Lean manufacturing: maximize value, minimize waste

Toyota made Lean Manufacturing (also known as lean production) famous. It’s about minimizing waste and maximizing customer value and value creation. To do that, production processes have to be continuously improved and optimized. That’s been a big part of Toyota’s success.

- Lean manufacturing: minimizing waste and maximizing value
- The eight types of waste are overproduction, waiting times, unnecessary transport routes, redundant movements, inventory, defects, overprocessing, and untapped talent.
- The five basic principles of lean manufacturing are customer value, value stream, flow, pull, and continuous improvement to increase production efficiency.
- Lean Manufacturing requires management commitment, full employee training, and clear communication during the change process.
- In short, lean management is a holistic philosophy of optimization that goes beyond production processes, the entire value chain, and all business processes.
Lean Manufacturing makes a company more competitive by increasing flexibility and efficiency. It helps to increase focusing on customer needs and market requirements, including the ability to customize products, the product can evolve and improve over time, resulting in higher customer satisfaction and better market positioning.

Another big benefit of lean production is reducing inventory and using production space more efficiently. Lean production aims to reduce lead times and waste and increase the flexibility of the value-added processes. That way, companies can react faster to market changes and continuously optimize production.

Lean production helps companies improve their products. Regular quality control and immediate rework mean defects are detected and eliminated quickly, reducing the error rate and leading to continuous improvement of product quality.
The core of lean production is the continuous optimization of production processes to reduce eight defined types of waste. Five lean principles work in a loop and are the foundation for implementing lean in companies.

Companies must optimize production factors like personnel, materials, and resources together to benefit from lean production. IT systems for lean production, like MES, detect waste and prevent it with real-time alerts and historical analysis, making processes more efficient in the long run.
After World War II, Japan had limited financial and material resources compared to Western countries, especially the US. Like other carmakers, Toyota couldn’t afford significant inventories, mass production, and inefficient processes.

Instead, they had to find an approach to efficiency and resource conservation. That’s how lean manufacturing—a holistic approach to production optimization—was born.

The US-based MIT in Boston later named it ‘Lean Production’ in a study about Toyota’s methods. The work showed how Toyota’s production system increased efficiency and productivity by minimizing waste and optimizing processes. The Toyota Way became a model for many other companies worldwide.

Lean manufacturing and its components

The Lean Manufacturing House is a model that illustrates the principles and parts of lean manufacturing. It represents the systematic approach ensuring stability, efficiency, and value creation in production.

Continuous improvement, reducing waste, and respect for people are key elements. The two pillars of the house are Just-in-Time (JIT) and Jidoka (integrated quality).

JIT means producing the right product in the correct quantity at the right time,
Jidoka means to detect problems early and stop the production process to prevent defects.

The roof area represents quality, cost reduction, and customer satisfaction goals. Inside the house are tools and methods like 5S, value stream mapping, and Kaizen that make the system work.

The 5 Lean Principles

Lean Manufacturing is based on five basic principles that apply to the whole production process:

Customer value
Value stream
Flow
Pull principle
Continuous improvement

These principles are the foundation of lean production. A lean process is a structured approach to increasing efficiency, reducing waste, and optimizing the collaboration between machines and people.

1) Customer value

In Lean Manufacturing, the customer’s perspective defines value. The end product has to meet the customer’s expectations and requirements. Customers show this by paying for the product. This principle ensures companies align their production processes with customer needs and preferences, thus ensuring customer satisfaction.

Key questions to ask:

What is the lead time for the product or service?
What are the costs of the product or service?
What has to be met?

2) Value stream

The next step is to visualize the value stream, which includes all the steps and activities involved in producing the product or service, from raw materials to delivery to the customer.

The value stream is seen from the customer’s perspective: only those activities that directly create value are considered valuable. The following are distinguished:

Necessary but non-value-adding activities are required for the operation but don’t create customer value.
Non-necessary and non-value-adding activities that are pure waste and should be eliminated.

3) Flow principle

The flow principle in lean manufacturing is a key element in avoiding waste and achieving disturbance-free production. The main goals of the flow principle are to ensure uninterrupted production processes and value streams, avoid disturbances and bottlenecks, and increase efficiency.

One example of how the flow principle is applied is the “one-piece flow,” where employees follow a workpiece to the end. This promotes teamwork and increases flexibility and productivity.

Unnecessary movement in the workplace should be avoided so as not to block the value stream.

4) Pull principle (Pull)

The pull principle means production is “pulled” by actual customer demand, not by forecast or mass production. Products are only produced when needed, thus avoiding overproduction and excess inventory.

5) Continuous improvement (Kaizen)

The principle of continuous improvement, called Kaizen, means minor continuous improvements in all company areas. It encourages employees at all levels to question processes and identify optimization opportunities. This increases efficiency and creates a growth and innovation culture.

