Principles of Lean Manufacturing

Setting up a manufacturing plant can cost millions or even billions of dollars depending on the product. In addition, a manufacturing plant will have high running costs, including raw materials, staffing, and transportation.

Many of these expenses are unavoidable, but others can be cut or eliminated by reducing waste and changing to a demand-based production policy. This is what lean manufacturing is all about.

In this article, we take a look at the fundamentals of lean manufacturing, its origins in post-war Japan, and its principles. We’ll also explain how this ideology can be implemented and the benefits the biggest companies enjoy after implementing lean ideas.

What Does Lean Manufacturing Mean?

Lean manufacturing refers to a systemwide approach to reducing waste in the production of a product, making the process more efficient, and as a result, increasing productivity. In lean manufacturing, waste is anything that doesn’t add value to the product from the customer’s point of view.

One key aspect of a lean manufacturing system is demand-triggered work activity. There is no production of surplus products, eliminating large inventories. This approach is in line with lean manufacturing’s ideas around waste. There are 7 major types of waste in lean and these are:

  • Excess Inventory: Inventory that’s in stock but isn’t immediately needed to meet demand. Applies to both raw materials and finished goods.
  • Transportation: Unnecessary movement of resources i.e. raw materials, finished products, people, etc.
  • Overproduction: Manufacturing more product than is needed.
  • Excess Motion: Unnecessary movements by machines and people that can lead to injuries or longer process times.
  • Overprocessing: Adding features that a customer won’t see value in or won’t be willing to pay for.
  • Waiting: Any form of waiting whether it’s an inactive workstation due to bottlenecks in the system or a finished product that is waiting in storage instead of being delivered.
  • Defective products: Products that are not up to standard and must be reworked or scrapped. This means using more than the minimum resources on one product or discarding a product that has consumed resources.

The Origins of Lean Manufacturing

The concept of Lean was formalized in the 80s but its origins can be traced back to the 1910s. Industrialists in the US figured that making their manufacturing processes more efficient would be the best way to remain competitive in the face of cheaper manufacturing overseas.

The table below captures the key events that have defined lean manufacturing since the 1900s.

Year Event
1911 Henry Towne states that American companies should welcome any efforts to improve efficiency as it is the key to keeping them competitive in both the domestic and foreign markets without lowering wages.
1911 Fredrick Winslow Taylor publishes the “Principles of Scientific Management”. The book details how to incentivize continuous improvement in production.
1931 Shigeo Shingo reads “Principles of Scientific Management”. He would later help to develop TPS and train thousands in Japan including Toyota employees.
1934 Toyota shifts from textile manufacturing to the manufacture of vehicles.
1940 – 41 Japan joins World War 2
1945 – In the aftermath of WWII, Japan lacks the cash, space, and natural resources needed to rebuild. Factories and processes are made leaner to minimize investment in raw materials and in-process inventory.
1948 – 1975 The Toyota Production System is developed by Taiichi Ohno and Eiji Toyoda. TPS builds on the foundations established by Sakichi and Kiichiro Toyoda and was initially called Just-in-Time Production.
1977 Word of Just-in-Time Production makes its way to Western countries.
1980 Conference held in Detroit sponsored by RMG. Future president of Toyota Motor Corp, Fujio Cho, explains Toyota’s system prompting companies to shift to JIT manufacturing.
1988 Just in time manufacturing is rebranded to Lean with the publication of “Triumph of the Lean Production System” by John Krafcik
1990 The lean manufacturing movement kicks off with the publication of “The Machine that Changed the World”.

 

The Five Principles of Lean Manufacturing

There are five core principles applied to lean manufacturing systems. These are:

  • Value
  • The value stream
  • Flow
  • Pull
  • Perfection

Value

This first principle of lean manufacturing emphasizes the need to understand the value of a product from the customer’s perspective. The essence of this principle is to ensure that products and features that are important to customers are the focus of manufacturing efforts.

Identifying the value of a product from the customer’s perspective means companies only manufacture products or add features to products that customers are willing to pay for.

Map the Value Stream

A value stream encompasses every action that takes place from the moment a customer places an order to when they receive the product. Mapping the value stream helps to identify and eliminate any actions or processes along the value stream that don’t add value to the customer.

