OVERVIEW OF LEAN MANUFACTURING

Ritesh Kumar SinghReader

Department of Production Engg.B.I.T. Mesra, Ranchi

Lean excellence is a coordinated response to today's highly competitiveenvironment. Its roots lie in manufacturing and are strongly influenced by theproduction system principles originally developed at Toyota. Lean manufacturingphilosophy ask for elimination of wastes hidden in the manufacturing system byfocusing on product value stream, eliminating non-value adding activities likestorage, transportation, inspection etc through continuous improvement efforts.This paper highlights the basic concepts of lean manufacturing philosophy, itscomponents, tools and techniques, and major benefits.

1. INTRODUCTION

In today’s competitive environment, companies are increasingly forced to respond to diversemarket demands by realigning their organizational structure and their competitive strategies.These firms need to respond to the change with stable and long-term, yet flexible andresponsive strategies. The past 30 years have witnessed the continued emphasis onefficiencies in western organizations by using the Japanese Management philosophies, such aslean thinking.

Lean manufacturing has been the buzzword in the area of manufacturing for the past fewyears. The concept originated in Japan after the Second World War when Japanesemanufacturers realized they could not afford the massive investment required to buildfacilities similar to those in the USA. The Japanese, particularly Toyota, began the longprocess of developing and riffing manufacturing processes to minimize waste in all aspects ofoperations (Thompson and Mintz 1999). Lean manufacturing, also known as the ToyotaProduction System (TPS), was originated by Taiichi Ohno and Shigeo Shingo at Toyota. It isnow widely recognized that organizations that have mastered lean manufacturing methodshave substantial cost and quality advantages over those still practicing traditional massproduction (Fleischerand Liker 1997).

The term Lean Production is coined by Womack et. al.(1990) to describe the profoundrevolution in manufacturing that was initiated by Toyota Production System. Leanmanufacturing has evolved from Toyota Production System (TPS) (Ohno, 1988), amanufacturing philosophy that shortens the timeline between the customer order and shipmentby eliminating the waste. Lean manufacturing combines the advantage of craft and massproduction, while avoiding the high cost of the former and rigidity of the latter (Womack et.

al. 1990). Lean is not about eliminating people but about expanding capacity by reducingcosts and shortening cycle time between customer order and ship date. Thus, the goal of leanmanufacturing is to reduce the wastes in terms of human effort, inventory, time to market andmanufacturing space and become highly responsive to customer demand while producingworld class quality products in most efficient and economic manner (Liker, 1998). Tables 1portray the difference between lean manufacturing and conventional MRP based system.

CONVENTIONAL –Order-based production Complex flows

LEAN –Rate-based production Streamlined flows

• Detailed operations are used to define andcost every step of the process.

• MRP controls subassembly replenishmentorders.

• MRP controls priorities on the shop floor.(dispatch list)

• Production is scheduled in batches tominimize setups.

• Action is based on MRP exceptionmessage on vendors.

• Detailed operation reports.• Designed for lumpy demand.

• Takt time regulates process flow, costs arebased at product option level.

• Kanbans pull lower-level items throughprocess.

• Pull sequences dictate priorities on thefloor.

• Setups are reduced to enable repetitivemanufacturing.

• Suppliers are part of the pull sequence.

• Operations and materials are back flushed.

• Designed for stable demand.

Table 1 : Difference between conventional MRP based system and Lean manufacturing.

Lean Manufacturing leads to integration of various culture and strategy to serve the customerwith quality, low cost, and shorter lead time. Lean manufacturing implies that all the activitiesnot adding value to the product are waste. In lean manufacturing, the value of a product isdefined solely based on what the customer actually required and willing to pay for. The basicidea behind the lean manufacturing system are, waste elimination, cost reduction, andemployee empowerment.

Waste can be termed as anything other than minimum amount of equipment, material, parts,space, and time that are essential to add value to the product (Russell and Taylor, 1999).Waste uses the resource but does not add value to the products. It has many forms and can befound at any place and at any time inside the organization. Nicholas (1998) identified that inall the manufacturing systems, waste has many forms like complexity, labor, overproduction,space, energy, defects, material, time, and transport. Within the context of leanmanufacturing, different researchers have extended the list of manufacturing wastes (Womacket. al. 1990, Ohno 1998, and Liker 1998). The list of the various wastes identified in themanufacturing organizations is as given in Table 2.

Table 2: Different wastes affecting the performance of industries Hines and Rich (1997),and Singh et. al. (2006).

Overproduction is considered as the worst waste of all because it leads to nearly all the otherwastes. Overproduction causes excess inventory, and it can hide defects and hinder the searchfor their root causes. Overproduction can create a need for additional processing, such as rustprotection and rework. Overproduction also leads to more conveyance effort because theexcess material must be moved, stored, and otherwise handled many times. Waiting time ofthe material, the largest component of cycle time, is increased by overproduction since thematerial is produced before it is needed

Waiting Time, the time during which value is not added to the product, arises in the industrydue to unsynchronized workflow, uneven distribution of load, breakdowns or lack of materialor component to process. Waiting time also include the time spent by operators watching toensure that the machine is working properly and that product is perfect. Long setup/changeover time is also one very important constituent of waiting related wastes; some of themost dramatic improvements in productivity have come from reductions in set-up time.

