Lean Manufacturing Principles

Lean manufacturing is one of the most widely utilized business improvement methodologies. There are hundreds of consultants and schools teaching lean manufacturing principles.

The problem with many courses teaching lean manufacturing is the lack of real world experience of the instructor. Many have limited experience applying the principles, nor the interpersonal skills to influence change.

Lean manufacturing is not nearly as structured as six sigma or other continuous improvement initiatives. There is no standard approach to implementation or third party certifying body such as ISO.

Lean manufacturing consists of many different “tools”. The best courses teach the lean manufacturing principles as well as how and when to use the tools.

Some companies have heard that lean manufacturing implementation will reduce their waste and costs, and decide to just start implementing. They often start using one tool at a time until the boss declares it’s done.

Worse yet, some companies find a consultant that knows 5S and little else. When the consultant leaves, the clean and organized business eventually realizes they are clean, organized, and still full of waste.

The correct approach to implementing lean manufacturing begins with an analysis of the businesses needs, opportunities, and challenges. Once these opportunities are identified, the tools are used which will solve the issues. These tools might be lean manufacturing or six sigma tools. It simply wouldn’t be prudent to limit the success of a lean initiative to exclude any tool if it was known to solve the problem at hand.

In other words, the problems identify the tools rather than the tools being force into the organization.

Some of the lean manufacturing tools are 5S (Sort-Set in Order-Shine-Standardize-Sustain), value stream mapping, kanban, takt time, continuous flow, cellular manufacturing, TPM (total productive maintenance), SMED (single minute exchange of die), OEE (overall equipment effectiveness), line balancing, standardized operations, 7 wastes (muda), error proofing, kaizen, and root cause problem solving.

There are a few tools that can and should be used with any lean manufacturing initiative. The 5S tool is a powerful workplace organization tool. This tool makes sense in any business. It would be hard to find an organization where order and organization didn’t make sense.

Root cause problem solving tools should be used in every lean manufacturing implementation. These tools vary based on the problem. Some of the more common are Cause and Effects Analysis, 5 Why Analysis, 8D method, CT trees, Process Mapping, and affinity diagrams.

Value stream mapping is another useful tool to determine where value is added and the areas of non-value added (muda). The value stream map depicts the flow of product and information on paper. Information such as inventory, distance, and bottlenecks are highlighted. Once the value stream map is completed, opportunities for improvement become obvious.

Tools such as line balancing, SMED, takt time, and OEE should be used to solve specific business opportunities. For example, SMED (single minute exchange of die) is a tool that is used to reduce machinery or process setup times. This tool is a lot more useful in businesses that run smaller order quantities and changeover often. OEE is an excellent tool to determine why a machine or process is not producing at world class levels. Once the reasons (opportunities) are known, they can be improved.

Kaizen (Japanese word meaning continuous improvement) is a very powerful improvement tool. It is basically a rapid (3-5 days) improvement method utilizing a cross-functional team to solve a business problem. A kaizen event team will use many other lean tools to help solve the problem.

Total Productive Maintenance (TPM) is an excellent tool to improve maintenance, which in turn helps improve all aspects of a manufacturing business, including OEE, setup times, downtime, costs, and profitability. TPM is based on having operators involved in the maintenance of their equipment. The operators often complete their own preventive maintenance, while other initiatives simply have them highly involved. Although TPM is a great tool, it wouldn't be as useful in a service organization without equipment.

Utilize lean manufacturing principles to identify and solve business issues and the financial impact will justify their use. If the tools are made to “fit” the organization, the result will be chaos, disruption, low morale, and financial loss.

Changing To a Service Oriented Approach- An Example From Logistics

The main business process of logistics is typically a product oriented approach. Delivering a package could already be seen as a service. The main elements in this process are:

The package,
Time
Location(s) and
The distributor

The distributor is not one vehicle but a series of transport vehicles that are optimized for the trajectory. A trajectory is split in various parts and each part uses its most efficient transport vehicle.
Now let’s say that the package is a letter and this letter goes from someone’s home to a consulate. The package is retrieved by someone on a motor (short distance from the local office to the client’s home) and will be dispatched to a long-distance vehicle. At the other side of the trajectory the same mechanism will be used. Flexibility at the local side.
In the normal product approach, the package – the letter – has no special meaning. In the new service oriented approach however, the package gets a meaning; the letter changes into a visa application.

