What is Lean Manufacturing?
Lean is the term used to describe the production systems and methods developed by the Toyota Company in the post war years. Lean comes about by focusing on the reduction of the non-valued activities within the organisation. Lean is all about achieving more value by applying fewer resources more effectively and efficiently through the continuous elimination of non-valued added activities or waste.
With its origins in the automotive industry the concept of Lean is widely applied in manufacturing industry but is not restricted solely to manufacturing activities and instead can be easily applied to the whole organisation’s administrative functions as well as to the service sector too. Lean can be and often is extended beyond the organisation’s boundary to encompass the supply chain.
The Five Simple Principles for Lean Manufacturing
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1. Identify and understand what creates value for the customer
By accepting that only a fraction of the total time and effort expended in the organisation actually adds value for the customer; understanding what the customer wants is the first step towards identifying all the non-value added activities or waste within the organisation.
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2. Identify, understand and map all the process steps required to fulfil the customer
By documenting the entire set of activities across all parts of the organisation involved in delivering products or services to the customer allows for an understanding how value is delivered to the customer in the current state makes it possible to identify the wasteful activities that can then be targeted for elimination.
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3. Make the value-added actions within processes flow
Flow is about creating value for the customer with the minimum number of process steps with the minimum number of delays between those process steps and the minimum number diversions along the way. The value stream is used to identify wasteful activities to be eliminated; flow concerns the rethinking or reorganisation of the remaining activities to further eliminate waste.
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4. Only make what the customer wants or Pull
If one objective for creating flow within processes is to minimize their throughput time. A clear second is to ensure that processes are only initiated when customer demand requires it. Essentially, this may mean only making products or delivering services at the point the customer demands; just-in-time. As such as many process steps in the value stream should be triggered when there is a firm customer requirement.
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5. Pursue Perfection through Continuous Improvement
Creating flow and pull begins with often radical changes to individual process steps, but the gains delivered by Lean principles really become significant as they are applied with increasing scrutiny. As this happens more and more layers of waste become visible and the cycle continues towards a theoretical end point of perfection; where every asset and every action adds value for the customer. Through continuous improvement the organisation should strive for incremental improvements in the value stream every single day. Go here for more information on Continuous Improvement
In applying the five principles of Lean your organisation will encourage a culture of continuous improvement; it will become “the way things are done” instead of “that’s the way we've always done it”. You will be ensuring that every asset and activity are driving towards the overall organisational strategy through constant review of processes and the targeted elimination of waste to ensure that they constantly and consistently deliver value to the customer.
But what does that mean?
Lean allows the organisation to maintain high levels of customer service whilst being able to grow and flex with a changing environment and it does this through implementing sustainable change.
Consider the following definitions for each of the key words:
Value: that which the customer is willing to pay for. For instance, in manufacturing this will typically be the processes that convert raw materials into products; while in administrative functions it may concern the unnecessary paperwork.
Value Stream: the sequence of processes that deliver value to the customer. The complete value stream flows through the complete supply chain.
Flow: movement between value adding processes without delay or interruption.
Pull: activating a process when the customer wants to receive, not when the supplier wants to provide.
What are the Benefits of Lean?
Lean essentially aims to compress time required to deliver value to the customer.
Typically, if you quarter lead-times, you will double productivity and reduce costs by 20%.
This is known as the ¼:2:20 rule. Typical results are as follows:
- Halving of lead-times; doubling of stock turnover
- 30% to 50% reduction in floor space requirements
- 20% to 40% increase in Overall Equipment Effectiveness (OEE)
- 20% to 25% labour productivity gains
- Reduction in administration and co-ordination roles