Transportation waste includes wastes like multiple handling, delay in material handling,unnecessary handling, and loss of material due to poor handling, spills, leaks or contaminationetc. Every time a component is moved from one place to another, it creates delay. Thesolution lies in improving the transportation system so that the components that have to bemoved arrive at the next machine in the minimum time possible, and in redesigning the both

1. Overproduction

Producing too much or too soon, result in poor flow of information orgoods and excess inventory.

2. Waiting Long periods of inactivity pertaining to the people, information or goods,lead to the waste of time and cost.

3. Transportation Excessive movement of people, information or goods, result in poor flowand longer lead times.

4. InappropriateProcessing

Adoption of wrong set of tools, procedures or systems to produce the parts.

5. UnnecessaryInventory

Excessive storage and delay of information regarding the products results inexcessive inventory and costs, and thus leads to poor customer service.

6. UnnecessaryMotion

Improper workplace organization culminates into poor ergonomic postures,e.g., frequent lost items.

7. Defects Frequent error in paperwork or material / product quality problems resultsin increase in scrap and / or rework, as well as poor customer service.

8. Power andenergy

Excess consumption of energy than actual requirement i.e. when machinesare left operating even when they are not used in the actual production)

9. HumanPotential

Inability to utilize the experience, creativity knowledge and ability of theemployees due to absence of proper training, recognition, authority,motivation scheme and incentive schemes.

10. Inappropriatedesign

Inappropriate design of product or manufacturing process itself.

components and manufacturing processes so that more activities can be carried out within thesame production cell.

A process may be wasteful; or it may be totally unnecessary and capable of being completelyeliminated. The reason, it is wasteful may be that it does not add value or because there arealternative, better ways of producing the same results. For example, a heat treatment processmay be eliminated by the selection of materials that do not require heat treatment. This focuson the waste of the process is particularly useful when applied to service processes.Improving the efficiency of a production process can significantly reduce waste generation atthe source of generation.

Holding or purchasing unnecessary raw material, work in process and finished goods areconsidered as inventory waste. Excess inventory is rated as colossal waste. Inventory is oftenused to insulate the factory from problems, such as long setup time, poor maintenancepractices, unreliable suppliers, and improper production control policies. Therefore, it can beviewed as an indicator of problem rather than as a problem itself. The ultimate in inventorycontrol procedures is embedded in the just-in-time manufacturing philosophy, since thismethod estimates the need for inventory.

Unnecessary human motion is a waste of time and energy; it is tiring, stressful, anddisrespectful to the workers. It is found that in some of the western factories, operators areseen waiting near work stations to receive the parts from the conveyor belt. Productive time ofworkers is unutilized and this situation can be improved by redesigning the wok, reallocationsof work stations and synchronizing the flow, as being suggested by the formed JapanesePhilosophy of TPS.

Frequent error in paperwork or material / product quality problems resulting in scrap and / orrework, as well as poor customer service are defined as defects. Defects waste time whichconstitute of time to detect, time to repair or replace, time to sort, and the time it takes toproduce the defective products in the first place. Defects also waste material and create scrap.Defects are also realized in the performance of human potential and worker effort.Furthermore, defects directly contribute to high variability. This in turn causes morecongestion, longer cycle time, longer lead times, higher WIP, higher production costs, and theentire battery of problems related to high variability!

Different types of energy are used in day to day tasks of making steel, bread or whatever otheractivities which are being carried out in the organization. Oil, coal, gas, electricity and woodare used in industries to generate process heat, work space and water heating. Electricity isused to drive machinery, operate computers, lighting, electrochemical processing, cateringetc. The consumption of energy more than requirement, results in another waste known asenergy waste.

The waste of unrealized human potential disregards the most significant asset of a factory: thecumulative wealth of employee experience and creativity. Human beings have the ability tolearning, inventing, adapting, teaching, solving problems, creating new products, andimproving processes. In fact, they are one of the best competitive advantages which cannot beduplicated by the competitors.

NNVA35% NVA

60%

VA

5%

Figure 1(a) Physical productenvironment

Waste is present in the product design in the form of unnecessary complexities and nonstandardized component fits, interfaces and over specifications like high tolerance limits andhigh quality surface finish. Having unnecessary components, material variety, requiringcomplex and unnecessary manufacturing and assembly process increases waste in the form ofinventory, material waste, labor waste, time waste and energy waste resulting in increase inthe tooling and process costs, effecting quality, reliability, lifecycle cost, and new productdevelopment cycle time.

2. VALUE CREATION

In Lean Manufacturing, the value of a product is defined solely based on what the customeractually requires and is willing to pay for. Keeping in view the finer details of themanufacturing operations, various activities can be grouped into three main segments(Monden, 1993).

1. Value adding (VA)

2. Necessary but non value adding (NNVA) and

3. Non-value adding (NVA)

Activities involved in the conversion or processing of products are termed as Value addingactivities. For example, in the case of a steel mill hot rolling, raw coil pickling, cold rolling,welding, and annealing etc. lie in this category. Necessary but non value adding operations aredefined as activities that may be wasteful in nature but are necessary under present operatingconditions. These types of operations are difficult to remove in the short run and hence,should be targeted in the longer term by making major changes in the present operatingsystem. This includes creating a new layout, vendor selection for delivering the goods etc.They also include the health and safety activities that have to be taken to comply withlegislation. Non value adding activities do not make a product or service more valuable.These are termed pure waste and involve unnecessary actions which should be eliminatedcompletely. Some of the examples are: increased waiting time, double handling, unnecessaryinventory, inspection etc.

