The Ultimate Guide to Lean Manufacturing

When you watch a ballerina perform, you can't help but notice how fluid the movements are. Every step is choreographed perfectly. During the performance, nothing stops and everyone is moving towards completion. Another concept is when you are looking at an intersection in the street and you see a roundabout. No one stops and people flow across the intersection unlike a stop light.

When we look at our process, the only thing the customer cares about is a high quality product and delivered on time. To achieve this we must remove any and all waste in effort, time, and money the best we can and only focus on what the customer cares about.

How is a company supposed to please their customers while still keeping costs down? It turns out that manufacturers now have a secret weapon at their disposal. Instead of getting bigger, manufacturers have decided to get lean. Lean manufacturing is a set of production principles that helps manufacturers reduce costs while also improving production quality. If you're a company that wants to produce desirable products at the lowest possible price, putting lean manufacturing to work in your warehouse can improve both productivity and profitability. And the beautiful thing about lean manufacturing is that it works in industries both small and large.

What is Lean Manufacturing?

What is Lean Manufacturing

Lean Manufacturing is a set philosophy that governs how products are processed from raw materials into finished goods. The traditional manufacturing methods of producing huge amounts of inventory while waiting to deliver on forecasted consumer demand aren't as workable these days. If your projections are off, then you either have too little inventory (for unpredicted demand) or too much inventory (for slack demand). If you have excess inventory, then you have to devote part of your warehouse space just to store it. And that's warehouse space that you now cannot use for production, which is going to be a drag on profits.

A better way of matching production supply with demand is to allow your output to flexibly increase as demand increases. This is exactly what companies do when they use the lean manufacturing methodology. Lean is an operational strategy that allows companies to ramp up (or down) production as marketplace demand changes.

An important aspect of becoming a lean manufacturer is tossing out anything that isn't absolutely needed. As an overall guiding principle, lean is always looking to eliminate waste in the production cycle. Muda, the Japanese word for waste, is used to signify any activity that brings no added value to a manufactured product. As waste is eliminated in the manufacturing cycle, the speed of production is simultaneously increased. Eliminating waste also ties into lean's philosophy of looking for ways to improve the quality of manufactured products. In lean manufacturing, this concept is known as Kaizen, which means "continuous improvement" in Japanese.

Manufacturers generally don't need much persuasion if you offer them the opportunity to get rid of waste in their production process. Lean's commitment towards eliminating wasteful things that get in the way of the manufacturing cycle fits in well with the manufacturing world's emphasis on reducing costs.

Lean manufacturing is a process that helps companies produce more with less:

  • Less resources
  • Less time
  • Less Inventory
  • Less (human) capital

These lean manufacturing principles of working with "less" helps streamline the overall production process. The lean philosophy focuses on the continuous flow of raw materials all the way to the customer. When there's "less" to get in the way of this process, manufacturers will reap the rewards of happier customers and increased profits.

The History of Lean Manufacturing

The History of Lean Manufacturing

Eiji Toyoda and Taiichi Ohno were the men instrumental in pioneering the lean manufacturing system during the 1930s. These two men were constantly preoccupied with finding ways to raise the value added productivity of workers as they oversaw the Toyota car manufacturing process. One of the first revelations was the increased productivity gained by using the Jidoka concept of intelligent automation throughout their operations.

Toyoda and Ohno also searched for other ways to stretch their limited resources of equipment and capital. One way they were able to achieve this by putting the Just In Time concept to work systematically. Ohno further refined the lean production system by making each process the customer for the preceding process. This was a drastic departure from the accepted dogma of traditional mass manufacturing. Mass manufacturing had traditionally delivered parts to any dependent processes regardless of what was actually needed. But this traditional manufacturing process was pushing supplies onto downstream processes whether the demand was there for them or not.

Taiichi Ohno

Taiichi Ohno

"Progress cannot be generated when we are satisfied with existing situations."

Taiichi Ohno invented a completely new kind of system where cards (known as Kanban cards) were removed from a board to depict the parts they had consumed. The Kanban cards represented a withdrawing of parts from the previous processes. These Kanban cards were removed from bins after they were used. These withdrawn cards then were sent back to the supply center. As Kanban cards came back for specific cards, they became instructions to make additional parts to replenish what had been used. The Kanban flow helped make sure that manufacturing processes only made parts to replace only those that were actually consumed by downstream processes.

