Going Lean – A Panacea for Global Manufacturing

Translated literally, the phrase ‘lean mean fighting machine’ implies doing away with excesses and being single-minded in one’s objectives. For most businesses, that singular objective is improving profitability.

However, continued economic uncertainties, stymied global demand accompanied with heightened levels of competition, customers that are more discerning, stiffer environmental regulations and rising input costs have put this objective under greater strain than ever before.

Given these tough market conditions, many companies are turning to lean manufacturing to improve efficiencies in their day-to-day operations and push-up profit lines. A 2010 Manufacturing and Wholesale Distribution National Survey conducted by  tax consulting firm McGladrey across more than 1000 US businesses revealed that 65% of the companies surveyed had adopted lean production principles to increase efficiency.

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What is Lean Manufacturing?

Lean Manufacturing Lean manufacturing focuses on persistent elimination of resource wastage across the production chain so that customers only pay for the true value of a product or service. By linking production to market demand, lean manufacturing facilitates organizational responsiveness to actual customer requirements.

Lean is not a short-cut strategy that involves massive lay-offs. On the contrary, respecting people and involving them in driving improvements across the length and breadth of the  organization is intrinsic to the lean approach.

Benefits of Lean manufacturing

Lean manufacturing helps businesses reduce production cycles, stabilize processes and offer higher value to customers. The ‘pull’ focus of lean involving production triggers depending on market demand helps reduce business inventories and cut costs. This outward focus also means that a lean manufacturing company is more attuned to varying its product-mix as per customer requirements. An often-undervalued benefit of lean manufacturing is the improvement in morale of the staff that stems from being involved in efficiency initiatives.

Apart from manufacturing, lean methodologies have today found application in myriad businesses such as healthcare, retail, logistics, software development, financial services, and even the military.

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Brief History

Ford and Toyota are two companies that have been synonymous with the origins and successes of the lean methodology. The Ford Motor Company’s operation at Hyland Park is often referred to as the birthplace of lean manufacturing. Beginning of the 19th century, Henry Ford was among to implement the concept of a continuous assembly line where the various stages in the production of cars were closely linked to each other, resulting in minimal wastage of time and resources.

However, the Ford production system had one major problem: Production levels continued to be determined internally and cars were ‘pushed’ into the market for sale. This led to an unsold inventory of cars and ultimately wastage of resources.

Inspired by the Ford approach, a few years later the Toyota Production System (TPS) was conceptualized. In 1938 the manufacturing concept of Just-in-Time was born. JIT introduced the world to the ‘pull’ production strategy in which production was based on demand, thereby eliminating surpluses in the system. It was only in 1975 that the TPS handbook was translated into English giving the rest of world an opportunity to access the expertise that had made Toyota a global corporation.

In 1988 the term ‘lean’ was used for the first time by John Krafcik, a former quality engineer at Toyota, who published an article ‘Triumph of the Lean Production System’ based on his master’s thesis at the MIT Sloan School of Management.

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Lean Manufacturing Tools

One of the chief philosophies of lean is kaizen or ‘small continuous improvements’. In other words, no matter how well your processes work, you can always find better ways to do the same thing and in the bargain create value for your customer.

The key lean implementation toolkit

Just-in-Time
As the term suggests inputs needed at the various stages in the production process are acquired only when they are needed and in the quantity they are needed. JIT helps reduce inventory and associated holding costs. In fact, one modern day business that has successfully adopted the JIT principle is Dell computers. Bucking the market trend of selling pre-packaged computers, Dell chose to assemble laptops and PCs per customer order. The JIT delivery model has helped the company remain profitable in tough economic conditions.

Kanban
Kanban underpins the JIT approach. It involves the definition of visible cues or in the production system that act as triggers for inventory management. For example, in a supermarket a trigger would be the level of fruit dropping below a certain level in its storage bin.

Lean 5S  (Sort, Set-in-order, Shine, Standardize and Sustain)
5S focuses on standardization and organization of equipment and supplies. Whether in an office or a manufacturing facility, 5S can improve efficiency and is often a good place to start when considering implementation of the lean methodology.

Single Minute Exchange of Die (SMED)
Also commonly referred to as the ‘quick changeover,’ SMED focuses on reducing the time it takes to shift a production line or machine between products. The SMED programs accord organizations with the operational flexibility needed to meet changing customer demands and counter reduced product life cycles.

Value Stream Mapping
This technique helps a manufacturing enterprise depict the flow of information and materials needed to produce good and identify ‘kaizens’ throughout the production cycle.

In fact, like lean manufacturing, six- sigma methodology is also focused on end-to-end improvements in process quality. As a small- to medium-size business owner, you may want to either undertake lean and six sigma quality training or hire the services of a supply chain and OEM consultant to make the successful transition to greater operational efficiency.

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