Manufacturing Theories: Lean Manufacturing

Lean manufacturing is a management philosophy focusing on reduction of the seven wastes to improve overall customer value:

• Transportation
• Inventory
• Motion
• Waiting time
• Over-production
• Processing Itself

Defective Product (Scrap in manufactured products or any type of business.) By eliminating waste (muda), quality is improved, production time and costs are reduced. To solve the problem of waste, Lean Manufacturing has several “tools” at its disposal. These include constant process analysis (kaizen), “pull” production (by means of kanban) and mistake-proofing (poka-yoke).

Key lean manufacturing principles include:

• Pull processing: products are pulled from the consumer end (demand), not pushed from the production end (Supply)
• Perfect first-time quality - quest for zero defects, revealing & solving problems at the source
• Waste minimization – eliminating all activities that do not add value & safety nets, maximize use of scarce resources (capital, people and land)
• Continuous improvement – reducing costs, improving quality, increasing productivity and information sharing
• Flexibility – producing different mixes or greater diversity of products quickly, without sacrificing efficiency at lower volumes of production
• Building and maintaining a long term relationship with suppliers through collaborative risk sharing, cost sharing and information sharing arrangements.

Lean is basically all about getting the right things, to the right place, at the right time, in the right quantity while minimizing waste and being flexible and open to change. More importantly, all of these concepts have to be understood, appreciated, and embraced by the actual employees who build the products and therefore own the processes. The cultural aspect of lean is just as important as the actual tools or methodologies.

Lean thinking got its name from a 1990’s best seller called “The Machine That Changed the World : The Story of Lean Production”. The book chronicles the transitions of automobile manufacturing from craft production to mass production to lean production.

The seminal book “Lean Thinking” by Womack and Jones, introduced five core concepts:

1. Specify value in the eyes of the customer
2. Identify the value stream and eliminate waste
3. Make value flow at the pull of the customer
4. Involve and empower employees
5. Continuously improve in the pursuit of perfection.

Finally, there is an understanding that Toyota’s mentoring process (loosely called Senpai and Kohai relationship) so strongly supported in Japan is one of the ways to foster Lean Thinking up and down the organizational structure. The closest equivalent to Toyota’s mentoring process is the concept of Lean Sensei, which encourages companies, organizations, and teams to seek out outside, third-party “Sensei” that can provide unbiased advice and coaching, as indicated in Jim Womack’s Lean Thinking book.

Experienced kaizen members at Toyota, for example, often bring up the concept of “Senpai, Kohai,” and “Sensei,” because they strongly feel that transferring of Toyota culture down and across the Toyota can only happen when more experienced Toyota Sensei continuously coaches and guides the less experienced lean champions. Unfortunately, most lean practitioners in North America focuses on the tools and methodologies of lean, versus the philosophy and culture of lean. Some exceptions include Shingijitsu Consulting out of Japan, which is made up of ex-Toyota managers, and Lean Sensei International based in North America, which coaches lean through Toyota-style cultural experience.

History

Most of the basic principles of lean manufacturing date back to at least Benjamin Franklin. Poor Richard’s Almanac says of wasted time, “He that idly loses 5s. [shillings] worth of time, loses 5s., and might as prudently throw 5s. into the river.” He added that avoiding unnecessary costs could be more profitable than increasing sales: “A penny saved is two pennies in hand. Save and have.”

Again Franklin’s The Way to Wealth says the following about carrying unnecessary inventory. “You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may [be bought] for less than they cost; but, if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, ‘Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.’ In another place he says, ‘Many have been ruined by buying good penny worths’.” Henry Ford cited Franklin as a major influence on his own business practices, which included Just-in-time manufacturing.
The concept of waste being built into jobs and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who saw that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to get a 5 pound (2.3 kg) brick but this inefficiency had been built into the job through long practice. Introduction of a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to work about three times as quickly, and with less effort.

Frederick Winslow Taylor, the father of scientific management, introduced what are now called standardization and best practice deployment: “And whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment”

Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or discharging workers) when efficiency improvements reduce the need for raw labor: “…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer’s side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, just doing what he is told] can prevent it.” This is now a foundation of lean manufacturing, because it is obvious that workers will not drive improvements they think will put them out of work. Shigeo Shingo, the best-known exponent of single-minute exchange of die (SMED) and error-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration.