Research at the Lean Enterprise Research Centre in the United Kingdom (Hines and Taylor2000) to identify the ratio of various activities for physical product environment is indicatedin Figure 1(a) and same for information environment is indicated in the Figure 1(b). From theFigure 1(a) it is found that for a typical physical product environment (manufacturing orlogistics flow) only 5% of the total activities are value adding activities, 60% are non valueadding activities and remaining 35 % are necessary non value adding activities. Outlinediagram in Figure 1(b) are properly interpreted. This figure shows that as per the informationenvironment (e.g. office, distribution or retail) value stream time is distributed as 1% valueadding, 49% non value adding, and 50% necessary but non value adding.

NNVA50%

NVA49%

VA1%

Figure 1( b) Information environment

These figures suggest that in most companies there is considerable scope for reducing waste.But, most manufacturing operations today can tolerate between 85% and 99% Waste. Thebest Japanese, namely Toyota, admitted that they still have an average above 30% waste. Inthe purest sense of interpretation the division of activities in physical flow environment andinformation flow environment are assessed properly and the above classification has beenoutlined without much discussion

3. PRINCIPALS OF LEAN MANUFACTURING

Lean manufacturing is based on five principles proposed by Womack and Jones (1996). Theseprinciples provide a simple structure to build a detailed route map of lean implementation.The five lean principles are described as follows:

1. Specify what does/doesn’t create value from the customer perspective and not fromthe perspective of individual firms, functions and departments.

2. Identify all the steps necessary to design, order and produce the goods across thewhole value stream to highlight non value adding waste.

3. Make the actions that create value flow without interruption, detour, backflows,waiting or scrap.

4. Only make what is pulled by the customer.

5. Strive for perfection by continually removing successive layers of waste as they areuncovered.

As with most other production philosophies and management practices, lean principles cannotbe universally applied. However, because they are fundamentally customer value driven, theyare suitable for many manufacturing environments. There interpretation of the aboveprincipals are as follows :

1. Understanding Customer Value—Value must be externally focused. Only what yourcustomers perceive as value is important.

2. Value Stream Analysis—Once you understand the value that you deliver to yourcustomers, you need to analyze all the steps in your business processes to determine whichones actually add value. If an action does not add value, you should consider changing itor removing it from the process.

3. Flow—Instead of moving the product from one work center to the next in large batches,production should flow continuously from raw materials to finished goods in dedicatedproduction cells.

4. Pull—Rather than building goods to stock, customer demand pulls finished goods throughthe system. Work is not performed unless the part is required downstream.

5. Perfection—As you eliminate waste from your processes and flow product continuouslyaccording to the demands of your customers, you will realize that there is no end toreducing time, cost, space, mistakes, and effort.

Objective Method

Eliminate waste, make info &products flow, pulled by customerneeds

Appropriate method to makenecessary change

3

Extend the definition of valueoutside your company

Externalise the value focus to thewhole value stream

4

Continually aim for perfection Strive for perfection in the productand in all processes and systems

5

Define the internal value stream An internal framework for deliveringvalue

2

Understand customers and whatvalue they want

1 Setting the direction, targets andchecking results

These five lean principles work together and are fundamental to the elimination of waste. Youcan revisit each of them as improvements in one provide an opportunity for improvements inanother. All five lean principles can be applied nearly anywhere, but lean principles do notalways apply when customer demand is unstable and unpredictable. Kanban sizing and takt-time require level demand and accurate forecasts. Based on the above principals a road mapto implement lean can be drawn. The objectives of the above principles and methods ofachieving them is given in Figure 2.

Figure 2 : How to go lean

3. OBJECTIVES OF LEAN MANUFACTURING

The benefits of lean manufacturing are evident in the companies across the world in the formof reduced work in process (WIP), reduction in cycle time, improved product quality,reduction in tool investment, improved on-time deliveries, enhanced net income, decreasedcosts, superior utilization of labor, reduction in inventories, quicker return on inventoryinvestment, high level of production, increased flexibility, improved space utilization, betterutilization of machinery, stronger job focus, and better skill enhancement etc (CITEC 2004,Connstep 2004).

The main benefits of this are lower production costs, increased output and shorter productionlead times. More specifically, some of the goals include:

1. Defects and wastage – Reduction of defects and unnecessary physical wastage, includingexcess use of raw material inputs, preventable defects, costs associated with reprocessing ofdefective items, and unnecessary product characteristics which are not required by customers;

2. Cycle Times - Reduce manufacturing lead times and production cycle times by reducingwaiting times between processing stages, as well as process preparation times andproduct/model conversion times;

3. Inventory levels - Minimize inventory levels at all stages of production, particularlyworks-in-process between production stages.

4. Labor productivity - Improve labor productivity, both by reducing the idle time ofworkers and ensuring that when workers are working, they are using their effort asproductively as possible (including not doing unnecessary tasks or unnecessary motions);

5. Utilization of equipment and space - Use equipment and manufacturing space moreefficiently by eliminating bottlenecks and maximizing the rate of production though existingequipment, while minimizing machine downtime;

6. Flexibility - Have the ability to produce a more flexible range of products with minimumchangeover costs and changeover time.

7. Output – Insofar as reduced cycle times, increased labor productivity and elimination ofbottlenecks and machine downtime can be achieved, companies can generally significantlyincreased output from their existing facilities.

Most of these benefits lead to lower unit production costs – for example, more effective use ofequipment and space leads to lower depreciation costs per unit produced. More effective useof labor results in lower labor costs per unit produced and lower defects lead to lower cost ofgoods sold.

