Understanding Lean Manufacturing
Edited by David Rizzardo and Richard Brooks

The intent of the following is to provide the reader with a basic and better understanding of "Lean" manufacturing/production systems.

"Lean manufacturing" has become the buzzword of the 1990's thanks to James P. Womack and Daniel T. Jones. In their book, The Machine That Changed the World , they presented data based on a global study of the automotive industry, and coined the term "Lean Production" to represent the best practices as exemplified most closely by the Toyota motor company. However, there is still much confusion, and misunderstanding about what is, and what is not, Lean manufacturing, and where it came from.

Lean should be considered much more than a series of programs and/or techniques. It is a whole new way of thinking, and includes the integration of vision, culture, and strategy to serve the customer (both internal and external) with high quality, low cost and short delivery times. Lean must become a whole systems approach in order to create a new culture and operating philosophy for eliminating all non-value adding activities from order entry to receipt of payment.

First of all, what is Lean? The core of Lean is based on the continuous pursuit of improving the processes, a philosophy of eliminating all non-value adding activities and reducing waste within an organization. The Value adding activities are simply only those things the customer is willing to pay for, everything else is waste, and should be eliminated, simplified, reduced, or integrated. Wastes are usually grouped into the following eight categories: overproduction, motion, inventory, defects, waiting, transportation, extra processing, and underutilized people.

A term closely associated with Lean is the Japanese word " Kaizen " meaning Continuous Improvement. Kaizen is a methodology focusing on continuously improving the process. Some of the main objectives of Kaizen are to reduce waste, improve quality, reduce delivery time, assure a safer work area and increase customer satisfaction.

The essence of lean manufacturing is to compress the time from the receipt of a customer order all the way through to receipt of payment. The results of this time compression are increased productivity, increased throughput, reduced costs, improved quality and increased customer satisfaction.

So what is the mechanism for implementing Lean? There are a number of Lean techniques available such as, Value Stream Mapping, Visual Workplace, Setup Reduction, Cellular/Flow Manufacturing, Pull Systems and Total Productive Maintenance just to name a few; however, it is absolutely essential that Lean is viewed from a total system perspective. Otherwise, either a company risks putting all of its efforts into the wrong areas, and/or the improvement process will come to a grinding halt after the initial project. In either case, potential benefits will not be realized. However, if analyzed and planned from the proper system viewpoint, the continuous implementation and improvement of the appropriate lean techniques can yield substantial gains. For example, reducing manufacturing lead time and work in process by 80-90%, and improving quality by over 75%, while simultaneously becoming more responsive to your customers, utilizing less floor space, and reducing wasteful transactions, are results obtained by the proper implementation of a Lean manufacturing strategy.

At this time a brief discussion of some of the above mentioned Lean techniques or tools is warranted. The intent is to provide for a better understanding of how these techniques fit into the lean process development. Each of the following items will be addressed in more detail in future editions of the ERC newsletter.

Value Stream Mapping is usually the first step in the evaluation of an existing manufacturing process. A Value Stream Map is a visual documentation of the process flow, both material and information flows are depicted. It is used to provide a snapshot of the "Present State" of your manufacturing process. Producing this present state flow diagram will help identify all of the value adding and non-value adding steps within your process. Once this present state map is completed, a company will clearly see where the opportunities are for eliminating the non-value adding steps. The "Future State" Map of a process is then created showing the improved, streamlined flow. Using this method will allow a company to look at the "Big Picture" of a manufacturing process. Value Stream Mapping doesn't require any special software tools; everything should be drawn by hand and in pencil.

Visual Systems are used to transform a factory into a place where thousands of messages concerning product quality, productivity, scheduling, and safety are accurately and rapidly delivered every day. A "Visual Workplace" is self-explaining, self-ordering, self-regulating, and self-improving, where what is supposed to happen does happen, on time, every time, day or night - because of visual systems. A visual system should answer the following six core questions, requiring visual answers; Where, What, When, Who, How Many, and How." There are four basic visual devices, Visual Indicators, Visual Signals, Visual Controls, and Visual Guarantee (also known as mistake-proofing and poka-yoke devices). One of the main impacts visual systems will have is in eliminating non-valued added motion.

