You’d be hard-pressed to find a manufacturer that isn’t familiar with Lean Manufacturing. Lean Manufacturing, the idea, has become increasingly popular since 1990, when Jim Womack coined the term in his book, The Machine that Changed the World.
Surprisingly, though, many manufacturers fail to cash in on all of the competitive advantages of Lean. Why?
Well, for a variety of reasons, the most common of which are:
- Lack of vision, time and insight to convert decades old processes.
- Implementing only bits and pieces of Lean concepts – which only yields bits and pieces for results.
- Failure to apply Lean concepts beyond the manufacturing shop floor into the office.
Lean Throughout History
While the popularization of Lean is relatively recent, the concept dates back to the dawn of the 20th century when Henry Ford so boldly ignored the conventional wisdom of large general-purpose machines grouped by department. His company revolutionized manufacturing with his continuous flow assembly lines, lining up process steps closely and sequentially to create flow.
Where Ford Motor Company failed in this endeavor, though, was in its inability to provide variety: its system didn’t address machine changeovers. Other auto makers took advantage of the need for variety but unfortunately regressed back to departmental manufacturing. They used large, general-purpose machines that ran fast, but ended up with bloated inventories and increased lead-time. Why? Because flow was not factored into the equation.
Fast-forward to the 1940s and ‘50s. Toyota examined the systems of Ford and other auto makers and, after identifying the flaws, set out to develop a manufacturing system that promoted continuous flow while at the same time providing variety – a first in auto manufacturing. And the Toyota Production System (TPS) was born.
By recognizing the importance of producing at the rate of consumer demand in a way that doesn’t create excess inventory, Toyota found itself in a newly competitive position. In fact, Taiichi Ohno, one of the founders of TPS, famously said, “The more inventory a company has, the less likely it is they will have what they need.”
TPS was so revolutionary and successful because it focused on product flow, reduced set-up times, right-sized machines for volume and basically ensured the process can produce small amounts of many parts in an efficient, high-quality way. With TPS, lead times were drastically reduced with all the focus on the consumer – providing the variety, options and quality consumers desired at a competitive price.
Today, this Lean thinking, this “purposeful elimination of wasteful activities,” reaches far beyond auto manufacturers. In fact, it has made and continues to make a significant impact in companies around the world.
In his book, Lean Thinking, Womack discusses the five main, universal principles of Lean:
- The customer defines value.
- The company must focus on eliminating waste. (Waste is any activity that doesn’t add value to the customer.)
- The customer establishes pull.
- The company must involve and empower people who add value.
- The total cost is the ultimate performance metric.
So is Lean just another flavor-of the-month approach to better manufacturing? Absolutely not. Just look at Toyota’s success and you’ll realize that Lean manufacturing can provide tremendous benefits and continued success.
By focusing on customer needs, progressive companies are separating themselves from the competition.
Common Pitfalls – and Avoiding Them
But success with Lean techniques does not come without challenges and resistance. There are a number of issues that a company might face as it begins its Lean journey:
Many people falsely associate Lean with “head count reduction.”
In reality, Lean is about understanding consumers and making sure your processes meet their expectations. Lean is about harnessing the knowledge of your employees to better serve your customers. Lean is about continuous improvement, about building more capacity for your business. And how that capacity is utilized determines the success of Lean. If a Lean implementation is followed by layoffs, employee buy-in will be lost forever.
Short-term financial hits are common with Lean deployments.
Traditional absorption accounting allocates overhead to inventory and, as inventories are reduced, prior period costs are expensed in the current period. Without notifying financial and executive leadership of this fact, many leaders may falsely associate Lean with declining profits. Instead, this is a short-term phenomenon and, in fact, cash flow improvements should result.
It’s human nature to resist change.
And Lean is only successful when management is fully committed to Lean and understands what it’s all about – without executive buy-in and true leadership, Lean will probably fail in your company. You can pick and choose certain “Lean projects,” but without fully embracing Lean, you will not achieve the potential world-class results. According to Art Byrne, former CEO of Wiremold (one of the most successful Lean companies in the nation), more than 70 percent of companies say they are implementing Lean manufacturing. But in reality, only about 3 to 5 percent of these companies are truly Lean.
The Future of Lean
Lean continues to evolve. Now, small to mid-size manufacturers are beginning to embrace Lean techniques, and “Lean Enterprise” – a term labeling an organization that implements Lean principles – is a hot new term in the industry. In addition to focusing on the manufacturing operations of a business, the most progressive owners and executive leadership have recognized that it’s equally important to understand and analyze the complete value-stream, from customer order to delivery and collection. These companies have implemented Lean practices into their office and administrative processes, to much success. And this will only increase in the future.
One thing is certain – and that is change. It is with this continuous improvement mind-set that world-class companies of all sizes are undertaking Lean initiatives and finding ways to improve processes to better serve their customers.
In today and tomorrow’s competitive manufacturing environment, it’s imperative to continuously analyze processes. If you successfully and fully implement Lean, you’ll continually improve your ability to compete in the marketplace.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.