4. ELEMENTS OF LEAN MANUFACTURING

Key elements of lean manufacturing can be summarized as follows:

i. Elimination of waste – Recognize what does and does not create value from thecustomers perspective. Any material, process, feature or activity which is not required forcreating value from the customer’s perspective is waste and should be eliminated.

ii. Standard processes – Standardization and documentation of content, sequence, timingand outcome of all actions performed by workers to eliminate variations in the way thatthe workers performed their tasks.

iii. Continuous flow - Production flow should be free from bottlenecks, interruption, detours,backflows, and waiting. Successful implementation of continuous flow may results indrastic reduction of cycle time.

iv. Pull production (JIT) – Production is pulled by customers. Each workstation producesonly what is needed by the subsequent workstation, and when it is needed by subsequentprocess or customer.

v. Error free processing/ quality at source – It is also known as do it right first time.Defects should be eliminated at source and the quality should be built into the productionprocess in such a way that defects are unlikely to occur.

vi. Continuous improvement / Kaizen - Lean manufacturing requires a systematicprocedure for identification and elimination of the root causes of problems/ non valueadding activities by improving the production process.

5. LEAN MANUFACTURING TOOLS AND TECHNIQUES

i. Standard Work

Standard work (also called “standardized work” or “standard process”) means that productionprocesses and guidelines are very clearly defined and communicated, in a high level of detail,so as to eliminate variation and incorrect assumptions in the way that work is performed. Thegoal is that production operations should be performed the same way every time, exceptinsofar as the production process is intentionally modified. When production procedures arenot highly standardized, workers may have different ideas of what the correct operatingprocedure are and easily make incorrect assumptions. A high level of process standardizationalso makes it easier for the company to expand capacity without disruption.

The standard work guidelines used in Lean Manufacturing are typically defined insignificantly greater detail than the minimum required for conformity with 7.5.1. ofISO9001:2000 on “Control of Production and Service Provision”16, particularly in terms ofstandardizing the movements and work sequences of particular workers. In LeanManufacturing, standard work has several main elements (Mekong Capital, 2004):

a. Standard work sequence - This is the order in which a worker must perform tasks,including motions and processes. This is clearly specified to ensure that all workers performthe tasks in the most similar ways possible so as to minimize variation and therefore defects.Ideally this is so detailed as to clearly describe every single hand movement by a worker. Forexample, in wood cutting, the standard work sequence would describe every specific cut andoperating step from machine setup to materials handling, cutter adjustment, manualmovements and processing time.

In an assembly process, it would describe the exact sequential step-by step motions by whichthe item is assembled.

b. Standard timing – Takt time is the frequency with which a single piece is produced. Takttime is used to clearly specify and monitor the rate at which a process should be occurring atvarious production stages. For lean manufacturers, the Takt time of each production process isactively managed and monitored so that a continuous flow can occur.

c. Standard in-process inventory – This is the minimum unit of materials, consistingprimarily of units undergoing processing, which are required to keep a cell or process movingat the desired rate. This should be clearly determined since it is necessary to maintain thisminimum amount of in-process inventory in order to not cause unnecessary downtime. This isused to calculate the volume and frequency of orders, or Kanban, to upstream suppliers.

d. Communication of Standard Work to employee s- Standard work guidelines shouldn’tonly be textual manuals but should include pictures, visual displays and even samples.Employees are unlikely to read boring textual production manuals so visual displays and

actual samples, including pictures, should be used as much as possible. The guidelines shouldbe clear and detailed, but at the same time be presented in such a way that is it would be easyfor employees to understand and relevant to what they need to know.

ii. Visual Management

Visual Management systems enable factory workers to be well informed about productionprocedures, status and other important information for them to do their jobs as effectively aspossible. Large visual displays are generally much more effective means of communication toworkers on the factory floor than written reports and guidelines and therefore should be usedas much as possible. When it comes to improving compliance with a process, visualpresentation helps the team better understand a complicated process including the correctsequence of events, the correct way to perform each action, internal and external relationshipsbetween actions, and other factors. These visual tools may include the following:

a. Visual Displays - Charts, metrics, procedures and process documentation which arereference information for production workers. For example, trend chart of yield performance,% variation of defect rate, month-to-date shipping volume status, etc.

b. Visual Controls – Indicators intended to control or signal actions to group members. Thismay include production status information, quality tracking information, etc. For example,color-coded panel for temperature or speed setting control limits that help an operator quicklyidentify process is out of the control range. Kanban cards are another example of visualcontrols.

c. Visual process indicators – These communicate the correct production processes or flow ofmaterials. For example, this would include the use of painted floor areas for non-defectivestock and scrap or indicators for the correct flow of materials on the factory floor.

iii. Quality and the Source (or “Do It Right the First Time”)Quality at the Source, also called “Do It Right the First Time”, means that quality should bebuilt into the production process in such a way that defects are unlikely to occur in the firstplace – or insofar as they do occur, they will be immediately detected.

A defect is a deviation from a specification, i.e., an item that does not conform to its design,material, or customer requirements. Defects have associated costs. These costs are scrap,rework, long cycle time, more elaborate inspection procedures, loss of customer’s good will,loss of reputation, loss of market share, disruptions caused by defects being passed along theproduction line etc. The three major sources of manufacturing defects are excessive variance,mistakes and, complexity. Each source of defects has its own set of solutions and its ownmethods of control. For example, excessive variance is monitored and "controlled" throughstatistical methods. Mistakes are prevented through mistake-proofing. Complexity isaddressed through simplification schemes such as robust design, design for manufacturability,and concurrent engineering. Complexity can lead to perplexing manufacturing problems; italso exacerbates the effects of excessive variance and mistakes.