Flow

Establishing flow means eliminating obstacles and finding ways to shorten lead times. This can be done by changing the layout of the factory floor, removing unnecessary approvals, improving maintenance policies, etc. Lack of flow leads to sudden stoppages and system restarts.

Pull

The idea of production based on pull, i.e. demand, is at the core of Just-in-Time manufacturing. In this system, the work to produce a product should only start when there is a demand or pull. Demand can be a customer placing an order or the completion of a process step downstream.

The pull system eliminates the waste of overproduction and helps eliminate other wastes such as excess inventory.

Perfection

Chasing perfection means that the company should continuously strive to deliver more value to its customers. The organization should always be on the lookout for ways to eliminate waste from the process or streamline it so it can deliver more value to its customers.

In modern companies, this requires gathering and analyzing data on their processes and systems to identify any areas that can be improved.

Benefits of Lean Manufacturing

Implementing a lean system in a manufacturing system can have many advantages including:

  • Improved time efficiency: Removing unnecessary steps from processes and removing barriers to production ensures more company time is used on productive activities.
  • Improved resource efficiency: Reducing waste and streamlining processes ensures that the least amount of resources are used for production. Raw materials and finished goods also don’t depreciate due to long stints in storage.
  • Improved space efficiency: Where space is at a premium, not having a large inventory and unnecessary processes taking up space leaves more room for productive activities.
  • Higher product quality: Using better processes and avoiding processes that don’t add value will result in higher product quality.
  • Greater customer satisfaction: Shorter lead times, better product quality, and lower prices due to efficient manufacturing will lead to greater customer satisfaction and consumer loyalty.
  • Increased profits: Removing wasteful practices and streamlining processes lowers the cost of production resulting in higher profits for the company.

Disadvantages Of Lean Manufacturing

Lean manufacturing comes with challenges that, if not properly addressed, will make the initiative a net negative for the company, customers, and employees.

Potential Negative Effects on Employees

Reduction of processes and other measures to eliminate waste can lead to employee burnout and other safety issues. This can happen when a company cuts down too much and can lead to lower product quality and employee resistance.

Employees may also have too much idle time once their regular tasks become more efficient. Therefore, it’s important to have alternative activities to maximize productivity.

Negative Effect on Future Projects

What is considered waste in a process today could be the key to productivity in a future project. Lean manufacturing implementation requires a strategy to avoid pushing for short-term gains that hurt the long-term strategy.

Inability to Absorb Sudden Stoppages in Production

Unplanned stoppages in production can happen due to natural disasters and other issues. Companies that use a lean manufacturing system may not have the inventory to supply customer orders when production is down.

An obvious example of this is the recent supply chain disruptions due to the Covid-19 pandemic.

Success is Significantly Culture Driven

There is no standard methodology for applying lean that will work in every company and lean has been described as more of a culture.

Successfully implementing lean heavily depends on the existing culture in a company or the ability to change the culture to a lean way of thinking. Without a corresponding culture change, the implementation may focus on lean tools while ignoring its values.

Implementing Lean manufacturing

Lean manufacturing is an ideology and there is no blueprint for implementing it in every company. When implementing lean manufacturing, it’s important to take into account the problems of the specific company and come up with a fitting lean strategy.

Steps for Implementing Lean Manufacturing

Four steps that can be followed when implementing lean manufacturing are:

  • Mapping the current value stream: It’s important to understand what the current situation is before initiating any changes. This first step enables you to gather quantitative and qualitative data on processes, identify waste in the value stream, and get the input of employees on process improvements.
  • Switching to a pull system: Switching to a pull or demand-based system is the key to reducing many of the seven wastes. Pull-based systems cut down on overproduction waste and this reduces other wastes such as excess inventory and transportation.
  • Applying lean manufacturing tools: Different lean manufacturing tools can be chosen by a company depending on its systems and goals. When the future value stream is known and an implementation strategy established, one or more tools can be chosen to start the lean transformation. Many companies start with 5S. Other common tools include Kanban and Poka-Yoke.
  • Training: All workers should be trained on the proper use of lean manufacturing tools they are expected to work with. Additionally, the significance of implementing lean manufacturing should be explained to them.
  • Continuous Improvement: Lean manufacturing is a long-term initiative. Taking on it all at once isn’t realistic. A better approach is to see it as an opportunity to continuously improve the process. This also means that once the initial goals have been met, the company should look for other ways to improve and offer more value to customers.