The added value of the service oriented approach is that the consulate sources the visa application to a logistics company. The normal way to apply for a visa will remain the same in which a client has to call for an appointment at the consulate. This however takes much more time for both parties.

But the logistics company can now offer an additional service both to the end-customer (applying for a visa) and to the consulate (delivering the right set of documents). This requires human intervention and this is where the service approach get complicated. The logistics company will have to know the visa-requirements and has to check these requirements when collecting the documents at the customer’s home. It is important that this step is followed with care (rather than merely collecting a product) because this is the added value of the service. In case when not the right set of documents are collected and delivered at the consulate, the visa-procedure cannot start and the additional document needs to be collected. This makes the logistics process more complicated. If this happens, the single product-oriented-delivery is still optimized, but on a service level, the process is inefficient.

Knowledge management is what makes the difference between the original product-oriented approach and the new service approach. The required knowledge to collect and deliver a single package is limited. But the person who is approaching the local client must now know what to accept and what to reject. This requires more knowledge. And this is only one type of service.

Please visit the following site for learning more about "six sigma"
http://www.6sixsigma.com

What does "LEAN" really mean?

"Lean" production perfectly synchronizes demand and replenishment. But it's not just about manufacturing. Here's how lean thinking applies to logistics.

Imagine that you are an automaker, and that three American customers have ordered blue cars with black seats and four Canadian customers have ordered white cars with red seats. The orders arrive while the factory is holding just enough red seats and black seats, blue paint and white paint, and car bodies and power trains to assemble the seven cars and ship them out that same day.

As the materials are consumed, they signal supply stations to replenish them at once. The supply stations then alert the suppliers whose trucks are driving several "milk runs" each day to deliver parts moments before they are needed. The whole supply chain runs like clockwork, perfectly synchronized no matter how variable the demand from customers.

In this perfectly demand-driven world, there is no waste. And that, hugely simplified, is what "lean" production is all about. The assembly lines make no more and no less than is needed right then and there. Distribution centers (DCs) are simply cross-docking hubs—if they exist at all. Communications are rich, frequent, and unambiguous between suppliers and producers, between producers and distributors, and between distributors and customers. And inventory? What inventory?

In concept, lean is brilliant. In execution, it is more theory than reality. "We all know what we need to do. It's doing it that's hard," says Dr. Karl Manrodt, associate professor in the Department of Management, Marketing, and Logistics at Georgia Southern University. "People know the words but not the tune," adds James Womack, cofounder and principal of the Lean Enterprise Institute (LEI), a leading education and research firm.
Despite the difficulty of implementing a lean system, companies have begun to consider it as a process-improvement tool, not just for manufacturing but also for everything from transportation management to accounting. The beauty of the lean philosophy is that it focuses everyone on what matters—on exactly what the customer needs. This means that everything else is seen as non-essential and therefore as a cost that can be taken out, whether it is buffer stock or a business process that requires multiple manual sign-offs.

Lean Essentials

Lean is essentially a business discipline that is built around obeying only the customer's demand signals (or "pull") and getting rid of waste everywhere in the supply chain—waste in overproduction as well as in inventory. (For definitions of some lean concepts, see "The Language of Lean" at end of article.)

Ten years ago, the LEI-authored book Lean Thinking expanded the lean concept beyond production. Lean Thinking proposes five guidelines for achieving the benefits of lean processes:

Define value from the standpoint of the end customer, broken down by product family.

Identify all of the steps in the "value stream" for each product (a process known as VSM, or value-stream mapping), eliminating wherever possible steps that do not create value. The value stream includes all of the actions, including those that create value and those that do not, that are required to bring a product from concept to launch and from order to delivery.

Make the value-creating steps occur in tight sequence so the product will flow smoothly toward the customer.
As "flow" is introduced, let customers pull value from the next upstream activity. In other words, as continuous-flow production is put into practice, ensure that those responsible for each process phase act only to add value to the preceding phase.

Begin the process again, defining value, identifying steps in the value stream, removing unnecessary steps, and introducing flow and pull. Continue until perfect value is created and there is no waste.
Lean production was pioneered by Japan's Toyota Group after World War II, and the company remained the leader in that area for decades.

According to LEI, by 1990 the Toyota Production System (TPS) required half the human effort and half the manufacturing space and investment for a given amount of capacity, as well as a fraction of the development and lead time, as did other mass production systems at that time.

