Lean manufacturing: a production method aimed primarily at reducing times within the production system as well as response times from suppliers and to customers. Source: Wikipedia
Ultimately, lean is a way of thinking with the goal of eliminating waste and increasing efficiency. This concept is primarily used throughout the manufacturing industry, but lean can be applied to virtually any industry and any department.
Lean is transforming the business world and management practices as we know it through waste reduction and efficiency increasing processes.
History of Lean Manufacturing
Henry Ford is credited with being the first person to integrate a production process from start to finish. While not referred to as lean manufacturing until the 1980s, Ford applied lean concepts to his Model-T production line, focusing on getting parts from one line to another, seamlessly, while reducing waste. He did this with multi-floor buildings with chutes from one floor to the next that would move products from line to line.
While great innovations have been made since the days of the Model-T, Ford’s philosophies and concepts are the basis for modern lean manufacturing.
Prior to World War II, Kiichiro Toyoda, then president of Toyota Motor Corporation, applied Ford’s thinking and philosophies to Toyota’s manufacturing processes to increase efficiencies. Back then, Toyota was a much smaller, regional company. Kiichiro Toyoda had goals of becoming the best manufacturer and knew with lean manufacturing, those goals could be accomplished. While innovation and continuous improvement were key components of Toyota’s predecessor, Toyoda Automatic Loom Works, Kiichiro Toyoda expanded those philosophies to develop a lean company that embodied improvement.
“Toyota’s focus in the 1940s and ‘50s on eliminating wasted time and material from every step of the production process – from material to finished goods – was designed to address the same conditions most companies face today: the need for fast, flexible processes that give customers what they want, when they want it, at the highest quality and affordable cost,” Jeffrey K. Liker explains in The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer.
Now, Toyota is viewed as the example of lean manufacturing, encouraging many manufacturers to follow their lead. The Toyota Production System (TPS) is Toyota’s own version of lean. The TPS embodies the key concepts and principles of lean production. Many manufacturers try to learn and implement lean manufacturing, as Toyota does, in their own plants, but it isn’t always easy to do.
This blog will serve as a guide in becoming a lean manufacturer.
In 1988, John Krafcik wrote, “Triumph of the Lean Production System” where he effectively coined the term “lean” to define the style of waste reducing and efficiency increasing philosophies.
But, much of the foundation of lean is based on TPS and how Toyota has developed it over the years.
“Toyota is always thinking about how to teach and reinforce the value system that drove the company founders to get their hands dirty, to truly innovate, and think deeply about problems based on actual facts,” Liker explains. This is the premise of lean – innovation and solving challenges.
Tools of Lean Manufacturing
In your quest to achieve lean manufacturing, you’ll likely wonder, “How? Where do I even begin?” It’s a fair question. In this section, we specifically address how you can apply lean tools to help you achieve lean manufacturing.
If you do a deep dive, you’ll find there are many, many tools in lean manufacturing, all with the goal of eliminating waste in processes. In this blog, we will focus on 9 of those tools.
- 5s – a methodology for organizing workspaces
- Andon – system which notifies of a problem
- Bottleneck analysis – identifying the cause of a blockage in the work process
- Gemba – seeing how a process is done
- Kaizen – business philosophy for continuous improvement
- PDCA – four-step model for creating change
- Poke Yoke – mistake-proofing
- Root cause analysis – uncovering the source of a problem
- Value stream mapping – workflow outlining all of the steps in a process
This is a methodology for organizing workplaces to foster functionality, effectiveness, and safety for employees. As a central part of the Toyota Production System, 5s consists of 5 phrases: seiri, seiton, seisō, seiketsu, and shitsuke. These have been translated as “sort”, “set in order”, “shine”, “standardize”, and “sustain”.
“In my opinion, 5s is a critical component of a successful lean plant,” Nick Hinman, VP of Corporate Strategy says in his podcast episode ‘The Foundations of Lean’, “Clutter causes confusion and confusion causes inefficiencies.”
Essentially, 5s maintains a system for everything having a place in the plant. It is a central part of maintaining a visual factory.