Lean advocates to build quality into the production process in such a way that defects areunlikely to occur in the first place. This approach is known as quality at the source (or do itright the first time). Lean manufacturing system often refers to the Japanese word “Jidoka”

which means that problems should be identified and eliminated at the source. Some of the keyimplications of this are (Mekong capital 2004):

a) In-line inspection – The main responsibility for quality inspection is done in-line byworkers, not by separate quality inspectors who inspect sample lots. Although someindependent quality control inspectors are often used in lean companies, their role isminimized (ideally there are no quality control inspectors because they are also considered aswaste in Lean Philosophy).

b) Source inspections – In source inspections, the quality inspectors don’t inspect for defectsthemselves, but inspect for the causes of defects. For example, they may inspect if standardprocesses are being done correctly by workers, or in a case where defects have occurred, theymay be responsible for identifying what was the source of those defects. From thisperspective, the primary job of a quality control team is to attend the root cause of defects,implement preventive measures and provide training to workers to ensure the defects do notreoccur.

c) Clear accountability among workers – In Lean Manufacturing, unless there is anintentional inventory of semi-finished products, there is a direct handoff between eachupstream stage and downstream stage, meaning that the workers at each upstream stage arefully responsible for the quality of the materials they deliver to the downstream stage and willbe held personally accountable for any defects. On the other hand, if there is a large buffer ofinventory between two production stages, the workers at the upstream process are less likelyto feel personally accountable for any defects.

d) Poka Yoke – Simple methods for on-line quality testing (not just visual inspection),sometimes referred to as “Poka Yoke”, are implemented so that defective materials do not getpassed through the production process. In Poka-Yoke, 100% of the units are tested as part ofthe production process. These measures are performed on-line by the production workers (notthe quality control team).

e) Intentional shutdowns – When defects are generated, production is shut down until thesource of the defect can be solved. This helps ensure a culture of zero tolerance for defectsand also prevents defective items from working their way downstream and causing biggerproblems at downstream. For example, at Toyota, any worker can shut down the productionline. This also helps ensure accountability by upstream workers.

iv. The Five S’sThe Five S’s are some rules for workplace organization which aim to organize each worker’swork area for maximum efficiency.

a) Sort – Sort means identification of what is needed and what is not needed so that the thingsthat are frequently needed are available nearby and as easy to find as possible. Things whichare less often used or not needed should be relocated or discarded.

b) Straighten (or “Set in order”) – Arrange essential things in order for easy access. Theobjective is to minimize the amount of motion required in order for workers to do their jobs.For example, a tool box can be used by an operator or a maintenance staff who must usevarious tools. In the tool box, every tool is placed at a fixed spot that the user can quickly pick

it up without spending time looking for it. This way of arrangement can also help the user tobe immediately aware of any missing tools.

c) Scrub (or “Shine”) – Keep machines and work areas clean so as to eliminate problemsassociated with un-cleanliness. In some industries, airborne dust is among the causes of poorproduct surface or color contamination. To be more aware of dust, some companies paint theirworking places in light colors and use a high level of lighting.

d) Stabilize (or “Standardize”) – Make the first 3 S’s a routine practice by implementing clearprocedures for sorting, straightening and scrubbing.

e) Sustain – Promote, communicate and train in the 5 S’s to ensure that it is part of thecompany’s corporate culture. This might include assigning a team to be responsible forsupervising compliance with the 5 S’s.

v. Value Stream Mapping

Value stream mapping (VSM), is a collection of tools, which helps the researchers andpractitioners to identify waste in individual value streams (Monden 1993). A value stream isdefined as the value- added and non value added action required to bring a specific product,service, or combination of products and services, to a customer, including those in overallsupply chain as well as those in internal operations(Womack and Jones 1996, Rother andShook 1999). VSM provides a blue print for implementation of lean manufacturing conceptsby describing how information and material flow, identifying waste and its source andillustrate how the information and material should flow (Rother and Shook, 1999).

vi. Preventative MaintenancePreventative Maintenance is a series of routines, procedures and steps that are taken in orderto try to identify and resolve potential problems before they happen. In Lean Manufacturing,there is a strong emphasis on preventative maintenance which is essential for minimizingmachine downtime due to breakdowns and unavailability of spare parts. When equipmentreliability is low, manufacturers are forced to maintain high inventories of work-in-progressas a buffer. However, high inventories are considered a major source of waste and defects inLean Manufacturing.

vii. Total Productive MaintenanceTotal Productive Maintenance (TPM) assigns basic preventative maintenance work includinginspection, cleaning, lubricating, tightening and calibration to the production workers whooperate the equipment.

TPM clearly assigns responsibility to workers to proactively identify, monitor and correct thecauses of problems leading to unnecessary machine downtime. By allocating thisresponsibility to the machine operators, maintenance problems are less likely to occur andtherefore machine downtime can be reduced. This also requires the operators to frequentlyupdate to the maintenance team about the machine condition so that potential technicalproblems could be discovered on a timely basis and prevented.