American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s, and what is now called lean manufacturing was explicitly regarded as a countermeasure. Henry Towne, past President of the American Society of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor’s Shop Management (1911), “We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes.”

Henry Ford continued this focus on waste whilst developing his mass assembly manufacturing system. “Ford’s success has startled the country, almost the world, financially, industrially, mechanically. It exhibits in higher degree than most persons would have thought possible the seemingly contradictory requirements of true efficiency, which are: constant increase of quality, great increase of pay to the workers, repeated reduction in cost to the consumer. And with these appears, as at once cause and effect, an absolutely incredible enlargement of output reaching something like one hundred fold in less than ten years, and an enormous profit to the manufacturer.”

Ford (1922, My Life and Work) provided a single-paragraph description that encompasses the entire concept of waste. “I believe that the average farmer puts to a really useful purpose only about 5%. of the energy he expends. … Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. … It is waste motion— waste effort— that makes farm prices high and profits low.” Poor arrangement of the workplace-- a major focus of the modern kaizen-- and doing a job inefficiently out of habit-- are major forms of waste even in modern workplaces.

Ford also pointed out how easy it was to overlook material waste. As described by Harry Bennett (1951, Ford: We Never Called Him Henry), “One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces. ‘You know,’ Mr. Ford said to me, ‘there’s iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant.’“ In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.

Design for Manufacture (DFM) also is a Ford concept. Per My Life and Work, “Start with an article that suits and then study to find some way of eliminating the entirely useless parts. This applies to everything— a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones, we also cut down the cost of making. ...But also it is to be remembered that all the parts are designed so that they can be most easily made.” The same reference describes Just in time manufacturing very explicitly.
However Ford’s mass production system failed to incorporate the notion of Pull and thus often suffered from over production.

It was with Taiichi Ohno at Toyota that all these themes came together and Lean Production finally took form. Levels of demand in the Post War economy of Japan were low and the focus of mass production on lowest cost per item via economies of scale had little relevance. Having visited and seen supermarkets in the US Taiichi Ohno recognized the scheduling of work should not be driven by sales or production targets but by actual sales. Given the financial situation during this period over production was not an option and thus the notion of Pull (rather than sales target driven Push) came to underpin production scheduling. Norman Bodek wrote the following in his foreword to a reprint of Ford’s (1926) Today and Tomorrow: “I was first introduced to the concepts of just-in-time (JIT) and the Toyota production system in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system’s creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford’s book.”

Types of waste

Toyota defined seven categories or types of waste. Technically, there are now nine ‘deadly wastes’:

• Overproduction (making more than what is needed, or making it earlier than needed) .
• Transportation (moving products farther than is minimally required)
• Waiting (products waiting on the next production step, or people waiting for work to do)
• Inventory (having more inventory than is minimally required) NOTE: this is the deadliest type of waste -- excess inventory
• Motion (people moving or walking more than minimally required)
• Processing itself (relates to standalone processes that are not linked to upstream or downstream processes)
• Defects (the effort involved in inspecting for and fixing defects)
• Safety (unsafe work areas creates lost work hours and expenses)

Information (age of electronic information and enterprise resource planning systems (ERP) requires current / correct master data details)

System engineering

Lean is about more than just cutting costs in the factory. One crucial insight is that most costs are assigned when a product is designed. Often an engineer will specify familiar, safe materials and processes rather than inexpensive, efficient ones. This reduces project risk, that is, the cost to the engineer, while increasing financial risks, and decreasing profits. Good organizations develop and review checklists to review product designs.

Companies must often look beyond the shop-floor to find opportunities for improving overall company cost and performance. At the system engineering level, requirements are reviewed with marketing and customer representatives to eliminate costly requirements. Shared modules may be developed, such as multipurpose power-supplies or shared mechanical components or fasteners. Requirements are assigned to the cheapest discipline. For example, adjustments may be moved into software, and measurements away from a mechanical solution to an electronic solution. Another approach is to choose connection or power-transport methods that are cheap or that used standardized components that become available in a competitive market.

Lean software engineering

Lean and Toyota Production System (TPS) concepts have inspired the successful Agile software development methodologies Scrum and Extreme Programming (XP). These software development methodologies apply the “lean” concept to the architecture, design, and construction/implementation software development activities. In a separate but related effort, Lean software development has adapted TPS to the management and measurement of software development projects.