Lean Manufacturing Implementation

Because of increasing pressure from customers and competition to reduce costs , many companies want to begin lean implementations next year. Like other major initiatives, effective lean implementations begin with good planning. In this article, I will cover 5 key steps to planning for lean implementation.

1. Perform an initial lean assessment.The purpose of a lean assessment is to identify organizational strengths and weaknesses and determine how “lean” the organization is initially in different areas. It should include financial and operational analysis. It is important to select an employee or consultant with significant lean experience to conduct the assessment. While someone internally might have the necessary experience, an outsider might help to provide a new perspective that can prove to be very beneficial in the planning stage. It can also help in convincing members of the management team that might not initially be on board with the change.

2. Begin tracking metrics.The lean assessment will provide the baseline and answer the question “Where are we?” Tracking and posting metrics will show you where you are going during the lean transformation and will gauge how successful your program is. Develop a set of metrics that you will use to track your implementation efforts. It is important to select a reasonably small number of metrics and post them in the plant- metrics should not be reserved for management’s eyes only.

3. Develop a one year detailed implementation plan and three to five year plan.Based on the lean assessment and metrics selected, develop a timeline for implementing lean. It should include goals and milestones. The plan needs to be tailored to the unique circumstances of the organization- not all plans will look alike!

4. Develop a training plan.Companies commonly make two mistakes with regards to lean training- either they train too much too early or they fail to train. Both of these mistakes can prove to be costly. It is important to develop a training plan that coincides with the implementation plan. You should identify who should be trained, when they should be trained, and in what disciplines they should be trained.

5. Develop a communication and performance/reward plan.Communicating the plan to go lean to everyone in the organization and letting them know how this will effect them is critical to success. Part of the communication plan should include a plan to reward both teams and individuals for their successful participation.

As you plan your lean implementation in the future, keep these five keys in mind. They will help you to move more quickly toward successful implementation.


Does Lean Work in Any Industry

Many people think that lean is only for high-volume manufacturers. However, the Toyota Production System was born out of low-volume requirements (see our article: EPEI and Quick Changeover); that fact should put to rest this false assumption about lean. Lean is about finding ways to eliminate all forms of waste from an organization such that the customer is satisfied and profits and cash flow are increased. Lean can be applied to any organization: from high volume manufacturers to hospitals to restaurants to insurance companies. This is because just about every organization has these basic requirements:

  • The need to make money
  • Processes Products and/or Services
  • Customers
  • Waste in their Processes

It is the approach to lean that should differ from organization to organization. The principles of lean defined by Womack and Jones in Lean Thinking are general enough to be useful to any organization (Define Value, Identify the Value Stream, Create Flow, Let the customer pull, seek perfection); however, it is the interpretation and improper application of these principles that has led to failure for many and a false assumption that lean will not work for them becausethey are different.When people claim that their company is different, they are partially correct. The implementation process differs from organization to organization for this reason; however, no company is so different that they don’t need to make money by eliminating waste from their processes.

Let’s consider a high-mix, low-volume manufacturer attempting to implement lean. Let’s suppose they make highly complex electro-mechanical assemblies with demand for about one unit every other day across all varieties. They might read some books on lean manufacturing and attempt to implement the tools and principles in their organization. They might try to create one-piece flow cells and falsely conclude that they work only for low-mix, high volume situations. This is because they might have read that they need to calculate takt time, design the cell such that parts are delivered to the cell every 30 to 60 minutes, finished goods are removed from the cell every 30 to 60 minutes, etc. These “requirements” of lean are not really requirements but are specific applications of the concept of “one-piece flow” for a high-volume producer. These “requirements” will not work for a low-volume producer as presented. For example, if they need to produce one finished unit per day, they won’t need to deliver parts to the cell every 30 to 60 minutes. In fact, they might consider kitting parts (or at least those parts that are not common to each product) and delivering those parts to the cell daily based on customer requirements.