When everything is in place, it’s easier to get the job done and innovate.
An Andon system is a component of a visual factory that indicates a problem needs to be addressed. For example, an operator may have a problem on the line and will pull a cord, flip a switch, turn on a light, or write a note to alert a manager.
While the type of Andon may vary from plant to plant, the method of drawing attention is all the same. It’s a way to organize requests for assistance.
Essentially, a bottleneck analysis is a process of identifying a problem in the plant that is causing a backup. To do that, you can either do a Gemba walk or look at a Pareto Chart to find the root cause or both. Then, when you’ve determined the cause of the bottleneck, you can begin to fix the issue.
We wrote an extensive article on identifying and solve problems through bottleneck analysis which we highly recommend you read for a deeper dive.
As mentioned above, this is often referred to as a Gemba walk. In Japanese, it simply translates to “the actual place”. It embodies the idea of watching what’s going on in the plant to understand what’s going wrong and what needs to be improved.
“Your office is a terrible place to run a company or department,” Jesse DePriest, a Lean Transformation Coach, Certified Process Optimizer, and Director of Operational Excellence at First National Bank of Omaha explains.
It’s imperative to go and see what’s happening in the plant. Then, you can begin to implement improvements. Think about it this way, too. “Most businesses can and will measure performance with lagging indicators, but it’s the worst way to drive a car or drive a company is through the rear-view mirror,” Jesse says.
It’s always better to look forward and know what’s happening at any given time than to rely on a report or someone else’s findings.
Kaizen is a continuous improvement strategy in which all members of an organization work together incrementally. The key difference between kaizen and lean is that the former focuses on continuous improvement while the latter focuses on removing wastes. Kaizen is a tool to be used in conjunction with lean manufacturing.
Often, this is tool is referred to as a kaizen event, used to monitor and map out a plan for improvements. For example, H&T, the world’s largest battery manufacturer, used a kaizen event to determine the cause of unplanned downtime, made incremental improvements, and was able to reduce short stoppages on the line by 71%.
PDCA stands for plan, do check, and act. It is also a continuous improvement strategy, similar to a kaizen event, except it is more of a methodology in determining a course of action and monitoring changes for improvement. If the changes did not create a positive impact, the goal is to circle back through the PDCA process until positive changes are made.
We wrote a blog on the specifics of PDCA, and we highly recommend it for additional reading. It will provide the knowledge you need to use PDCA in your own plant.
In Japanese, Poke Yoke means “mistake-proofing”. Essentially, it is a term used to define the process of avoiding, or eliminating, mistakes on the production line. It draws attention to mistakes made by operators so they can be learned from and corrected.
The goal is to create work standardization to reduce the number of errors made or defects produced.
Root Cause Analysis
This one is self-explanatory, but root cause analysis is the process of determining the source of a problem. Often used in conjunction with a bottleneck analysis, it helps find and solve problems in the plant.
Often, you would use other, supporting lean manufacturing tools and strategies to help determine the root cause.
Value Stream Mapping
Yes, value stream mapping is a component of the 5 principles of lean manufacturing, but it is still a tool that helps manufacturers create flow. As we mentioned above, it is a map that displays all of your steps in a process. It gives you the ability to visualize every step and the resources (and wastes) of that particular step.
All of these tools are helpful, and will no doubt help you in your journey in becoming a lean manufacturer, but “most companies have focused too heavily on tools such as 5s and just-in-time, without understanding lean as an entire system that must permeate an organization’s culture,” Liker explains in The Toyota Way.
The tools play an important part, but the culture is first and foremost, the most important.
What’s the Difference Between Six Sigma and Lean?
This is a great time to take a break and explain the difference between Six Sigma and lean before we get too far. Six Sigma is another production method often used by manufacturers. The two concepts are often confused and used interchangeably. While they are different in definition, they absolutely can work together harmoniously, too.
“While Six Sigma focused on improving the value-adding processes – e.g., find the source of the quality problems or downtime on the machine center and put in countermeasures to fix it – lean focuses on the whole value stream and creating flow among the value-adding operations. There is an obvious case for harmonious marriage between Six Sigma, which fixes individual processes, and lean, which fixes the connections among processes,” Liker says.
