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What is Lean Manufacturing

©2015 Productivity Press. Reprinted from Grow Your Factory, Grow Your Profits: Lean for Small and Medium-Sized Manufacturing Enterprises.
What is Lean Manufacturing

Lean Manufacturing (also known as Lean Management, Lean Enterprise, Lean Production, Lean Thinking – they are all names for the same thing) 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 and Services.

So 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 very practical solution developed by a medium sized manufacturer to address its cash flow problems. While 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, 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.

So, what are those underlying principles?

Value and Waste

As I mentioned, Toyota realised that most of what happened in their factories did not add value to the product and therefore was waste. It classified this waste into seven categories. In recent years others have added more waste categories, but I think the original seven is a good place to start. These seven wastes are:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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).
  7. 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.

The Four Rules of the Toyota Production System

Lean ManufacturingMany businesses over the past 30 years have experimented with the tools of lean manufacturing. Most of you have heard of methods such as 5S, Kanban, single minute exchange of die (SMED), and total productive maintenance (TPM).

Despite implementing these tools, many companies did not see the improvements in performance they expected. Further study of the Toyota Production System revealed some basic principles that supported it. These were described in 1999 in an excellent Harvard Business Review article by Stephen Spear and Kent Bowen. Spear and Bowen identified four rules which were integral to everything Toyota did. Again, these rules are simple, practical, and applicable to every manufacturing business. They are essentially the basic principles that Toyota (and other lean companies) apply to eliminate the eight wastes. The four rules are:

Rule 1: All work is specified in terms of content, sequence, timing, and outcome.

This is described as standard work and means that to the extent possible there is a standard method for every task. This standard work is usually developed with the production team rather than remotely by industrial engineers. It becomes the agreed-upon method that everyone follows to complete a task. As such it becomes the basis for training employees. In essence, the standard method means that workers can complete a task and achieve consistent quality outcome in a specified time, every time. It also provides the basis for improvement. The first question asked by a Toyota improvement coach (or Sensei) is always: What is the standard? They rightfully argue that if you do not have a standard you do not know the capability of your current process, and therefore you cannot measure improvement or detect deterioration.

Rule 2: Every customer-supplier connection must be direct and there must be an unambiguous yes-or-no way to send requests and receive responses in the supply chain.

Every employee at Toyota is a customer and a supplier. Assembly lines are the customers of material handlers, material handlers are customers of parts and materials stores. Each assembly line worker is the customer of the worker upstream of him and the supplier of the worker downstream. Production is the customer of maintenance. Crucially, the team is the customer of the team leader and the team leaders are customers of their supervisors. In every case customers and suppliers have clear agreed-upon expectations of supply and response. When an assembly worker empties a bin of parts, it is the job of the material handlers to replenish that bin with another bin of quality replacement parts in an agreed-upon time to assure that the worker does not run out of needed parts. Each assembly worker has to complete his task in a specified time and to a specified quality and hand the product on to the next worker on time and without defects. When a worker highlights a problem by pulling his alarm cord (called an Andon cord), the team leader is expected to arrive and support the team member within a specified time. Equally, however, if the worker does not pull the cord, the team leader knows there is not a problem and does not need to offer the worker help. He can focus instead on other tasks. This clarity greatly simplifies operations. Expectations are clear and employees are empowered to make decisions and take action based on these simple and clear signals.

Rule 3: The Pathway for Every Product or Service Is Simple and Direct.

Every process flow and every business process must be analysed and unnecessary complexity eliminated. This means that for any given product or part there is one simple routing rather than many alternative routings. Plant layouts are designed to have a simple end-to-end flow for products and ideally a single production cell where all production steps are completed in one location.

Rule 4: Improvements Are Made Using a Scientific Method under the Guidance of a Teacher, at the Lowest Possible Level of An Organisation.

When we study science or engineering in school or at the university, we learn scientific method. Problems are solved by analysing the root causes, developing hypotheses, performing experiments to test hypotheses, measuring the results of the experiments, and then, if successful, recording and documenting the results and adding them to the body of scientific knowledge. After starting work in business we usually forget all this. When we have a problem we usually jump to a solution and tell employees to implement it. Chances are we know the solution because the problem has happened before (and will happen again), and chances are that we will just address the symptoms of the problem (e.g. by reworking defective product) rather than finding the root cause. It is also likely that problems will be handed up the line to managers to solve. In a lean production system we try to apply the plan-do-check-act cycle. This means that when we have a problem such as defective product, a machine breakdown, or an excessively long set up, we see this as an opportunity to improve. The team leader, supervisor, or engineer will gather the team to discuss the problem and agree to the most likely root cause (PLAN). Corrective actions will be agreed to, and a plan to implement them developed. The corrective actions will then be implemented (DO), and the results tracked over a period of time to make sure that the problem does not occur again (CHECK). If the correction is successful then standard work will be updated to include the new method, materials, or process that has been developed (ACT). This approach can be painstaking at first, but it means that problems are solved permanently.

Roos, Daniel, Ph.D.; Womack, James P., Ph.D.; Jones, Daniel T. 1991. The Machine That Changed the World : The Story of Lean Production, Harper Perennial
Spear, S. and Bowen, H.K. Decoding the DNA of the Toyota Production System, Harvard Business Review, September-October 1999.