How might such a low-volume manufacturer implement one-piece flow? They might create a cell that produces a variety of products using one-piece flow by designing standardized work for each product variety. They will meet the requirement of having a management time frame (pitch) using some form of visual control to show progress in the assembly process over time instead of moving finished goods from the cell every 30 to 60 minutes. These are just a few examples of how the tools need to be customized to meet an organization’s specific needs.

I encourage you to take the concepts that you read and learn about and think about how the concept might be modified for use on your company’s unique situation. This requires much more thought than reading a book and quickly dismissing the concepts just because your company is different; it requires thinking creatively. This is what makes lean implementation a challenge.

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Lean Leadership

Why do some organizations seem to find success on their lean journeys more quickly than others? Why does it appear that employees are eager to participate in lean at some organizations and are not so excited about lean at others? Based on my observations, I believe the single biggest factor in lean successes is leadership.

Let’s consider two companies, ABC Corporation and it’s biggest competitor XYZ, Inc.  Both of these organizations began their lean journey about 1 year ago, but one has found much more success than the other.

Both companies put together “lean” core teams that were thoroughly trained in the Toyota Production System methodologies, and both had the same lean (outside) teacher, who performed the training and facilitated the first value stream mapping and kaizen activities at each.

ABC Corporation, within the first few months, made substantial gains in productivity on the factory floor and reduced WIP by more than 80%; within the first six months, they had begun reducing finished goods and have a plan in place to reduce their FGI by 60% before the end of 2007. Employees at all levels were beginning to make suggestions for improvements and were asking when they would be able to participate in a kaizen event. The VP of Operations and factory floor employees are on a first name basis, and the VP of Operations has made a concerted effort to talk to employees about lean, it’s importance to the company, and it’s value to them as individuals. Not only did he do this in a formal setting, but he does this regularly on the factory floor.

XYZ, on the other hand, has completed some kaizen events that have identified improvements, but the improvements have not “stuck.” XYZ’s VP of Operations, after 3 months, had considered halting the program because he believed that the employees were not ready for lean. In contrast to his ABC Corporation counterpart, this VP almost never visits the factory floor, and many of the operators are not even sure who he is.

After studying both organizations, I’ve compiled a list of some examples of actions ABC’s management has taken that have contributed to their success in contrast to those things that XYZ has done.

ABC Corporation XYZ Corporation
Had all executives trained in lean; VP persuaded Division President of lean’s benefits. Held brief overview of lean for executives. Most were ok with the idea as long as it did not impact their organizations negatively.
Division President and VP of Operations attend kaizen event kickoffs and reports-out. President never interacts with low level employees. VP of Operations occasionally does but never on the shop floor.
Clearly communicated what lean means to all employees not only at formal meetings but on an on-going basis. Communicated lean benefits to the organization at employee quarterly meeting.
Rewards employees for their lean ideas and participation Expects participation from all employees; rarely recognizes an employees’ contributions to lean.
VP of Operations visits the factory floor daily and talks with operators VP of Operations rarely visits the factory floor.
Top management backs up their support of lean by stating that participation in lean events supersedes all other meetings/activities. Top management stated that lean was a high priority, but many kaizen events are cancelled or poorly attended due to more pressing issues.
VP of Operations actually participates in events on occasion, and the team members (including operators) are very comfortable with that. If the VP of Operations participated in a kaizen event, it would likely be a one-man show.
Management stated that no layoffs would occur due to a lean improvement, and they have backed up that claim. Management said that lean was necessary to keep the factory in the U.S. but made no promises. Employees are skeptical.

While both organizations had identical training and very similar business models, the results they achieved are markedly different. Leadership style and approach to lean are key to creating a lean culture. Without a lean culture, some success is possible; however, it is impossible to achieve the kind of breakthrough improvements you might read about in case studies.