Tools for implementation

Implementing lean manufacturing involves the use of many techniques and tools. The best tools for implementation are chosen based on the problems you’re trying to solve, integration with the company, and desired outcomes. Common tools used include:

  • 5S: 5S is a methodology used to declutter workspaces and organize them to make local activities more efficient. Implementing 5S is a common first step when implementing lean manufacturing.
  • Kanban: This is a visual tool for managing jobs by balancing demands and capacity while also improving how systemic bottlenecks are handled.
  • Gemba Walks: This involves going to the locations where work-related activities are taking place. This is important for identifying waste and understanding how current processes work.
  • Poka-Yoke: This Japanese expression can be roughly translated to error-proofing. It refers to devices or mechanisms that make errors impossible in a certain process or call attention to the error in an obvious way.
  • Total Productive Maintenance (TPM): This is an approach to equipment maintenance where all employees participate in the maintenance of their equipment. The idea is to ensure breakdowns and defects don’t happen by emphasizing preventive maintenance that workers should perform on their equipment.
  • Single-Minute Exchange of Die (SMED): This is a technique used to reduce the time needed to switch from manufacturing one product to manufacturing another. The goal is for startups and changeovers to take place in less than 10 minutes.

Tips for Easy Implementation

Implementing lean manufacturing can be challenging but there are a few ways to make this process easier. These include:

  • Defining your goals: The company and the lean manufacturing champion should know what they are setting out to achieve before starting implementation. This makes it easy to know where Lean is succeeding and where it’s failing.
  • Make small changes: Small and gradual changes reduce disruptions, focus the efforts of the few people with enough training, and allow you to observe the challenges and potential negative effects you’d face should the initiative be rolled out on a wider scale.
  • Focus on your ‘Why’: Different companies choose to be lean for different reasons. Identify why your company needs to go lean and make sure others understand this ‘why’ as well.
  • Identify and address conflicts: Implementing lean manufacturing can lead to many conflicts such as reduced responsibilities for some employees and increased responsibilities for others. Anticipate and address these conflicts as early as possible.
  • Experiment: A culture of experimentation creates room to try different approaches and solutions without fear of failure.
  • Create a continual improvement culture: When you register early wins in your implementation, don’t stop there. A mindset of continuously improving makes it easier to sustain these initial gains and leads to substantial long-term gains.

Lean Manufacturing Vs Six Sigma

Lean manufacturing is not the only ideology used to improve productivity in companies. Six Sigma is another popular movement and the two initiatives have some similarities and differences.

Similarities and Differences

Both lean manufacturing and Six Sigma aim to eliminate waste from manufacturing and make processes more efficient. When successfully implemented, lean manufacturing and Six Sigma lead to similar benefits such as higher product quality, shorter process times, and higher profits.

On the other hand, Six Sigma is a highly data-driven approach compared to lean manufacturing. Six Sigma also reduces waste by reducing variations in the process while lean manufacturing does this by eliminating unnecessary steps.

Lean Six Sigma

Lean Manufacturing and Six Sigma can be complementary processes. This has led to the development of the Lean Six Sigma approach.

Lean Six Sigma combines different elements from Lean Manufacturing and Six Sigma to create a framework that removes defects and any resource use that doesn’t add value to the customer. The DMAIC steps borrowed from Six Sigma offer a structured approach to implementing changes in Lean Six Sigma.

Lean Six Sigma uses lean manufacturing tools such as 5S, Kanban, and value stream mapping. It also offers certifications at different levels represented by belts, just like Six Sigma.

Conclusion

Lean manufacturing has become a key tool companies can use to run their businesses efficiently. Companies that have successfully applied the lean manufacturing model are now some of the largest and most successful in the world.

The ideas of lean manufacturing are centered on five core principles. However, different companies must apply these principles differently to get the most out of lean. Lean manufacturing has many benefits, but poor implementation can lead to negative effects.

There are steps, tools, and tips companies can use to make the implementation of lean manufacturing easier. Some companies have also opted to implement Lean Six Sigma, an ideology that combines Lean Manufacturing principles and Six Sigma.

Additional Resources