2019-06-24 04:30:00 Expenses English The Lean Manufacturing process applies to more than just physical manufacturing. Find out what it is and how to implement it into your... https://quickbooks.intuit.com/r/us_qrc/uploads/2015/08/2015_7_27-small-am-lower_your_production_costs_understanding_and_implementing_lean_manufacturing.jpg https://quickbooks.intuit.com/r/expenses/lower-your-production-costs-understanding-and-implementing-lean-manufacturing/ How to use lean manufacturing to cut waste | QuickBooks

How to use lean manufacturing to cut waste

11 min read

The idea behind lean manufacturing, also called lean production, or just “lean“ is simple: Cut waste out of the manufacturing process while maximizing productivity.

No matter what type of business you run, you can still benefit from the guiding principles and techniques specific to lean. But choosing the right processes in manufacturing is very different from choosing which lean techniques are right for your small business. Settling on which Lean methods to implement is something that can take time and constant revising.

Depending on what your company does, you can apply lean manufacturing principles and cut waste in areas of production, customer service, assembly, or even accounting. By streamlining business processes, your company will be able to focus on value for your customers without sacrificing productivity.

What is waste?

In the case of lean, waste is defined as any action or step in the process that doesn’t add value to the customer. Waste is an activity or action that has a direct impact on your costs but adds nothing of value to your products, services, or operations. Waste is something your customers would not be happy to pay for.

That’s why companies, like yours, must work relentlessly to eliminate all aspects of waste. Doing so improves efficiencies, lowers production costs, expedites the supply chain process, cuts lead times, and ensures that the value stream flows to the customer.

Although you may have heard the term, lean, used before, read on to learn about the origins of lean, the main principles of lean manufacturing, and its benefits. We’ll discuss different lean tools and systems, and how you might implement lean in your business.

The origins of lean manufacturing

Japanese automaker Toyota formally introduced lean manufacturing to the world by the early-to-mid-20th century. However, Henry Ford himself put many of the basic principles of lean into practice back in 1913, far before Kiichiro Toyoda and Taiichi Ohno invented the Toyota Production System (TPS).

Even so, Toyota gets the nod for coining the phrase and implementing the lean manufacturing system that’s still up and running at Toyota, in manufacturing plants, and in the business world at large. In essence, Toyota shifted the focus from individual machines to the flow of product through the total manufacturing process.

By doing so they found they could lower costs, improve product quality, and shorten the amount of time required for a product to pass through a manufacturing process. Their success at doing so is strong proof of the power of lean manufacturing.

Toyota described three roadblocks that have a negative impact on a company’s work processes:

  • Muda, a Japanese word that refers to the eight identified types of waste associated with the lean manufacturing system.
  • Muri refers to the changes made to proactively eliminate waste from a process or system.
  • Mura refers to steps that might be taken retroactively or in response to a process when unforeseen waste is found.

The 8 types of waste

Learning how lean manufacturing works begins with getting to know the eight distinct types of waste or muda. The original seven wastes — transportation, inventory, motion, waiting, overproduction, overprocessing, and defects — were introduced by Toyota, as part of the Toyota Production System. These seven ‘mudas’ are often referred to by the acronym, TIMWOOD.

The eighth waste — non-utilized talent — was introduced in the 1990s when the TPS was adopted by the Western world. By adding the eighth waste, the acronym became TIMWOODS. Here’s what each of the eight types of waste look like in the manufacturing process:

  1. Transportation: unnecessarily moving products and materials during the process.
  2. Inventory: too many products and materials not being processed and therefore remaining as excess inventory.
  3. Motion: unnecessary movements (like walking, bending, reaching, etc.) by workers.
  4. Waiting: time wasted by workers waiting for the next step in the process.
  5. Overproduction: producing more product than is needed.
  6. Over-processing: more work or higher quality work than is required by customers.
  7. Defects: reworking or scrapping a product not fit for the customer.
  8. Non-utilized talent: underutilizing the talents, skills, and knowledge of a team of workers.

Often the first and biggest hurdle for many businesses is pinpointing what they view as the biggest contributors to waste. Sometimes one or two areas are glaringly obvious. Other times, all eight come into question.

Even so, not all waste can be eliminated. For instance, testing a specific component of software is not an activity your customers would be willing to pay for. However, without that step, you might launch a product that has a defect, which would negatively impact your company.

Benefits of the lean manufacturing system

Eliminating waste is the core goal of lean. For that reason, businesses that actually produce or manufacture products will typically benefit the most from establishing lean principles. It is possible, however, for service-oriented organizations, small businesses, and even online stores to find value in the lean method by examining their own internal processes.

Lean principles are surprisingly adaptable to many different business settings. It has evolved outside of just manufacturing to become a method used to achieve ever-increasing value for customers in large and small businesses alike. Lean is a philosophy and strategy for improving how companies do business that should be familiar to small-business owners.

These guiding principles stand as the pillars of lean thinking.

  • Respecting people
  • Looking at your business in the long-term
  • Working to continually improve
  • Thinking quality first
  • Maintaining a customer-focus
  • Managing employees in a way that builds trust and participation

To successfully implement lean practices, you must also be adept at measuring processes and outputs, including employee productivity. Doing so can help you understand what is currently happening and how it can be improved — or at least, better controlled — in the future.

The merits of lean are vast and can include:

  • Higher product quality and employee performance
  • Fewer breakdowns of machines and processes
  • Smaller amounts of inventory
  • Faster inventory turnover
  • Higher output and higher efficiencies
  • Greater customer satisfaction
  • Better supplier relations
  • Better employee morale
  • Higher profits
  • Increased business

The process to set lean manufacturing in motion is different for every company. And, no matter what you may have heard or read, lean is not a quick fix that produces miraculous outcomes overnight. It is, however, a focused process that when implemented correctly, can have significant benefits for your company.