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Why Involve Suppliers In Your Lean Journey

According to Lean Thinking by Womack and Jones, the five principles of lean are:

  1. Specify Value
  2. Identify the Value Stream
  3. Flow
  4. Pull
  5. Perfection

I thought it would be worthwhile examining these five principles in the context of supplier involvement in a lean program. In most analyses, supplier involvement falls only into #5. That is, involving suppliers is part of “seeking perfection.” In actuality, however, working with suppliers to improve the value stream is critical to success. Let’s examine each principle:

1. Specify value. Value is defined by the customer. The end customer defines value as does each customer in the process. If you are on a lean journey and involve suppliers, you are the customer to your tier 1 suppliers, tier 1 suppliers are customers of tier 2 suppliers, etc. Looking at the entire value stream helps determine what creates value for each customer in the process (as well as the end customer). For manufacturers whose products consist of many purchased components (or whose material cost far outweighs labor cost), understanding the entire value stream and the what customers need at each point is critical. Leaning the internal operations of such an organization is good; however, stopping at that point would be a mistake.

2. Identify the value stream. The value stream includes all of the information and material flow steps necessary to bring a product to the end customer. This obviously involves suppliers. In many cases, both the information and material flows going in and out of each player in the value stream are full of wastes that would go unseen without mapping the value stream.

3. Flow. Flow means moving material or information from one value-added step to the next with as little delay as possible. In many cases, it is associated with internal manufacturing only. However, it is applicable to both information and material flows within an extended value stream. Having information flow through the value stream without delays or errors can result in dramatic improvements in customer service and reductions in lead times and inventory. Better material flow within supplier plants and between plants can result in improvements as well.

4. Pull. This has a very obvious implication for suppliers. Most organizations do not pull from suppliers, and many of those that do have “pull” systems in place are pulling from a supplier that is operating in “mass production” mode. This means that additional costs, in the form of inventory, defects, and other wastes are inside the supplier’s four walls. Any customer that assumes that those costs are not being passed on to them is naive. Thus, it is important to setup true pull systems with suppliers, who have bought in to the philosophies of lean.

5. Perfection. For the extended value stream, seeking perfection simply means continuing to remove wastes in the entire value stream by working closely with suppliers on programs such as product design for manufacturability, supplier associations, and other programs that aim at leaning the value streams out.

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Lean Manufacturing and the Current Economy

As I write this article, most of the television, internet, and print media are focused on the financial crisis. The Dow Jones Industrials is a virtual roller-coaster, and most financial experts are referring to this time as one of a “credit crunch” or a “liquidity crisis.” Credit is very difficult for businesses to obtain. Without the availability of cash, businesses will have difficulty making payroll, purchasing inventory, and growing in general. Thus, people will lose their jobs. The result could be a deep and long-lasting recession.

I have been asked many times over the past few weeks how lean relates to the current financial crisis. Can businesses use lean principles to help them navigate this difficult time?

The five principles of lean as defined by Womack and Jones (Lean Thinking, 1996):

  1. Specify Value.
  2. Identify the Value Stream.
  3. Create Flow.
  4. Let the Customer Pull.
  5. Seek perfection.

What are the results of applying these principles? I believe the effects of lean implementation can be summarized as follows:

  • Lead-Time and Inventory Reduction. Lean compresses the value stream. That is, it shortens the time between receiving a customer order and being paid by that customer for the finished product. This results in less inventory and quicker response to the customer.
  • Productivity Improvement. Lean eliminates waste, activities that consume resources but do not create value for the customer. As wastes such as wasted motion, transportation, and waiting are reduced or eliminated, productivity increases. Increased productivity results in lower costs.
  • Quality Improvement. Lean thinking forces problems to the surface. As problems are solved to their root causes and eliminated, product quality improves, resulting in lower costs and increased sales.

All of these effects have the benefit of increased cash flow. As an organization applies lean principles, it is able to realize a net decrease in inventory. This results in a net increase in cash. As a company improves product quality, it will be able to outsell its competitors. As a company improves productivity, it will be able to support additional sales with the same size workforce. Lean principles will enable any organization to navigate the credit crunch by freeing up cash, improving product quality, and reducing costs while growing as a company. In short, it will help a company become self-reliant in its growth and less reliant on the availability of credit from financial institutions.

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