How a Process Works With a Lean Mindset

How a Process Works With a Lean Mindset

The Toyota Production System that serves as the basis for lean manufacturing has gained a worldwide renown. If we didn't have any laws of physics, how cool would it be if when a customer asks for 50 units of a product, we snap out fingers like a genie and give them 50 units, we would have the biggest profit margins and deliver as much as possible. Well, that will never exist but we can optimize our process so much that we can deliver to our customers as fast as possible with the smallest lead times. With a lean mindset, it's all about how to eliminate as much waste as possible and when we're thinking about waste. It's about wasting of time and money down. Every step, every movement, every space consumption and etc. For an example with space, If you have product sitting, that's taking up space that could be used to produce more goods and every time a worker has to walk from their station, that's time being wasted from producing more goods. Also, when employees don't understand how something works, there is an opportunity cost to the company and the company is wasting money and not having to do things properly. If the company is doing anything other then providing more value to the customer, it's waste.

But enough of the theoretical talk. Let's see how a system is put to work in a fictitious automobile plant. This fictitious automobile assembly plant uses the kanban methodology as one of its fundamental lean operating principles. As parts are emptied from bins, each bin's corresponding card is taken from the bin and thrown into a pile. When the pile grows high enough, that signals that it's time for a fresh set of supplies. The kanban cards of the emptied bins are then sent to the various supply warehouses as instructions to make new parts. As we'll soon see, this ensures that the main manufacturing plant gets exactly the parts that are needed only when they are needed.

The lean manufacturing principle can also be applied to each supply warehouse that brings material into the plant. The trucks that deliver parts to the auto manufacturing plant carry a variety of items in each load. You might wonder why they don't assign specific delivery trucks to specific parts. It turns out that it's more efficient to not restrict each truckload to a specific kind of product or part. By allowing mixed loads, manufacturers ensure that each truck will arrive at its destination fully loaded. This minimizes the number of delivery trips, which also reduces fuel costs and other associated travel expenses.

The trucks empty their supplies to the loading docks where forklifts will carry the parts to racks next to the assembly lines. This close proximity ensures that there is minimal friction as parts are placed where they're needed on the production floor. When workers on the assembly line use the part, they will then remove the attached Kanban cards. These Kanban cards get picked up at regular intervals and sorted. Only when the shipping employees have gathered a full truckload of parts will the parts be delivered to the vehicle.

The sorting process helps arrange the Kanban cards according to what area they're needed in the automotive factory. Shipping personnel perform the job of exchanging empty boxes for full boxes of Kanban cards. The production processes in the plant make additional parts only to replace parts that have been withdrawn. This measure helps to prevent the waste that's built up when too many parts accumulate unused.

The delivery truck drivers pick up the Kanban cards for their respective supply warehouses. This is done as part of their regular work routine before leaving the main automobile factory. The voyage of the Kanban card now shifts back over to the supply factories. The Kanban cards that their workers have retrieved from the auto plant become orders for picking additional parts to transport back to the main automobile plant.

Kanban is one lean manufacturing method that links all of this fictitious company's plants together. The Just In Time manufacturing principle helps minimize inventories, eliminate waste and also maximize productivity. All of these various processes play a part in the lean manufacturing production system.

Examples of Lean Manufacturing and Other Applications

We've only looked at lean manufacturing as it relates to a fictitious automobile factory. But one of the most impressive aspects of lean is how versatile it is. Lean can also be employed in office environments that work as auxiliary support for a manufacturer. A lean manufacturer can use lean principles in their back office to reduce the time it takes to process customer orders. For example, a manufacturer's back office can optimize their flow process so that requests are acted upon only when they are requested (which is a pull request) from a customer.

Hospitals can use lean practices to reduce errors and minimize the amount of time it takes to find medical supplies. Various lean methods such as error-proofing (which helps patients receive the correct medication) and having doctors respond to pull requests can make healthcare more efficient. These practices not only add value, but they can also save lives in healthcare settings.

Side Note About Lean In Other Applications

I was introduced to Lean when I was working for Sony, where we were practicing Lean Software Development. With our team, our goal with lean was to eliminate wasted time in creating software and deliver features as fast as possible to see if the users even liked what we were building.

