Manufacturing

Lean Manufacturing: Eliminate Waste and Cut Operational Cost

What is lean manufacturing?

Lean is defined as a set of management practices to improve efficiency and effectiveness by eliminating non-value adding activities and waste.

Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity. 

This approach is based on the Toyota Production System. It was 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 can be applied in every manufacturing business, no matter how small.

The truth is that the principles can be universally applied in other industries. A lot of companies use lean manufacturing principles to eliminate waste, optimize processes, cut costs, boost innovation, and reduce time.

As a result, companies that implement lean manufacturing principles become more effective and competitive in the fast-paced, ever-changing global marketplace.

What are the lean principles?

A widely referenced book, Lean Thinking: Banish Waste and Create Wealth in Your Corporation, which was published in 1996, laid out five principles of lean:

1. Value

Value is created by the producer, but it is defined by the customer. Companies need to understand the value the customer places on their products and services, which, in turn, can help them determine how much money the customer is willing to pay.

2. The Value Stream

There are specific steps that need to be done in order to create a product or service from raw materials into a functional product through to disposal. Analyze the flow of product’s entire lifecycle and examine if there is any step that is that does not add value and must be eliminated. Analyzing inefficiencies and taking steps to eliminate them is the first step toward becoming leaner.

3. Flow

Eliminate functional barriers and identify ways to improve lead time. This aids in ensuring the processes are smooth from the time an order is received through to delivery. Flow is critical to the elimination of waste. Lean manufacturing relies on preventing interruptions in the production process and enabling a harmonized and integrated set of processes in which activities move in a constant stream.

4. Pull

This means you only start new work when there is demand for it. Lean manufacturing uses a pull system instead of a push system. Push systems are used in manufacturing resource planning (MRP) systems. With a push system, inventory needs are determined in advance, and the product is manufactured to meet that forecast. However, forecasts are typically inaccurate, which can result in swings between too much inventory and not enough. In contrast to MRP, lean manufacturing is based on a pull system in which nothing is bought or made until there is demand.

5. Perfection

Lean manufacturing rests on the concept of continually striving for perfection, so that the number of steps and the amount of time needed to serve the customer continually falls. This entails targeting the root causes of quality issues and eliminating waste across the value stream.

What is the purpose of lean manufacturing & why is it important?

As the world speeds up and customers want more and more customization in shorter and shorter times, then the need to reduce time in every steps we take to deliver a product or service becomes even more important.

Here are the main purpose of implementing lean manufacturing:

  1. Improve Quality. To stay competitive, companies must meet customers’ changing wants and needs. Therefore, processes must be designed to meet their expectations and requirements.
  2. Eliminate Waste. Waste is bad for costs, deadlines, and resources. It takes without adding any value to a product or service.
  3. Reduce Time. Time is money, and wasting time is therefore wasting money. Reducing the time it takes to start and finish a project is going to create value by adding efficiencies.
  4. Reduce Total Costs. Money is saved when a company is not wasting time, materials, and personnel on unnecessary activities. Overproduction also adds to storage and warehousing costs.

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, and greater flexibility and agility to respond to customer needs.

What are the eight types of waste in lean manufacturing?

Lean manufacturing defines waste as anything that doesn’t add value to the customer.

This can be a process, activity, product, or service; anything that requires an investment of time, money, and talent that does not create value for the customer is waste.

The eight lean manufacturing waste can be remembered using the acronym DOWNTIME:

The 8 wastes of lean manufacturing: DOWNTIME
  1. 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.
  2. Overproduction. Over-production is producing more than what is needed or 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.
  3. Waiting. 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.
  4. Non-utilized talent. The lean waste of non-utilized talent is not recognizing and effectively utilizing the valuable skills or talents that your employees could bring.
  5. Transportation. 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.
  6. Inventory. 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 minimized.
  7. 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.
  8. Extra-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 is packaging of work in progress or subassemblies that need to then be unpacked later in the process.

Implementing lean manufacturing

1. Have a Clear Strategic Goal

Lean is not a strategy nor an outcome. Lean is a method to deliver your business’ strategic goal. Start with a clear goal and communicate this to your team. Make them understand the importance of implementing lean manufacturing. You can start with the 4 purposes we discussed above.

2. Leadership “Walks the Talk”

Just like in digital transformation process, leaders who aim to implement lean principles need to demonstrate lean leadership behaviors themselves. Remember as a leader “the standard you walk by is the standard you set” and this truism definitely applies to lean.

3. Map your Value Streams

We have discussed how mapping the end to end flow of your production can help you identify loopholes. See whether there is any step you can improve or eliminate in your operations in order to reduce cost and shorten production time.

4. Set Clear Standards

Provide clear SOP for your employees and make sure they complies to the standard by conducting routine inspection. Having solid standard will stabilize your production process and help you deliver more consistent results, which in turn supports the lean principle continually striving for perfection. A digital inspection software like Nimbly can help you on this.

5. 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. Front-line staff usually trust and listen to their immediate supervisor more than any other person in the business. Provide training for your front-line leaders on lean practices and let them lead their team to achieve the goal hand in hand.

6. Set Simple and Clear Measures that Can Be Improved Every Day

In order to know if your strategy is working and the lean principles are implemented successfully, you need to develop simple measures for safety, quality, and cost that can be measured every day. Make sure they can be easily understood and assessed by front line teams. Address issues that come up immediately rather than finding them has grown into significant problem in the monthly report. You can use an operational audit software like Nimbly to evaluate your manufacturing process.

Summary

Identify your production value stream through operational audit and eliminate any process that doesn’t add value to the customer. This way, you can cut cost, reduce working capital, as well as bring greater flexibility and agility to respond to customer needs.

About Nimbly 

Nimbly is a mobile solution that turns manual operational processes into actionable insights. By digitizing manual checklists and converting the collected data into real-time insights, Nimbly enables companies to monitor, manage, and evaluate business operations effortlessly.

Consult how your business can start implementing operational audit with the Nimbly team free of charge.

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