In TPM, the maintenance team is responsible for the higher value-added maintenanceactivities such as improving the equipment, performing overhauls and improvements, fixingproblems and providing training.

viii. Setup Time Reduction

Lean Manufacturing aims to reduce unnecessary downtime due to machine setup or productchangeovers since machine downtime is a significant source of unnecessary waste. Thisrequires a culture of continuous improvement in which the company is continuously trying tofind ways to reduce changeover and setup times.

Often quicker changeover times can be achieved to some degree by having very standardized(and well-documented) configuration settings for the production of particular products so thatthere is no uncertainty about how to reconfigure the equipment during a changeover.Companies with a wide range of product mix, color and specifications often underestimate theconversion cost every time the production process is halted to replace molds, clean leftovermaterials with a different color or specification, adjust machine settings, etc. Other ways tominimize the changeover/setup time include changing the physical layout of a process, havingall materials and tools needed are available, and using dual/spare storage bin to eliminatecleaning downtime.

ix. Batch size reduction

Lean Manufacturing aims for materials to flow on the factory floor in the smallest batch sizespossible, with the ideal being one piece flow, so that works-in-progress between processingstages can be minimized. The smaller the batch size, the more likely that each upstreamworkstation will produce exactly what the customer needs, exactly when the customer needsit.

Therefore, instead a few large production lines with large batch sizes, Lean Manufacturingusually favors a larger number of small production lines with small batch sizes, with thecellular layout being one version of this. The main benefits of smaller production lines are:

• Smaller batch sizes mean less works-in-progress between processing stages and brings thecompany closer to the ideal of continuous flow;

• A larger number of production lines with smaller batch sizes allows for a bigger range ofproducts to be made concurrently, therefore reducing downtime and disruptions due tochangeovers.

• Smaller production lines have fewer workers and therefore lead to greater accountabilityamong the workers at each line.

x. Production layout and point of use storageLean Manufacturing aims for the minimum amount of transportation and handling betweenany two processing stages. Likewise, works-in-progress should be stored as close asphysically possible to the place where they will next be used. This is to reduce materialhandling requirements, reduce misplaced or inaccessible inventory, reduce damage tomaterials in transit, and to require the discipline of adhering to a pull based productionsystem.

xi. KanbanShipment under JIT is in small, frequent lots. A kanban is used to manage these shipments.“Kanban” is a pull-based material replenishment system that uses visual signals, such ascolor-coded cards, to signal to upstream workstations when inputs are required at adownstream workstation (Monden, 1998). In effect, Kanban is a communication tool for pull-based production. A Kanban could be an empty bin, a card, an electronic display or anysuitable visual prompt. The most common types of kanbans are the withdrawal kanban, whichspecify the quantity that the succeeding process should pull from the preceding process,and the production kanban, which specifies the quantity to be produced by the precedingprocess (Monden, 1998).

xii. Production LevelingProduction leveling, also called production smoothing, aims to distribute production volumesand product mix evenly over time so as to minimize peaks and valleys in the workload. Anychanges to volumes should be smoothed so that they occur gradually and possibly in the mostnon-disruptive way. This will also allow the company to operate at higher average capacityutilization while also minimizing changeovers.

A key element of production leveling is that the person(s) responsible for placing orders to thefactory floor should have a system for automatically smoothing out the orders so that anyincreases or decreases are gradual and not disruptive. This makes it easier to correctly allocatethe necessary equipment and people. In order to apply this methodology, a company needs toknow its true capacity as well as the rate of production at each production stage.

xiii. Pacemaker

In order to ensure the smooth functioning of continuous flow production in leanmanufacturing, each workstation has to produce its product at the correct rate which is not toomuch or too little compared to what downstream workstations require. In order to achievethis, one workstation is often designated as the “pacemaker”. The pacemaker sets the pace ofproduction for the whole production line and the production rates at other workstations areincreased or decreased so as to match the rate of the pacemaker.In a Replenishment Pull system, the pacemaker is usually the final workstation such as finalassembly. In a Sequential Pull system, the pacemaker is often a workstation near thebeginning of the value stream.

xiv. Overall Equipment Effectiveness

Overall Equipment Effectiveness (OEE) is a measure of the overall capacity utilization ofparticular pieces of equipment. OEE can be broken down into:• Availability - how much time the equipment can be potentially operational after consideringdowntime; and• Performance efficiency - the machine’s actual throughput when it is operating compared toits designed maximum capacity or the maximum it could produce based on continuousprocessing.

If, for example, availability is 80% and performance efficiency is 75%, then the OEE wouldbe:Availability x Performance Efficiency = 80% x 75% = 60%

When analyzing OEE, many companies may be surprised to find that there is significant roomto increase the output of certain pieces of equipment. For example, they may be able tominimize:

Unnecessary equipment breakdowns; Downtime due to set-up and adjustment; Idling and minor stoppages due to lack of raw materials to process due to bottlenecks

or poor production planning; Operation below maximum designed speed due to poor operator efficiency,

maintenance constraints or other factors; Defects that require re-processing;

Tracking OEE is helpful for identifying the sources of bottlenecks, for making capitalspending decisions and for monitoring the effectiveness of programs to increase machineproductivity. However, Lean Manufacturing typically prioritizes the maximum utilization ofpeople instead of the maximum utilization of machines. One reason for this is that factoriesthat produce multiple products will not be able to use all machines at all times since therequirements may differ depending on the product being produced.