Over the years, a hybrid of the two methods has been developed to help manufacturers improve and increase efficiencies, but at the end of the day, they are simply just tools to achieve a means to an end.
The success of these methodologies and all the tools that support them is the culture of the organization. We’ll talk more about this in just a minute.
So, you want to become a lean manufacturer? The magic is in the small wins, culture, and communication, not in the tools like you may think. The tools do play an important part, but they are secondary to creating a problem-solving culture.
“Ok, but where do I begin?” Great question. Let’s dive in.
First, you need to understand what’s going on in the plant. Start with observing your processes and having conversations with the front-line workers. What’s happening? Toyota specifically refers to this concept as “Go and see” (also a reference to Gemba).
Set goals that you’d like to achieve, plant-wide. Determine what’s holding you back from achieving those goals. Create a rough draft of a plan, and over time, improve the plan. It goes back to the age-old saying, “You don’t know what you don’t know.” so you don’t want to get too eager with a strict plan when there is much more room for improvement and learning.
Then, break those larger goals down into small goals that are achievable in a shorter amount of time. To become a true lean manufacturer, you need to have your people on board, and this is done through education and small improvements that are easy to accomplish. Change is hard to accept but when employees see small wins, they’ll not only understand what’s in it for them but embrace, the larger goal.
Habits become very important at this stage.
“If I can get leaders to buy into the habit, it feeds throughout the organization and becomes an expectation throughout the company. It enables everyone else to hold themselves to the same standard,” Nick explains.
So, you’ve got a plan, you’ve set goals, you’re making the effort to create good habits and behaviors, but now what? This is where we stress the importance of a good, healthy, supportive culture that fosters employee engagement and communication. You can almost guarantee that your lean efforts will fail if you don’t have a great culture in place, or at least making the effort to create that culture.
This culture needs to be supportive and encourage problem-solving. Everyone in the plant from the CEO to operators needs to be involved in initiatives, even in daily production meetings. There needs to be transparency at every step of the way. Leadership needs to lead and provide a good example.
“You’ve got to start simple. You have to build that house, right? You can’t put the second floor on a home until you build a foundation so that’s where you have to have the right structure in place, roles and responsibilities, job descriptions, everybody needs to understand, you have to have a training matrix that defines what are the key things associated with each line, what’s the skill set of the people that I have associated to this line, where’s my backups, etc.
You have to have all of that built out and then you start establishing a standard of work for people,” Nick Hinman says.
The key concept here is that you need to have the foundation in place before you can start implementing lean manufacturing tools, or even an incentive program.
Improving processes is crucial but improving people should always be the number one objective. As you’re working towards becoming a lean manufacturer, this should be the number one thing you remember. Without people, your processes wouldn’t exist.
Examples of Lean Manufacturing
“Ok, I understand all of that and see the importance of a healthy culture, but where can I learn from manufacturers who have done this?”
Another great question.
It should come as no surprise, but Toyota is regarded as the shining example of lean manufacturing, but there are plenty of manufacturers who consistently strive to become lean manufacturers in their own regard. The manufacturers who learn from others and use that as guidance to create a world-class organization are outstanding examples of lean manufacturing.
Take, for example, a few of our customers who have made those efforts, and so far, have seen success.
Mingo aside, we’ve worked with many manufacturers who make the effort to consistently improve. Rather than explain each’s initiatives and goals, we figured you could learn from them directly.
- Tacony – Reduced lead time by 150%, created standardization across plants, organized and increased efficiency in distribution, increased utilization of capacity, and increased on-time delivery rates to customers
- H&T – Reduced downtime by 73%, reduced scrap, costs, and overtime while creating accountability through daily production meetings and reports while continuing to focus on continuous improvement
- Oral BioTech – Increased OEE by 30% and availability, reduced scrap by 99.8%, eliminated manual reporting, and created accountability through daily production meetings
- Lyons Blow Molding – Reduced mistakes and created a culture of mistake-proofing, increased the accuracy of data, and reduced non-value work while eliminating manual reporting
- Versatech – Eliminated manual reporting, reduced downtime, overtime, and waste, and increased OEE 30%
How Lean Manufacturers Avoid Costs When They’re Growing
I spend a lot of time speaking with and working with some of the world’s smartest lean manufacturers. They embrace the idea of lean manufacturing. They live and breathe it and every part of their business; however, many of them admittedly struggle in one area in particular – staying lean through periods of growth.
