Lean Manufacturing Improves Efficiency and Increases Profit

lean manufacturing concepts
lean manufacturing concepts
lean manufacturing concepts

Lean Manufacturing Improves Efficiency and Increases Profit

The manufacturing industry has steadily evolved from craft to mass production. Before the middle of the 20th century, hallmarks of mass production were large amounts of inventory, thousands of low-skilled assembly line workers, and a great deal of diversified waste. Although many companies have applied numerous production strategies designed to increase their return on investment, none were as successful as Toyota. In the middle of the 20th century, Toyota pioneered lean manufacturing through the application of the work of Dr. Edward Deming.  This created a new way to think about manufacturing combined with a specific production strategy that would forever change the way businesses think about their products, their employees, and their customers. 

Lean manufacturing improves efficiency and increases profit because, at its core, the lean philosophy is about minimizing waste while maximizing customer value. It is important to note the principles and practices of lean manufacturing are not only for automobile manufacturers. All kinds of businesses, regardless of whether they sell goods or provide services, can benefit from adopting a lean efficiency philosophy.

Minimizing the 7 Types of Waste

One of the first steps to adopting lean manufacturing methods is to identify and then work to minimize the seven types of waste – the following are examples of each:

  1. Inventory — Storing excessive inventory can be a waste of both space and money. Consider the benefits of having less inventory on hand.
  2. Motion — Both humans and machines can waste motion. For people, using excessive physical motion to reach, bend, and stretch wastes time and can result in injury. Consider arranging workstations supportive of ergonomic principles and organizing all materials necessary for task completion within arm’s reach of employees. Examples of machine waste are using large capacity machines for small batches of work or running more machines than required to complete a particular job.
  3. Over-Processing — The aim of lean is to make only what is needed when it is needed to meet customer demands. Making too much, too soon, is often what drives excessive inventory. Miscommunication, misunderstanding, mistakes, and breakdowns in the supply chain can also be causes of over-processing.
  4. Overproduction — Within the lean model, every item should be made as it is needed. This is called Just-in-Time (JIT) production. “Overproduction manufacturing is referred to as ‘Just in Case’ production, which creates excessive lead times resulting in high storage costs, making it difficult to detect defects. The concept is to schedule and produce only what can be immediately sold/shipped and improve machine changeover/set-up capability” (McBride, 2003, para. 2).
  5. Waiting — Waiting equals wasted time and wasted time equals less profit. When one department has to wait on another for a part, a price, or a process to be completed, production and/or service stops. Anytime processes are not synchronized according to a set of best practices waiting occurs. Waiting disrupts the flow and becomes a serious impediment to the effective elimination of waste.
  6. Transport — Consider how much time is wasted by not moving products or materials in the most effective and efficient way possible. For example, it is wasteful for a company to send out their biggest truck to deliver their smallest order. Eliminating transport waste can facilitate savings in multiple areas across business processes.
  7. Defects — Anytime a company manufactures a batch of product that does not meet specifications, time, money, and effort are wasted. Many times the problem with product defects in large scale manufacturing is the lack of time to effectively use quality assurance to ensure the product has fewer defects. After assessing each area of waste, an organization can then implement lean best practices that are likely to make the operational activities run more smoothly, thus improving efficiency and increasing profit. Whether you work in a plant, factory, or office environment, understanding how to how to create a lean environment can eliminate waste and can make you a valuable asset as well as position you for career advancement.

Value and the Value Stream

The idea of eliminating waste supports another tenet of lean, which is to add value. Every company, regardless of industry, must understand what value a customer or client places upon their products or services. This value is what determines how much money the customer is willing to pay. Another way to think about value is in terms of the value stream, which is the complete flow of a product’s life cycle from the origin of the raw materials used to make the product through the customer’s cost of using and ultimately disposing of the product when it no longer has use. Once a company understands the value stream, they can clearly identify where in the cycle there is a value-add and where there is a waste.

Continuous Improvement

Another tenet of lean is the concept of continuous improvement. Employing lean tools and techniques such as visual maps, the plan-do-check model, and root cause analysis contribute to this effort. “Continuous improvement is an active, intentional practice, ideally one that is honed across an entire organization. To provide structure to their continuous improvement practice, many organizations choose to follow a continuous improvement model. Continuous improvement models vary in their rigidity of structure, but generally, all aim to eliminate waste and improve quality and efficiency of work processes”(Leankit, 2019, para. 1).

A Final Note to Consider

Organizations in any industry can have lean principles, practices, and processes securely in place, but if the employees are not implementing those processes, the organization’s lean transformation initiative and ultimate success can be in jeopardy. Organizational leaders often implement lean manufacturing processes but forget that business success depends not only on implementing new processes but also in making sure employees are well-suited to the tasks with which they are charged.

A Master of Science Lean Manufacturing degree from Kettering University Online provides you with the tools, techniques, and strategies necessary to leverage both processes and people so that you can play a direct role in helping your organization reach its strategic goals while boosting your career trajectory.

 

References 

McBride, D. (2003, August 29). The 7 wastes of manufacturing

Leankit. (2019). What is a continuous improvement model?

 

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