The 8 types of waste (Muda)

The 8 wastes, also called “muda”, are the foundation of lean management. They describe the different kinds of inefficiencies in the value creation process. They were defined in the Toyota Production System (TPS) and later in lean manufacturing. They are:

Unnecessary transportation
>Overproduction
>Unnecessary motion
Excess inventory
Idle time
Overprocessing
Defects
Unutilized talent

Key figures in Lean Manufacturing

Metrics for lean production:

Lead time – time from order to delivery of a finished product, measures a company’s ability to deliver on time.
Cycle time – time for a product to go through a process.
Throughput
Utilization – the percentage of production capacity used and production output.
Defect rate – the percentage of defective units produced.
Value added – value added to total production output.
Overall Equipment Effectiveness (OEE) combines a production plant’s availability, performance, and quality into one figure.

Tools in Lean Manufacturing

Lean manufacturing has many methods and tools to minimize waste, increase efficiency, and improve continuously. One of them is the just-in-time (JIT) method, a production and delivery concept to reduce inventory by delivering materials on demand.

Here are the methods. They are the foundation of lean manufacturing and can be used individually or in combination to make a production system meet requirements.

5S Method

A structuring and organizing method to optimize workspaces:

Sorting (Seiri): separate necessary and unnecessary things.
Systematizing (Seiton): order and clear allocation of space.
Cleaning (Seiso): keep work areas clean and serviceable.
Standardizing (Seiketsu): set standards for order and cleanliness.
Self-discipline (Shitsuke): enforce the standards.

Kaizen

Continuous improvement through small incremental changes to processes.

Read more about CIP and Kaizen. Our blog has more information on how to improve your processes.

Kanban

The Kanban system controls the flow of materials based on demand. It is a way to implement the pull principle and is used in many areas. For example, a Kanban system can monitor the flow of materials.

It’s a visual control system that regulates the flow of materials and production. This is done with Kanban cards or digital signals. It ensures materials are delivered just in time and no overproduction.

Value Stream Mapping

Value Stream Mapping (VSM) is a method for mapping the whole production process. It shows value-adding and non-value-adding steps and gives insights into where to improve. By visualizing the flow of materials and information, VSM helps companies streamline their processes, eliminate waste, and increase overall efficiency.

SMED (Single Minute Exchange of Die)

A method to reduce set-up times for machines and equipment to make production faster and more flexible.

Poka-Yoke

Error-proofing mechanisms to identify and eliminate errors before they happen.

Just-in-time (JIT) production

A production system where materials and products are delivered when needed to minimize inventory and waste. The goal of just-in-time (JIT) in production is to reduce inventory by delivering materials just in time. Just-in-time production requires precise planning and coordination to have materials available on time. The Kanban system supports the just-in-time principle by removing only the needed material, thus reducing inventory.

Jidoka (built-in quality)

This is a principle where machines are equipped, and employees are trained to detect defects and stop production to avoid quality problems.

Total Productive Maintenance (TPM)

A method to maintain and service machines to reduce downtime and increase equipment availability.

Heijunka

A production leveling method to avoid fluctuations and have a stable workload.

Andon

A visual feedback system to show issues or bottlenecks in real-time so they can be fixed immediately.

Learn more about Andon in our blog article.

Hoshin Kanri

A strategic planning tool to link corporate goals to operational processes and coordinate improvements across all levels.

Gemba

The principle is to go to the “agenda” (scene of the action), i.e., where value is created (e.g., the production line).

Takt time

A method to match production speed to customer demand to eliminate overproduction and underutilization.

Fish bone diagram (Ishikawa)

A fish bone diagram is a tool to analyze causes to find and fix the root cause of a problem.

Lean manufacturing challenges

Implementing lean manufacturing is not without its problems. Cultural resistance can create insecurity and fear among employees and make implementation harder. Physical changes to the work environment can also meet resistance and slow down acceptance.

Lack of resources, time, and personnel can greatly hinder lean processes. Getting all employees and suppliers involved is often difficult, especially during a cultural change.
Integrating lean principles into existing systems can be challenging, especially when moving from classical to modern lean organizations.

Requirements for a successful implementation

Basic knowledge of lean principles and how to apply them is key to a successful introduction. Management commitment is essential: without it, it will fail. Senior management has to actively support and promote lean initiatives.

Lean production depends heavily on the knowledge of the employees who operate the machines and plan the processes. A comprehensive training program helps employees learn about lean principles and understand what they mean.

Clear communication is key to avoiding misunderstandings and to include employee language in the change process.
Find out more about lean transformation:

Summary

Lean manufacturing offers many benefits, from increasing production efficiency to better product quality. However, it requires careful planning and implementation and everybody’s commitment. By applying lean principles and methods, companies can optimize their processes and gain a competitive advantage. Let’s work together to apply lean manufacturing to your production processes.

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