Setup Reduction is driven by the need of being able to change over a given process to produce a different product in the most efficient manner. Reducing Setup (or Change Over) is the lean manufacturing technique allowing the mixing of production/products without slowing output or creating higher costs associated with non-value adding activity. Changeovers add no value and therefore should be minimized. The goal is to reduce and/or eliminate downtime due to setups and changeovers. The setup process should be viewed from two different perspectives, one is Internal, steps required to be completed when the machine is stopped versus External, steps accomplished offline while the machine is in operation. Quick Changeover will increase productivity, reduce lead-time, lower total costs, and increase flexibility to adapt to a changing market and/or product mix.

Cellular/Flow Manufacturing is the linking of manual and machine operations into the most efficient combination to maximize value added content while minimizing waste of motion and valuable resources. Cell construction will help achieve simplified flows by integrating process operations in a one way material flow. Cellular Manufacturing is one of the primary techniques used to obtain the Lean benefits of shorter lead-times, improved quality, reduced inventories, simplified scheduling, and minimized material handling.

Pull System is a method of controlling the flow of resources by replacing only what the customer has consumed. There are several major benefits to pull systems. One benefit is the reduction of Work-In-Process (WIP); the second major benefit is it reduces scheduling complexities. Pull Systems consist of production based on actual consumption, small lot sizes, low inventories, management by sight, and better communications. Pull systems eliminate sources of waste in the production flow.

Total Productive Maintenance (TPM) consists of a company wide equipment maintenance program covering the entire equipment life cycle and requires participation by every employee. The goal of TPM is to minimize downtime due to maintenance, and maximize machine uptime. One of the key elements of TPM is autonomous maintenance where the operators are responsible for maintaining their own equipment.

Now what Lean is and what it can do, where did it come from? Lean was not first born in the early 1990's when The Machine That Changed the World first came out. Some say it was born in the United States in the early 1980's when companies started implementing what was then known as Just-In-Time or the Toyota Production System. However, the deep roots of Lean actually go back to the early 1900's to Mr. Henry Ford. He was the first to envision the flow of materials from the mining of the iron ore to the completion of a car, and he identified having raw material or finished goods in excess of requirements as waste. How this Lean vision got turned upside down during the 1920's into the Ford mass production system, representing the exact opposite of Lean, will not be chronicled here. The man who has become known as the father of Just-In-Time production is Taiichi Ohno from Toyota. He has definitely made the most significant developments to what we call Lean manufacturing; however, the roots of Lean are definitely multi-national, and today, best practices are continuously being developed across the globe and within almost every industry.

Throughout the past 20 years, a variety of buzzwords or phrases have been created, but are conceptually the same as what we are calling Lean manufacturing. The previously mentioned Just-In-Time (JIT) or The Toyota Production System, Demand-Pull Manufacturing, World-Class Manufacturing, and Agile Manufacturing are just a few of these strategies. When all are viewed from a total systems perspective, these concepts are basically the same with only a difference on area of emphasis. So, don't be confused by this array of words, but rather start on the continuous improvement process represented by all of these terms.

Now, understanding of what Lean manufacturing is, it is equally important to understand what Lean manufacturing is NOT. Lean does NOT mean "Lean and Mean." Some people erroneously think the goal of Lean is to fire people and make the survivors work harder. This misunderstanding and the issue of job security must be addressed prior to initiating any Lean efforts. One of the key characteristics of Lean Manufacturing is that it is a TEAM implementation process, and obviously, no one will get involved in a process if they feel it will eliminate their jobs.

As previously mentioned, the core of Lean is about doing things that add value from the customer's perspective. Because of these extremely competitive times, one way jobs will surely be in danger of being lost is by continuing the many wasteful, or non-value adding, practices taking place within our organizations. The companies reaping the benefits of Lean, will be the surviving and successful companies in the future who will be providing employment opportunities.

But as waste is removed from the process, what happens when you find out you only need four people to produce the product rather than five? Or, a couple of material handlers are no longer required? Or the data entry department is no longer required? Well, in a growing company, there isn't a problem. Employees can be transferred to other areas. And these transferred employees take with them enhanced credentials due to the training and experiences gained by being part of the Lean change process. And, the need to hire more people to support the growth will be reduced. The Lean process itself almost always results in company growth due to the benefits gained of quicker deliveries, higher quality, and increased responsiveness to customers. Once again, this has often resulted in a situation resulting in a requirement for less new hires, but no existing jobs are lost.