How to implement lean

If you want to use lean principles to make your company more efficient and customer-focused, there are a number of specific steps you can take. Just remember that setting lean principles in motion isn’t enough. You need to continuously revisit these steps to make sure your company is still running lean.

Design a simple manufacturing system

One of the tenets of a simpler system is handling product or materials only when they’re needed. This decreases the amount of raw materials kept in inventory, increases productivity since workers aren’t juggling more product than they need, and expands efficiencies.

Understand there is always room for improvement

This means that “good enough” is never good enough. Remember anything that doesn’t add value to the customer should be labeled waste and be eliminated, or at the very least, reduced.

Apply the principles of Kaizen

Lean manufacturing is based on several distinct principles, including kaizen, or continuous improvement. This lies at the heart of lean manufacturing and the Toyota Production System.

Based on the belief that small, continuous changes can create major improvements, kaizen was initially designed for the manufacturing sector. Its aim is to eliminate waste, lower defects, promote innovation, increase productivity, and encourage employee accountability.

Continuously think of ways to improve the system

A mindset that values continuous improvement and innovation is essential to making the lean system work. By constantly evaluating and reevaluating internal and external processes and procedures, organizations can make large and small improvements in a variety of ways that will ultimately impact their bottom line.

Implementing the 5S system of lean

5S is considered a fundamental part of the Toyota Production System. It represents Japanese words that describe the process of organizing a workplace. A cluttered working environment can lead to a production slowdown, mistakes, and even accidents.

By having an orderly facility, a company increases its odds that production will run smoothly. The benefits of a well-organized environment include reduced costs, greater employee satisfaction, and a safer workspace.

To use 5S methodology, you’ll need to:

  • Sort: Getting rid of clutter in the workplace, ensuring you only keep what’s truly necessary.
  • Set in order: Once you’ve gotten rid of clutter, make sure that you organize your remaining tools and materials in the order that you use them in most often. In other words, make them easy to access.
  • Shine: This refers to the physical act of cleaning your area (mopping, sweeping, etc.), as well as performing maintenance on machinery and equipment.
  • Standardize: In order to maintain the first three steps, you need to integrate steps into your processes that force you to keep things clear, organized, and clean.
  • Sustain: Conduct training at every level of the organization for smooth implementation of all of the above.

The whole process of introducing lean into your organization will go a whole lot easier if all members are on-board. Many employees resist change, and it’s common to see at least some resistance from the team when you pursue organizational change. Engaging employees rather than simply mandating that they learn lean concepts and techniques will go a long way toward smoothing out the process. This will not only save you valuable time and money in the long-run, but also ensure successful implementation of the system.

What is lean Six Sigma

Lean Six Sigma is a fusion of lean and the Six Sigma management philosophy.

Six Sigma is a structure for continuous improvement to business processes that helps reduce the chances that a defect or error will occur. It increases revenues and reduces costs. It also engages employees by encouraging them to improve the way they work — a win-win for everyone.

The lean Six Sigma process is completed in five stages:

  • Define the problem, goals, opportunity for improvement, and customer requirements.
  • Measure process performance by recording activities to determine if these activities meet the specifications of the job.
  • Analyze the process to flesh out causes of poor performance (defects).
  • Improve performance by finding ways to eliminate the root causes of poor performance.
  • Control improved performance in order to maintain future process performance.

Like lean, implementing lean Six Sigma doesn’t have to be difficult. With a little time and effort on your part and on the part of your whole organization, you can put lean Six Sigma into practice on any process in companies large and small.

Are there obstacles to implementing lean?

Many people think that lean is only effective in manufacturing. The truth is, if you have a task to be done and waste to eradicate, then lean principles can be applied. Many small businesses have adopted lean principles and witnessed the same success seen in larger companies.

However, successful implementation doesn’t always happen easily, and most business owners will hit a snag or two along the way. One root cause to the unsuccessful application of lean techniques is a lack of preparation. As a result, many lean programs are abandoned before they ever get off the ground.

Here are the five obstacles that keep small businesses from implementing lean.

  • Lack of time that management is willing or able to spend on learning lean
  • Not understanding of the benefits of lean
  • Employee resistance to change
  • Not having the skills necessary to implement lean
  • Not realizing the impact of customer value on your business
  • Backsliding to the old way of doing things

Putting lean manufacturing tools into practice almost always fails due to a lack of understanding of the key principles of lean. And, as with any new process, everyone in the organization must be willing to commit to a new way of doing things.

This is especially important for upper management. Managers lead by example, so they need to understand why and how the changes will be made in order to anticipate problems. This will also help smooth out the process and get you through any challenges you may face down the line.

Training can help. There are a number of lean management certificate training courses out there for business owners who want to apply lean principles in their business and for employees who want to become certified in lean.

By the same token, lean thinking starts at the top. Business leaders have the opportunity to inspire or undermine the implementation of lean. They must cultivate a culture of shared leadership by mentoring employees, removing obstacles, and changing learned behaviors. Lean also cannot be thought of as a quick fix. Instead, businesses must fully adopt lean principles and make sure they’re practiced on a daily basis by everyone in the organization.

Lean, mean and ready to achieve great things

Some businesses extend lean principles to all facets of their business, while others extend it to only manufacturing-oriented departments. Regardless of how lean is introduced in your company, it has the potential to make a huge impact on productivity, efficiency, innovation, and your bottom line.

The implementation of lean manufacturing practices will take time, patience, and commitment on your part, and on the part of the company as a whole. But, the competitive advantage you could have and the benefits your organization could reap from eliminating waste and committing to making products your customer’s value, will far outweigh the initial outlay of time and training.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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