Let’s face it, lean manufacturing is easy when you have the right technology and the right systems in place. Unfortunately, when lean manufacturers grow, they have to scale, add new systems, and often incur the costs of increased production. In many of these instances, the lean concepts they live by… get sort of blurry.
Below, I’ll highlight some really interesting lessons I’ve been learning from some of the world’s top lean manufacturers about how to stay lean when the business is growing.
How do Lean Manufacturers Justify the Cost of Growth?
This is one of the fundamental questions that really kicks everything off. How do you know when you can justify the costs of infrastructure needed to grow. The answer is always math and data, but where do you get it, and which formulas are most reliable?
One of the most common scenarios we can look at is related to the costs of adding additional machines. This is actually more critical than what many think.
Once you reach capacity in what you can produce with your current group of machines, it’s time to compare the costs of adding the new machine(s) to the profit that they would produce right? Unfortunately, the best lean manufacturers know it isn’t really this simple. There are actually opportunities to become more efficient embedded inside of this exercise.
New Machine vs. Getting More out of Current Ones?
Lean manufacturers hate buying new technology or new equipment, but this is often needed to grow. However, there are a lot of hidden costs that come with this stuff. New machines could mean new training, additional employees, new technology systems, and implementations of anything that is different from existing processes.
What lean manufacturers really want to know when they’re growing is, “Can I get more out of my existing machines”? If so, you can actually grow with existing infrastructure longer and more efficiently. The profit generated from being able to do this could actually then properly fund the costs needed to add things like additional machines.
This is the holy grail of growth strategies for lean manufacturers – exercises in growing using existing components to fund the materials needed to truly expand.
A Smarter Way of Growing
So how do you do this? It might be easier than you think.
How much could an additional 12 minutes per machine, per shift get you in annual production time? Let’s say you have 17 machines right now, running two 12 hour shifts per day. That could be in excess of +2,000 hours worth of production time per year out of your existing equipment. Probably more than enough to generate enough profit to add additional machines. Then, when you add those additional machines you’ll truly know the value that they can bring. Not only will this be more efficient, but you can generate the capital needed to fund future growth. Fundamental lean manufacturing.
To do this, look at the cost of a new machine and do the math behind if that machine ran the same amount of time (24×5), then you can compare that machine cost vs. what you can squeeze out of optimizing additional equipment.
How do you know if you can squeeze out that 12 minutes of additional production? We talked about that a little more here when we talked about uptime and downtime.
Save the Money Now, Not Later
You can save money now and in the future by doing this today instead of doing it retroactively. Too many lean manufacturers make the mistake of thinking of this after they’ve added additional infrastructure. They’ve missed a real opportunity to justify the costs of growth (and fund it).
How to Get Started
“It starts at the top. Take action. Celebrate the right things at the right time, and that’s where you start,” Stuart Fergusson, Direct of Solutions Engineering at Fiix Software, says in his podcast episode, ‘Healthy Maintenance Culture’.
If you have read through this entire lean manufacturing guide, you’ll know that lean is more than a set of tools. True lean manufacturing embodies a state of mind, constantly striving to remove waste from processes and increasing efficiencies. This is accomplished through transparency, communication, good habits and behaviors, and an even better culture.
Then, once all of those things are in place, you can begin to implement tools and methodologies to help you better achieve lean manufacturing.
Since we’ve referenced the wisdom of The Toyota Way throughout this guide, what better way to end our writing than with a quote?
We’ll leave you with this crucial piece of advice to begin your journey towards lean manufacturing. “Adopt a true culture of continuous improvement,” Liker says.