Obviously, at any time, business conditions could result in loss of employment; the key point is that at the outset of a Lean initiative, the true goals and benefits are clearly explained to everyone so there are no misunderstandings. And a plan must be in place, and clearly explained, as to the issue of freed up employees as a result of productivity improvements. It must be explained why, long term, the company and the employees can only be successful by doing things differently, and the employees will be directly involved in implementing this change process.

If you want help in developing a Lean plan within your organization, contact the TES regional office nearest you. We can assist in the process by assessing your current operation, and help identify improvement areas; also, we can provide general Lean training and/or specific training such as cellular manufacturing. And, as you travel along your Lean journey, TES can help facilitate the process so you can gain the competitive advantages as quickly as possible.

GLOSSARY of TERMS

Balanced Plant - A plant where capacities of all resources are balanced exactly with market demand.

Batch Production - A "Push" system of production where resources are provided to the consumer based on forecasts or schedules.

Cellular Manufacturing/Cells - Linking of manual and machine operations into the most efficient combination to maximize value added content while minimizing waste of motion and valuable resources.

Continuous Improvement Process (CIP) - The never-ending process of eliminating waste within the organization in order to shrink manufacturing cycle times, improve quality, and to respond to changing customer demands.

Cycle Time - Manual cycle time is the time needed for an operator to complete one work sequence to meet production. The Goal is to have Cycle time = Takt Time

Inventory Waste - Any supply in excess of a one-piece flow through your manufacturing process. Excess inventory increases the cost of the product by extra handling, extra space requirements, extra interest charges, extra people involvement, etc.

Just-In-Time (JIT) - A management philosophy aimed at eliminating waste from every aspect of manufacturing and its related activities. The term JIT refers to producing only what is needed, in just the amount it is needed, when it is needed.

Kaizen - Japanese word for continuous improvement.

Kanban System - An information system that controls (pulls) the production of the required parts in the required quantities and at the required time. Kanban is a manual (visual) system.

Lean Manufacturing/Production - A team based approach of manufacturing focused on identifying and eliminating waste through continuous improvement by flowing the product at the pull of the customer in pursuit of perfection.

Non-Valued Added - Any activity that does not add market form or function or is not necessary. Any activity the customer is not willing to pay for. These activities should be eliminated, simplified, reduced or integrated.

One Piece Flow - Is based on the concept of having operators focus on transferring each item individually to the next process step. One-piece flow dramatically reduces handling and transportation and provides immediate feedback to any overlooked defect.

Over Production - Producing goods over and above the amount required by the market.

Poka-Yoke - Methods and low cost devices that prevent defective parts from being made or passed on in the process.

Processing Waste - Anything that uses resources, but does not add real value to the product or service.

Pull System - A method of controlling the flow of resources by replacing only what has been consumed.

Push System - Resources are provided to the consumer based on forecasts or schedules.

Quick Change - The ability to change tooling and fixtures rapidly so multiple products can be run on the same line/machine

Takt Time - Is the rate at which your customer requires the product. Takt time defines the manufacturing line speed and the cycle times for all manufacturing operations.(Takt Time = Available work time per day divided by the daily required customer demand in parts per day)

Total Productive Maintenance (TPM) - A concept of productive maintenance aimed at achieving overall effectiveness of the production system through the involvement of all the people in the organization.

Toyota Production System (TPS) - A manufacturing philosophy that shortens the time between customer order and shipment by eliminating waste.

Value Added - Any activity that increases the market form or function of the product or service. Things the customer is willing to pay for.

Value Stream Mapping - A visual method of documenting the material and information flows of a process.

Visual Factory/Controls - Displaying the status of an activity so every employee can see it and take appropriate action.

Work-In-Progress (WIP) - The amount of inventory already in the manufacturing process that has had value added to it.

The Maryland Technology Extension Service would like to thank and acknowledge the following individuals and organizations for any of the material and assistance provided in the editing of this document.

1. NIST/Manufacturing Extension Partnership "Principles of Lean Manufacturing With Live Simulation" Seminar.
2. "Lean Manufacturing Handbook," 1998, Alabama Technology Network, University of Alabama in Huntsville.
3. "The Power of Visual Systems," designed and developed by Dr. Gwendolyn D. Galsworth, Quality Methods International Inc.

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