Lean Overview
August 29, 2003
The definition of lean is multifaceted. It
generally relates to those best processes and practices, which
optimize resources and yield the best products in the fastest manner
and at the lowest cost. It is an umbrella for total quality
management, continuous improvement, zero defects, and all the other
terms we’ve used and heard to describe doing things right the first
time, and doing it right every time. It is not an instant transition
nor is it an extension of traditional thinking or techniques. In
fact, it is a revolutionary thought process that requires
abandonment of some old paradigms. To think lean is to switch from
internally focused thinking to externally focused thinking.
Lean Manufacturing, often called Just In Time
(JIT) or Agile Manufacturing, is an operating strategy that seeks to
maximize operational effectiveness by creating value in the eyes of
the end customer. The focus is not on a department, area or process,
but on the optimization of the entire value stream -- the series of
processes between receipt of customer order and delivery of finished
product.
Lean manufacturing improves operating
performance by focusing on the quick and uninterrupted flow of
products and materials through the value stream. To achieve this,
the various forms of manufacturing waste must be identified and
eliminated. Waste can include any activity, step or process that
does not add value for the customer.
Under such a system, the plant is highly
customer-focused, providing the highest quality, lowest cost
products in the least amount of time. In the latest edition of their
book Lean Thinking, authors James P. Womack and Daniel Jones state
that lean thinking can be summarized in five principles:
1. Precisely specify value by specific product.
2. Identify the value stream for each product.
3. Make the value flow without interruptions.
4. Let the customer pull value from the
producer.
5. Pursue perfection.
Womack and Jones suggest that, if managers
apply these concepts collectively, they can reap full benefit of
lean techniques and significantly improve their product’s
competitive edge. Each principle is discussed below.
VALUE: Value is defined by the customer and is
only meaningful when expressed in terms of a specific product, which
meets the customers’ needs at a specific price and at a specific
time. The error many producers have made is internally defining
value: if customers don’t respond, they add more bells and whistles
or adjust the price. Then, if that doesn’t work, they try a
different marketing strategy to market a product that customers
really don’t want. They are internally focused and value is lost!
What they should be doing is rethinking value from the
perspective of the customer. Lean thinking must ignore existing
assets and technologies and rethink the business on a product-line
basis with strong, dedicated product teams.
VALUE STREAM: The value stream is all the steps
and processes required to bring a specific product from raw
materials to finished product in the hands of the customer.
Analyzing the entire flow of a product will almost always reveal
enormous amounts of waste and non value-added sequences. This is
frequently referred to as process reengineering. Value stream
analysis will almost always show that three types of actions are
occurring along the value stream: steps that create value; steps
that create no value but are unavoidable due to current technologies
or production methods or assets; and steps which create no value and
are avoidable—the immediate target of opportunity, often referred to
as low hanging fruit. To become truly lean, the entire enterprise
must analyze and improve the value stream as a whole.
FLOW: Once value has been precisely specified,
the value stream for a specific product fully mapped by the
enterprise, and wasteful steps eliminated, it’s time to make the
remaining steps flow. This entails probably the greatest departure
from traditional thinking. We relate to a world of functions and
departments, a conviction that activities ought to be grouped by
type so they can be performed more efficiently and managed more
easily. Also, it is common sense to perform like activities in
batches where products flow through different sequences and
operations in batches. This creates wait times (bottlenecks) while
the product waits for the next operation or sequence, or departments
change over to the type of activity the product needs next.
Traditional firms believe that, since this keeps everyone busy, it’s
efficient. Things work
better when you focus on the product and its needs, rather than the
organization or the equipment, so that all the activities needed to
design, order, and produce a product occur in continuous flow.
Womack and Jones’ research shows that plants in
North America and Europe where production activities were rearranged
from departments and batches to continuous flow (process flow),
productivity doubled and dramatic reductions were realized in errors
and scrap. The reengineering movement in the United States has
recognized that departmentalized thinking is not best and has tried
to shift the focus from organizational categories (departments) to
value-added processes. The problem is that the engineers haven’t
gone far enough. Conceptually, they are still dealing with
disconnected and collective processes rather than looking at the
whole value stream for major breakthroughs and managing the entire
flow of value-added activities for specific products. Also, the
reengineering frequently results in a collapse of employee morale
and a regression of the organization to the norm as soon as the
“reengineers” are gone. The lean alternative is:
- Redefine the work of functions,
departments and firms so they can make a positive contribution to
value creation and
- Address the real needs of employees
at every point along the stream so it is actually in their interest
to make value flow.
PULL: The results of converting from
departments and batches to product teams and flow is that the times
required to go from concept to launch, sale to delivery, and raw
material to the customer fall dramatically. When flow is introduced,
products requiring years to design are done in months; orders taking
days to process are completed in hours; and the weeks or months of
throughput time for conventional physical production are reduced to
minutes or days. Truly lean systems can make any product currently
in production in any combination such that shifting demand can be
easily accommodated immediately. You can let the customer pull the
product from you as needed rather than pushing them the product,
often unwanted. Customer demand becomes much more stable when
customers know they can get what they want when they need it and
when producers stop periodic price discounting campaigns designed to
sell goods already made that no one wants.
PERFECTION: As the organization begins to
accurately specify value, identify the entire value stream, make the
value-added steps for specific products to flow continuously, and
let customers pull value from the enterprise, something remarkable
surfaces. People begin to realize there is no end to the process of
reducing effort, time, space, cost, and mistakes while offering a
product. Perfection, the fifth and final principle of lean thinking,
seems achievable. The other principles interact with each other;
getting value to flow faster always exposes hidden waste in the
value stream. The harder you pull, the more the obstacles to flow
are revealed so they can be removed. Dedicated product teams in
direct dialogue with customers always find ways to specify value
more accurately and often learn of ways to enhance flow and pull as
well. In a truly lean system, everyone—subcontractors, first-tier
suppliers, systems integrators or assemblers, distributors,
customers, employees can see everything so it’s easy to discover
better ways to create value. Also, there is instant and positive
feedback for employees making improvements, a key feature of lean
work and a powerful element to continuous improvement.
Plant personnel are a vital element in
successful implementation of Lean Manufacturing. Plant-wide
participation in continuous improvement and kaizen events is a
critical difference between high-performance plants and the rest.
Employee involvement in and accountability process improvement helps
improve both product reliability and employee morale.
Some organizations have begun the movement
toward lean from the bottom: the lower level managers became lean
thinkers and had to convince the executive level that it was the
right thing for the organization. This is truly a challenge for
these organizations, but when the business begins to show an
increased customer satisfaction and greater profits, the executive
managers realize that the message is true: lean thinking drives the
competitive edge for any business.
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About the Author
David McBride is co-founder of EMS Consulting Group, a Carlsbad, CA based engineering and management consulting firm. David has a BS in Mechanical Engineering from Ohio State University. He has a successful track record in the development and implementation of FMEA and Design for Manufacturability programs at several organizations and has greatly reduced Manufacturing costs through the utilization of Lean Manufacturing, Kaizen Events, and Manufacturing System Analysis. He has also been highly successful at developing and executing New Product Introduction processes, and Staffing and Capital Equipment Plans.
EMS Consulting Group helps companies implement lean strategies through lean training and lean consulting services. To learn more, read our lean manufacturing case studies or lean manufacturing articles.