Lean manufacturing began as a factory floor effort to streamline operations for large Japanese auto manufacturers. Over time, manufacturers of all sizes in all industries have discovered that lean principles can be applied not only to the assembly line, but also anywhere in the entire organization and throughout the extended enterprise — and on a selective, case-by-case by basis.
This is because lean is a process of continuous improvement built on the basic principle that anything that does not add value to the customer is waste and any waste should be eliminated for the customer's benefit. The manufacturer thus benefits threefold: through improved customer service; in reduced costs, inventory, and waste; and with happier, more productive employees.
In the cutthroat manufacturing climate that we are in now, where customer service has established itself as the essential competitive differentiator in the market, lean manufacturing has re-emerged as the most important principle and associated set of tools that managers can apply to achieve business goals. Robust ERP systems — designed to improve productivity, increase throughput, save time, control inventory, improve communications, provide critical data, and integrate operations — can play a powerful and profitable role in today's lean initiatives.
At the core of lean is the belief that all non-value adding, non-necessary activities must be identified and eliminated. There are seven forms of waste — or "muda" as the Japanese say — that lean can squeeze from your manufacturing operations:
Overproduction
One of the most common and costliest wastes in manufacturing is overproduction: to make more products than is currently demanded. Overproduction is the result of making products to speculative demand and is visible as excess inventory and materials.
Overproduction typically goes unnoticed when demand is strong. However, when demand slackens, overproduction causes serious problems including unsold finished goods inventory, increased storage and handling costs, additional interest charges, false demand for resources, increased labor costs and more.
Overproduction should be eliminated as quickly as possible but it requires a major change in the traditional manufacturing mindset — the understanding that as long as customer demand is being met, machines and operators DO NOT have to be fully utilized to make operations cost effective.
Inventory or Work-in-Process
Excess inventory or Work-in-Process (WIP) is often the result of overproduction, large lot production, or processes with long cycle times.
Excess inventory often masks other underlying problems for manufacturers. As inventory levels are reduced, these problems surface and must be addressed: poor scheduling, machine breakdowns, quality issues, long transportation times, vendor delivery performance, lengthy set-up times, and communication issues both internal and with customers and suppliers.
Transportation
Transportation, or the movement of products and materials, does not add any customer value and should be minimized or completely eliminated. The most common form of this waste is the double- and triple-handling of raw materials or finished goods.
Processing
Processing waste is defined as any unnecessary steps in manufacturing operations. Manufacturers must examine every activity associated with producing a product and question continually why a specific step is required and why a specific product is being produced.
This examination should also be extended to upstream processes such as design and engineering. By considering manufacturability as part of the design process, companies can eliminate processing waste before production even begins.
Motion
The movement of workers, machines and materials can be difficult to eliminate in traditional manufacturing processes. The key to eliminating this waste is to understand that motion does not always equal work.
Often the root cause of excess motion is the inappropriate location of tools, parts, and the production line as well as a poor flow of materials. Instead of simply automating processes, manufacturers should examine all operations to determine which are necessary, eliminate those that are not required, and minimize what remains.
Waiting
Waiting, often seen as idle worker and machines and backlogs, is another very visible form of waste. To be lean, manufacturers must maximize the utilization and efficiency of their workers rather than their machines with the goal of eliminating workers waiting for a machine to finish processing.
Defective Products
Defective products are pure waste and should be avoided at all costs. Defects trigger a cascade of additional wastes such as increased waiting times in subsequent processes; additional labor for sorting, disassembly, re-work and reassembly; increased inventory levels to replace defective parts; and scrap. While these costs are bad enough, they pale in comparison to the potential costs if defective products reach customers.
The key to eliminating defective products is to prevent the occurrence in the first place. Rather than finding and repairing defects in products, manufacturers should focus their efforts on determining how the defects are happening and eliminate the root causes by creating a system that quickly identifies defects and empowers workers to take immediate corrective action.