How Mass Manufacturing Differs From Lean Manufacturing

How Mass Production Differs From Lean Manufacturing

Mass production leverages economies of scale to produce large quantities of items at the lowest price possible. As technology improves and capital becomes available to purchase more equipment, traditional mass manufacturers can push their costs even lower. Traditional mass manufacturing has also focused on the individual worker. Any efforts to improve production efficiency will often be focused at the level of the individual workstation.

Lean focuses on the 3 P's, People, Process, and Purpose. The workers own their environment, responsible for their work and are to initiate Kaizen. Workers are to look to improve everyday in anything no matter how small or how large. While in mass production, a worker is a cog in the system that is driven by management. A management-designed machine does not place trust in the people who work there and thus increases waste because the workers aren't allowed to remove any waste.

In contrast to mass manufacturing, lean manufacturing encompasses the entire manufacturing operation. Lean manufacturing focuses more on the efficiency of the total system versus the more isolated improvements that are typical with traditional manufacturing. For example, lean manufacturing targets the streamlining of production flow. The production flow improves when manufacturers get rid of waste (wasted time, effort or materials) in the production stream.

If you've ever taken Econ 101, you're probably familiar with the concept of economies of scale. This concept suggest that larger production runs enjoy efficiencies not seen as smaller scales. Because of this concept, mass manufacturers employ larger and larger production runs as a means to cut costs and realize a lower cost per unit. Lean manufacturing challenges the concept of economies of scale as lean product runs are as small as a single piece. Lean is concerned with optimizing production flow no matter how many widgets are being produced.

Manufacturing uses processes such as machining, welding and assembly to take raw materials and transform them into a finished product. It's instructive to look at how a traditional manufacturer would deploy their resources to produce an item as opposed to a company who uses the lean manufacturing methodology.

During mass manufacturing production cycles, energy is predominantly spent on activities that do not add any discernible value to the product in the eyes of the consumer. This is technically considered non-value added manufacturing activity. When a traditional mass manufacturer desires an increase in production output, they flip a switch and start producing more of everything.

This might include:

  • Purchasing or constructing more factory space.
  • Hiring more employees.
  • Purchasing more equipment.

Traditional manufacturing techniques result in more output as well as more activity that adds no value to the product. Lean manufacturing sharply divides the activities that produce value from those that produce waste. Manufacturing output expands in lean manufacturing just like it does in mass manufacturing. But a big difference is that lean is also simultaneously squashing any activity that doesn't add value.

Some manufacturing processes that don't add value to the finished product include:

  • Equipment set up.
  • Entering orders.
  • Material inspection.
  • Idle time.
  • The repair of broken equipment.

In traditional mass manufacturing, the actual value-added time represents only a slice of the overall production cycle time. Traditional mass manufacturers often attempt to increase productivity by ratcheting up the productivity of their machines. This might include revving up the spindle speed of a machine or increasing the rate at which widgets are pressed. But though these measures might improve the individual productive activity of these machines, they might have little effect on the overall efficiency of the production cycle. Machines that run faster break down more often, and machines producing more widgets will require a larger workforce to deal with the output. These added costs might not make the combined manufacturing gains worth pursuing using traditional manufacturing techniques.

Lean Manufacturing Reduces The Production Cycle Time

Lean Manufacturing Reduces The Production Cycle Time

The power of lean manufacturing lies in its ability to identify actions that manufacturers can eliminate. By minimizing waste, companies can reduce the length of the production cycle. The manufacturing cycle time is the duration of time that production material remains in the system. It's therefore an obvious target for managers who want to increase profits. If a manufacturer can get its product to a customer sooner, that's less time that a manufacturer has to wait before receiving compensation.

Lean Manufacturing champions the principle of optimal flow, which can be useful for minimizing production cycle times. One way companies can optimize flow is to rethink the design of their warehouses. For example, bringing production cubbies closer to each other may reduce lag and minimize miscommunication.

Now that we've got a larger overview of how lean works, let's turn to the tools and specific principles that lean manufacturers use.

Gemba

Gemba Kaizen

When problems occur, sometimes we need to just go to the site where the value creation is happening. In manufacturing, this would be the factory floor but it's also applicable to sales, construction, service providers. It's anywhere there is value created. 

