SMED) – a fast method to move between manufacturing processes
- Total Productive Maintenance – to improve manufacturing integrity and quality
- Value Stream Mapping
- Work Cell Redesign
Six Sigma is a method of data-driven management that is similar to lean in that it also seeks to assess and eliminate process defects to improve quality. However, while both processes seek to eliminate waste, they use different approaches to do so.
While lean contends that waste is a product of additional steps, processes and features that a customer doesn’t believe add value, Six Sigma sees waste as a product of process variation.
Despite the differences, Six Sigma and lean can be combined to create a data-driven approach called ‘Lean Six Sigma.’
Lean manufacturing is a methodology that can help streamline and improve manufacturing processes or other services in order to provide enhanced benefits for customers, while saving time and money through the elimination of waste.
As a methodology, lean is best applied across the entirety of an organisation with continual monitoring and improvements being applied with the support of employees at all levels.
TWI can help with a number of product and process development support activities, including technical support, manufacturing and production support, technology acquisition, asset management and failure analysis and repair. You can find out more about all of these services and support activities here.