Toyota tracked the information flow that defined both the process steps and the flow of the goods and products. But the company's breakthrough idea was to tie everything back to one trigger point: a demand signal that activated "replenishment loops" so that supplies were replenished as soon as they were consumed, with those "loops" ideally replicated all the way back to raw-material sources. The goal was to stay closely attuned to the demand signals and to respond to them by shipping flawless product frequently and in wide variety.
Lean logistics got its start as the inbound logistics function supporting lean production. It emphasizes frequent delivery, leveling flow (so that each day or hour produces roughly the same output), and cutting inventories. Lean production systems will typically involve carriers that operate milk runs—sometimes several times a day—to meet specified delivery times, thus reducing the need for inventory.

"We realize that the logistics system is hiding a lot of costs: inventory-carrying costs, the performance of our carrier base, the quality of the product, and so forth," says Robert Martichenko, president of consultancy LeanCor LLC. He points out that the best way to expose such costs is to gradually "lower the water level," as he puts it. In other words, to identify unnecessary costs, slowly reduce inventory, including work-in-progress inventory, until only what is crucial to a smooth production flow is left. Anything else is not necessary and is therefore a cost that can be eliminated.

Lean Machines

A handful of companies already do lean very well. Convenience store retailer 7-Eleven Japan is widely applauded for managing demand-driven replenishment several times daily. The U.K.-based grocery chain Tesco refills its shelves with small but very frequent deliveries. And automotive supplier Delphi Corp. has made such enormous strides in lean operations that it has often been described as a Toyota clone. One key to Delphi's success has been its collaborating with suppliers on reducing their costs rather than simply asking them to cut their prices. That effort has had a measurable impact on logistics. "One thing [Delphi] had to do was get rid of acres of intermediate warehouses," notes Womack. "They now have a tremendous amount of integrated logistics."

Eastman Kodak Co. has made big gains with its lean cross-docking project. The company has cut order cycle times for inbound materials from seven to two weeks because it can now accurately schedule deliveries. Since materials are pulled for production only when needed, inbound inventory at Kodak's plants has dropped from one week's supply to one day's worth. One department was able to eliminate 130 pallets of raw-materials inventory in just the first week of the project.

And it's not just multinational giants that are getting into lean logistics. The Top-Flite Golf Company, for instance, is putting lean to work in its distribution center. Distribution Manager Jude Prych explains: "We've been using kaizen (continuous improvement) events with our associates in the DC to examine and revise processes, focusing on eliminating waste and moving toward visual systems." (LEI defines visual management as "the placement in plain view of all tools, parts, production activities, and indicators of production system performance, so the status of the system can be understood at a glance by everyone involved.") One of last year's events, Prych notes, focused on the shipping dock.

If these companies can do it, why is lean difficult for so many others? Womack and other experts agree that the stickiest point is the complicated work of "Plan, Do, Check, Act" (PDCA), an improvement cycle that consists of proposing a change in a process, implementing that change, measuring the results, and then taking appropriate action. "The cyclical PDCA grind requires people. It requires commitment and tenacity," says LeanCor's Martichenko.

The Plan part of the cycle creates a particularly daunting challenge: In order to develop a logistics network of the future, a company must accurately map its current network. Managers who expect that exercise to be a breeze quickly change their minds when asked to provide a single, integrated file of all suppliers and relevant data. Then there is the issue of who "owns" different budgets: Is the transportation spend under manufacturing or procurement—or is it owned by the supplier?

When the process reaches the "future plan" stage, a different set of questions crops up. What if the freight charges are bundled with the price of the parts? How will costs change if we put the supplier's carrier on a milk run? For that reason alone it is crucial that a lean logistics initiative have the full backing of a senior manager who spans several functional areas.

It is not necessary, however, to wait for a green light from the top. Any manager can begin with a small-scale analysis of what an operation would look like if it could be perfectly leveled; that is, if the weekly output could be evenly spread out during each working day.

Another early step, says Martichenko, should be to look for waste in the supply chain. He urges managers to draw from the "Five Ss" principle (five Japanese terms that describe practices that are conducive to lean production) to identify and purge obvious clutter—obsolete inventory, for instance.

Value-stream mapping is another critical step in the beginning stages of a lean logistics initiative. Process mapping is not a new concept, but lean applies it with particular rigor. Georgia Southern University's Karl Manrodt relates the success story of a company that brought all of its relevant functional groups together and had them sketch out and post their process maps for public review. Team members and other employees reviewed the maps and pointed out numerous duplications in processes. Through this simple and open approach, the company was able to eliminate steps that did not produce value and get widespread buy-in from employees, says Manrodt.