When we arrive to where the value creation is happening, we are looking for waste in this area and take notes on areas of improvement. If necessary, you may want to create a Kaizen event to really optimize the process.

A Gemba Walk was developed by Taiichi Ohno. Gemba Walk is where the staff steps away from their day-to-day activities and walk the floor of the factory to identify wasteful activities. Leaders will gain new understandings of existing safety hazards, observe machinery and equipment conditions, and most importantly collect feedback from the workers.

One Piece Flow

One Piece Flow

One Piece Flow simply states that it's best to work on one piece at a time. By focusing on a single item at a time, One Piece Flow limits work in progress as well as preventing output interruptions. One piece flow works best when there is a stable manufacturing process in place that is already generating quality output.

The video below is a great example of One Piece Flow vs Mass Production.​ It's a common exercise and it gets the point across very well.

Cellular Manufacturing

Cellular Manufacturing

Cellular Manufacturing is a process where material is passed to the next processing step at a rate of one piece at a time. It can be thought of as a direct application of the One Piece Flow philosophy. Cellular Manufacturing helps a product flow quickly through the manufacturer's desired processing steps without incurring any delays.

Just In Time (JIT)

Benefits of Just In Time (JIT)

The Just In Time concept (JIT) was conceived at Toyota in 1938. The concept of JIT is to make only what is needed when it's needed. JIT helps ensure that downstream processes take only what is absolutely necessary from upstream processes for that stage's output.

Jidoka

Jidoka

Jidoka is the principle of automation with a human touch. Jidoka is more of a guiding ethos than an explicit methodology. The idea behind Jidoka is to raise productivity by putting intelligent automation at work everywhere in the production cycle.

Let's see how Jidoka is put into practice by looking at how it's applied to an assembly line. Automated machines can use signal lights to alert personnel whenever their sensors detect something is wrong. By calling immediate attention to any problems detected by sensors, lean manufacturers can deliver quality right at the source. Employees on assembly lines have themselves devised Jidoka measures to help prevent shoddy output.

The Jidoka concept is becoming particularly relevant in the age of artificial intelligence. Companies can decide what best to automate while not losing sight of the need for a human touch. Jidoka can help machines and humans work together to remove waste while respecting people at the same time.

5S

5S Explanation

5S is one of the most popular lean tools used today. 5S is a Japanese term which, when translated to English, stands for the following:

5S is an overall guideline useful for ensuring overall production quality. The principle of 5S helps guard against production defects so that they can be quickly identified.

Value Stream Mapping

Value Stream Mapping

Value Stream Mapping helps a company see which divisions of its business are the most productive. Using Value Stream Mapping helps organizations shift resources to the parts that have a larger probability of generating positive revenue. It can also help identify the parts of a company that are lagging. These laggards can then be improved through either increasing productivity or reducing waste.

Pull Manufacturing and Kanban

Pull Manufacturing and Kanban

A continuous flow is an ideal manufacturing state that isn't always possible. When the lean manufacturing principle of continuous flow isn't available, manufacturers can shift to a pull-based production method. In a pull-based system, a work area will not start production until a downstream process signals it to start doing so. The most popular means of implementing a downstream pull system is using the Kanban method. Kanban is the Japanese word for "sign." The Kanban system employs Kanban cards that move across different operational columns as resources are used.

Kanban can be used in many different contexts. In terms of of manufacturing control, Kanban is the visual production control system that signals when it's time for replenishment. Everything from ping pong balls to pushcarts can serve the function of a Kanban "card."

Heijunka

Heijunka

Remember earlier how we said that traditional manufacturers forecasted demand (which left them open to being wrong) while lean relied on more elegant pull techniques? Well, it turns out that lean actually does use some forecasting to smooth out production runs. Heijunka is the Japanese term for leveling the ups and downs of order demand.

The basic premise of Heijunka is that instead of producing varying-sized batches just to meet demand, manufacturers can "cheat" by doing a bit of forecasting. Machines as well as humans lose efficiency when they keep changing according to gyrating demand.

So lean manufacturers employ the concept of Heijunka to forecast and smooth out the volume of their production schedule.