xv. Continuous Improvement

A company can never be perfectly efficient. Lean Manufacturing requires a commitment tocontinuous improvement, and preferably a systematic process for ensuring continuousimprovement, whereby the company constantly searches for non value-added activities andways to eliminate those. The focus of continuous improvement should be on identifying theroot causes of non value-added activities and eliminating those by improving the productionprocess. Kaizen is a Japanese term for “continuous improvement”, with an emphasis on smallincremental improvements. A main theme of Kaizen is to create a culture of continuousimprovement, largely by assigning responsibility to workers, and encouraging them, toidentify opportunities for improvement.

xvi. Just in Time Production (JIT) / Pull production

Just-in-Time is closely associated with lean manufacturing and is management idea thatattempts to eliminate source of manufacturing waste by producing the right part in the rightplace at right time. JIT addresses waste such as work in process material, defects, and poorscheduling of parts delivered (Nahmias, 1997). Customer demand is driving force behind bothsystems. However, the difference is in how each system handles the customer demand. JIT isa tool that enables the internal process of a company to adapt to sudden changes in thedemand pattern by producing the right product at the right time, and in right quantity(Monden, 1998). Moreover, JIT is a critical tool to manage the external activities of acompany such as purchasing and distribution. It can be thought of as consisting of three

elements: JIT production, JIT distribution, JIT purchasing. JIT is about minimization of rawmaterial, work in process and smooth operations.

JIT utilizes what is known as “pull system”. In Pull Production the flow on the factory floor isdriven by demand from downstream pulling production upstream as opposed to traditionalbatch-based production in which production is pushed from upstream to downstream based ona production schedule. This means that no materials will be processed until there is a need(signal) from downstream. For example, in pull production a customer order creates demandfor finished product, which in turn creates demand for final assembly, which in turn createsdemand for sub-assemblies, and so on within the supply chain. The specific implications ofthis are as follows:

1. Orders start at most downstream stage - When an order is received from the customer andcommunicated to the factory floor, the production order is initially placed with the mostdownstream workstation (such as packaging or final assembly) as opposed to the mostupstream workstations (such as initial processing of raw materials). This practice requires avery effective communication system that ensures that upstream suppliers are continuouslyaware of what is needed by their downstream customers.

2. Product is pulled through production based on demand from downstream process – Eachproduction stage or workstation is seen as a customer of the production stage or workstationimmediately upstream of it. Nothing is produced by the upstream supplier until demanded bythe downstream customer.

3. Rate of production is driven by downstream consumption rates – The rate of production ateach production stage or workstation is equal to the rate of demand/consumption from itsdownstream customer.

Some of the benefits of JIT are (Nahmias, 1997):

Elimination of unnecessary work in process, resulting in reduction of inventory cost. Since units are produced only when they are needed, quality problem can be detected early. Since inventory is reduced, the waste of storage space will be reduced. Preventing excess production can uncover hidden problems.

xvii. Continuous Flow

Continuous flow is the linking of manual and machine operations into a perfectly smooth flowin which works-in-progress are continuously undergoing some form of processing and neverbecome stagnant waiting to be processed. Continuous flow eliminates waiting time for works-in-progress, equipment or workers.

In Continuous Flow, the ideal is one-piece flow or small batches which can be processed withvirtually no waiting time between production stages. Continuous Flow may require a redesignof the production layout away from groups of similar workstations located near each otherand towards highly integrated production lines in which semifinished products can move asquickly and easily as possible from one production stage to the next. Continuous flow canresult in very substantial reductions in total cycle time.

xviii. Cellular Manufacturing

In cellular production layouts, equipment and workstations are arranged into a large numberof small tightly connected cells so that many stages or all stages of a production process canoccur within a single cell or a series of cells. Cellular layouts are characterized by thefollowing characteristics:

1. Continuous flow - There is a smooth flow of materials and components through the cellwith virtually no transport or waiting time between production stages.

2. One-piece flow - Cellular manufacturing utilizes a one piece flow so that one productmoves through the manufacturing process one piece at a time.

3. Multi-purpose workers - There is only one or several workers in each cell and unlike batchprocessing where workers are responsible for a single process, in cell manufacturing the cellworkers are responsible for handling each of the different processes that occur in the cell.Therefore, each worker is trained to handle each process which occurs within the cell.

4. U-shape – Cells are usually U-shaped, with the product moving from one end of the U tothe other end of the U as it is processed by the worker(s). The purpose of this is to minimizethe walking distance and movement of materials within a cell.

Cellular layout helps to achieve many of the objectives of Lean Manufacturing due to itsability to help eliminate many non value-added activities from the production process such aswaiting times, bottlenecks, transport and works-in-progress. Another benefit of cellularmanufacturing is that responsibility for quality is clearly assigned to the worker in a particularcell and he/she therefore can not blame upstream stages for quality problems.

Many companies implement cellular layout for certain parts of the production process but notthe entire production process. For example, processing stages involving lengthy heating ordrying processes would not be appropriate for a cellular layout since it is difficult to connectthose to a continuous flow which happens in a cell. Furniture companies typically implementcellular layout for some cutting, assembly and finishing stages but not for any kiln drying orpaint drying stages.

xix) Worker Involvement

In Lean Manufacturing, workers are assigned clear responsibility to identify sources of nonvalue-added activities and to propose solutions to those. Lean Manufacturers typically believethat the majority of useful ideas for eliminating non value-added activities typically originatewith workers involved in those processes. A significant body of research also substantiatesthis assertion.