Is Lean For You?

Womack urges those who are interested in lean to visit facilities where it's already in use. Logistics professionals, he says, will quickly spot differences between a lean operation and its typical counterpart in everything from inventory levels to transportation scheduling. The challenge will be to apply what they see to their own operations.

There's no single, foolproof method for doing so, and that can make even seasoned pros uncomfortable. "Managers are desperate for a paint-by-numbers kit. They don't want to have to take the risk. But another company's reality is not yours," Womack cautions.

His advice is to approach lean as a pilot project that will generate useful data for many parts of the organization.

Two things are most important for a successful test, he says: scientifically running an experiment where results can be measured against inputs, and gemba (making direct observations where value-creating work occurs).
Once there are initial results to demonstrate, the next step is to start selling the lean concept to colleagues and senior managers. Although it may not be easy, it can be done, says Top-Flite distribution chief Jude Prych: "Once people see the benefits and impact of the changes, they are more open to the process."

The Language of Lean

Lean production has its own unique vocabulary. Here are a few commonly used terms.

Continuous Flow — Producing and moving one item (or a small, consistent batch of items) at a time, through a series of processing steps as continuously as possible, with each step doing only what is requested by the next step.

Cross Dock — A facility that sorts and recombines inbound items from many suppliers for shipment to many customers, such as assembly plants, distributors, or retailers.

Five Ss — Five Japanese terms (each starting with an S) that describe practices that are conducive to lean production and visual control (the placement in plain view of everything needed to understand the system status at a glance). For example, seiri (say-ree) means to separate needed from unneeded items and discard the unneeded.

Five Whys — The practice of repeatedly asking why whenever a problem is encountered in order to get beyond the obvious symptoms to discover the root cause. The number five is not the point. Rather, it is to keep asking until the root cause has been identified and eliminated.

Gemba (ghem-bah) — In Japanese, the "actual place," referring to the location where value-creating work occurs. The term stresses that real improvement can only take place based on direct observation of current conditions where work is done.

Jidoka (jee-doh-kah) — Providing machines and operators the ability to detect when an abnormal condition has occurred and immediately stop work. This prevents machines and operators from producing substandard product.

Kaizen (kigh-zen) — Continuous improvement of an individual process or an entire value stream to create more value with less waste.

Kanban (kahn-bahn) — A signaling device that gives authorization and instructions for the production or withdrawal of items in a pull system (see definition, below).

Milk Run — A delivery route that includes frequent pick-ups and drop-offs of small lots of materials at multiple manufacturing facilities. This method reduces inventories while speeding the flow of materials between facilities.

Plan, Do, Check, Act (PDCA) — An improvement cycle based on the scientific method of proposing a change in a process, implementing the change, measuring the results, and then taking appropriate action.

Pull Production — A method of production control in which a downstream operation provides information to an upstream operation about which part or material is needed, the quantity needed, and where and when it is needed. Nothing is produced by the upstream process until the downstream process signals a need.

Value Stream — All of the actions, including those that create value and those that do not create value, required to bring a product from concept to launch and from order to delivery.

Value-Stream Mapping (VSM) — A diagram of every step in the material and information flows needed to bring a product from order to delivery.

Source: Lean Lexicon—A graphical glossary for Lean Thinkers. The Lean Enterprise Institute, October 2004; Logistics Management

Readings and Resources
The Lean Enterprise Institute www.lean.org
Learning Lean Logistics www.nsrp.org/lean/lean_forum/martichenko.pdf
Lean Lexicon—A graphical glossary for Lean Thinkers. The Lean Enterprise Institute, October 2004
Understanding the Lean Supply Chain: Beginning the Journey www.manrodt.com/pdf/Lean.pdf
Lean Distribution: Applying Lean Manufacturing to Distribution, Logistics, and Supply Chain www.amazon.com
Lean Six Sigma Logistics: From Strategic Development to Operational Success www.amazon.com
"How Delphi Went Lean," R. David Nelson, Supply Chain Management Review, November-December 2004. www.scmr.com"A Lean Approach to Cross Docking," Robert L. Cook, Brian Gibson, and Douglas MacCurdy, Supply Chain Management Review, March 1, 2005. www.scmr.com

By John Kerr Logistics Management May 1, 2006