Single Minute Exchange of Dies (SMED)

Single Minute Exchange of Dies (SMED)

Equipment change overs are a part of manufacturing that need to be dealt with intelligently. The basic idea behind Single Minute Exchange of Dies (SMED) is to perform as much of a scheduled change over as possible during the time while the machine is still running. The example that is most often used is the pit stops that race car drivers make. All the preparation for removing the tires of a race car are done while the car is still racing. When the car comes in for a change over, the pit crew, leveraging their preparation of having all the tools ready to go, gets the job done as quickly as possible. Manufacturers are thus able to minimize the downtime when their machines are in for a "pit stop."

Standardized Work Procedures And Workplace Flexibility

Standardized Work Procedures And Workplace Flexibility

Many lean manufacturers also practice standardized work procedures. Lean companies will often post simple procedural documentation at each workstation. This help ensures that workers perform their jobs correctly even as they move from one job to the next. In general, respect for people remains an important aspect of lean. Lean champions that the most valuable asset of any organization is none other than its employees.

Workplace flexibility is also often practiced in lean manufacturing. This can help manufacturers stay flexible and adapt to changing productive demand. An abundance of power grids (including overhead power) allows portable machines to be moved. This workplace flexibility allows for adjustable configurations as customer orders fluctuate within the confines of Heijunka.

Total Productive Maintenance (TPM)

Total Productive Maintenance (TPM)

Manufacturing obviously works best when companies can count on reliably functioning machines. Machine breakdowns and time out for repairs have to be avoided at all costs. Workers trained in a strong Total Productive Maintenance (TPM) take an active part in ensuring that the machines they work with stay up and running.

How Lean Manufacturers Use Kanban Cards And Other Visual Queue Mechanisms

How Lean Manufacturers Use Kanban Cards

As we close out this article, we want to return to the concept of Kanban cards. We can't stress how often lean companies use some type of Kanban visual queuing mechanism to visualize what needs to get done. Kanban is a system where one card enters as another one leaves. The columns of the Kanban board represent how much work is in progress at each stage of production. As one card moves out of a column, another card replaces it. Having a visual reminder of how much work is in progress helps companies limit work in progress at each stage.

Kanban exemplifies the essential principle of pull in lean manufacturing. A pull production control system relies on the concept of replenishment. Inputs are produced or transferred for the purposes of replenishing material that was consumed by another downstream process. A pull system doesn't try to anticipate demand for materials. It instead reacts to the actual demand that is being generated.

Pull systems can use different trigger mechanisms besides Kanban cards. Many lean factories use other visual metaphors besides cards to help their employees visualize what needs to be worked on.

These systems can include:

  • Colored bins that can help workers easily identify parts at a glance.
  • Right-sized storage containers that help employees deal with inventory control
  • Marked floor space to hold limited amounts of raw material. This is an easy to deploy solution for most warehouse settings
  • Red / green lights that are useful in signaling the status of a production queue.

Kanban fits into the overall lean philosophy of reducing waste. Another way lean manufacturers reduce waste is by spotting problems in the production cycle. This allows these kinks to be quickly ironed out before they escalate. The principle of fixing problems quickly leads into another principle of lean manufacturing known as "quality at the source". By emphasizing quality control at the point when problems are discovered, there is minimal disruption to the overall quality of the production cycle. A lean manufacturer that employs "quality at the source" will probe for what caused the defect before anything more is manufactured. A traditional manufacturer that doesn't catch the defective part in time will face added costs. This could not only include a product recall or providing warranty replacements, but it could also involve lawsuits and a loss of trust.

If you're a manufacturer, you might now be convinced that lean principles can boost your company's profits. But lean only works if you have everyone onboard. All employees, from line workers up to management, have to be committed to adopting the lean methodology. Adequate training, an acceptable work pace and an openness to feedback can help spur employee adoption of lean techniques. The benefits of lean manufacturing include waste elimination, a shorter production cycle and better quality of products. This, of course, leads to better customer satisfaction and lower production costs. Watching production costs drop as quality goes up is a win/win that would make most manufacturers happy.

You'll also need a bit of time to let lean work its magic. Lean principles might have benefits that are quite subtle to observe. This can make it difficult to quantify lean's benefits to someone who is only familiar with mass manufacturing principles. But lean can't be implemented piecemeal since it's an overall system philosophy. The only sure way to get the benefits of a lean methodology is to use it as the basis of your entire production system.

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