In order to ensure that ideas for eliminating non value-added activities are acted upon, thepower to decide on changes to the production processes are pushed down to the lowest levelpossible (i.e. normal workers) but any such changes are required to meet certain requirements.For example, at Toyota workers are encouraged to implement improvements to the productionprocesses but the improvement must have a clear logic which is in accordance with thescientific method, the improvement must be implemented under the supervision of anauthorized manager and the new process must be documented in a high level of detailcovering content, sequence, timing and outcome. Toyota initially implements the proposed

changes on a small scale on a trial basis and if the improvement is effective, Toyota willimplement the change across its manufacturing operations.

Two common ways to encourage worker involvement in the continuous improvement processare:

1. Kaizen Circles - One way of increasing the levels of worker involvement is to implementKaizen Circles in which groups of 6-8 workers are formed to generate ideas for solvingparticular problems. Typically a Kaizen Circle will meet for around one hour per week for 6-8weeks and at the end of that period will present some proposals to their managers on how tosolve particular problems. Active involvement/support by managers is critical to the successof Kaizen Circles.

2. Suggestion Programs - Another way of increasing worker involvement is having an activesuggestion program where people are strongly encouraged to make suggestions and rewardedfor suggestions that are successfully implemented. Often the cost of the reward is quire smallrelative to the value that is created for the company by implementing the improvement.

Some experts in lean manufacturing maintain that high levels of worker involvement incontinuously suggesting improvements is a critical success factor in the implementation oflean.

6. PILARS OF LEAN MANUFACTURING

Following are the main peelers of lean manufacturing (BOEING, 2004):

Just-in-Time (JIT)

A fundamental pillar of a Lean production system is the concept of just-in-time (JIT). JITsimply means that you get what you need, where and when you need it. As the saying goes,time is money. If you focus on time, you're likely to find the hidden costs in an inefficientproduction system. The power of JIT lies in what it can do for the bottom line. Havingmaterials arrive at the factory in time to enter the production process allows a company tominimize the amount of inventory it must hold and store—a costly activity. It also minimizesthe cost of obsolescence, when parts sit on the shelf so long that they become obsolete. Byreducing the overall flow time of Boeing products, the company can reduce many of theassociated costs of production, such as inventory holding costs. This strategy will also allowBoeing to meet customer demands quickly and efficiently.

Resources, Techniques, and Principles

In a Lean production system, the right resources and the right tools must be applied to achievethree key Lean principles.

A Lean company needs people using standardized work procedures to produce a product at apace that matches the rate of customer demand—takt time. (Takt is the German word for aconductor's baton.)

A Lean company also must know the standard quantity of materials needed to keep everyonein the process operating and a signal that can tell people to "build one more" to achieve one-piece flow.

Finally, a Lean company must have machines available when they are needed and again, asignal to tell people when there is a problem.

Error-free production

Another important part of a Lean production system is the concept of error-free production.Error-free production means first-time quality. Doing three things can help Boeing achievehigh-quality processes and products:

1. Stop production when a defect is detected. Doing so prevents defects from travelingon to the next process, and the sooner an error is detected, the easier it will be to findthe cause and solve it.

2. Design reliable processes and machinery to prevent defects from occurring in the firstplace.

3. Separate human work from machine work. In other words, use the company'sresources appropriately—allow machines to do the repetitive and dangerous tasks,while people perform the work that requires decision-making and problem-solvingskills.

By continuously driving out the waste of imperfection, manufacturers can eliminate theamount of time and money spent on rework, scrap, and lost production time.

7. THE BENEFITS OF LEAN

Whether you

are looking to cut costs, gain a competitive advantage, or remain viable in the face ofcompetition that has gone lean, there are many reasons to adopt lean manufacturingtechniques in your company. Lean benefits include reduced work-inprocess, increasedinventory turns, increased capacity, cycle-time reduction, and improved customer satisfaction.According to a recent survey 4 of 40 companies that had adopted lean manufacturing, typicalimprovements included (IFS, 2006):

Operational Improvements

A 90% reduction in lead time (cycle time) A 50% increase in productivity An 80% reduction in work-in-process inventory

An 80% improvement in quality A 75% reduction in space utilization

Administrative Improvements

Reduction in order processing errors Streamlining of customer service functions so that customers are no longer placed on

hold Reduction of paperwork in office areas Reduced staffing demands, allowing the same number of office staff to handle larger

numbers of orders Documentation and streamlining of processing steps, enabling noncritical functions to

be outsourced and allowing the company to focus its efforts on customers’ needs Reduction in turnover and the resulting costs of attrition Implementation of job standards and pre-employment profiling, ensuring the hiring of

only above-average performers (imagine the benefit to the organization if everyoneperforms as well as the top 20%).

Strategic Improvements

Reduced lead time, reduced costs, and improved quality provide opportunities for newmarketing campaigns, allowing your company to gain market share from competitors that areslower, have higher costs, or have poorer quality.

8. CONCLUSION

Lean manufacturing should be understood as a business theory by which the manufacturingprocess is reconceived as a competitive weapon. The concept calls for removing all non valueadding activities, those that often cause bottleneck and other forms of waste from theproduction process. Eliminating waste from manufacturing reduces production time and costwhile maximizing the quality and customer service. For example, by eliminating waste, leanmanufacturing can reduce inventories, lower the cost of production, save on shop floor andstorage space, and reduction in labor costs without decreasing job opportunities. Inconclusion, this paper is focusd on providing the various concepts of lean manufacturing

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