Current Reality

People have some interesting reactions when they are first introduced to the concept of Lean Manufacturing. Here's one response I've heard several times:

"I've been in business for 25 years, I must be doing something right because I'm still here. How is Lean Manufacturing going to help me in my line of business? I'm different from other companies, no one produces parts the same way as my company does. I'm not a Toyota, GM or Ford, I manufacture custom products on a make to order basis in small quantities. So, tell me how is Lean Manufacturing going to improve my business?"

Many would agree with this statement on face value. It is totally true from the perspective of the individual business owner. However, the challenge to this statement comes from the changing face of doing business today. Can anyone really believe that the business process has not dramatically changed during the last 25 years? The real test is to ask a simple question. "Are your competitors still doing the same thing as they were 25 years ago?" If they are, then you have no problems. What if they're not? Can anyone really accept the idea that a business can remain competitive by continuing to do the same things year in, year out, without improving?

Here is a simple example, take the words "Made in Japan." What did people in the USA think of Japanese products 25 years ago? Here are some examples:

• Not as good as US made products

• Poor quality compared to US products

• Copies of US products made cheaper

• More low tech than US products

• Poor design compared to US made products

So, after 25 years what do US consumers think of Japanese products in today's market? Here are some examples:

• Better than US made products

• Best quality in the world

• Innovation, way out in front of others

• High tech, giving the customer value for money

• Trustworthy design and solid construction

Japanese products lead the world in quality and innovation and this has forced many nations including the USA and European countries to take a serious look at the way they manufacture products for consumers. Its forced them to look at their ability to supply their customers because the Japanese started to make inroads into markets that were once believed to be secure from external influences. In today's global market, consumers are much more educated to seek the best deal, and do not necessarily buy products manufactured in their own country. In fact, many Japanese products are household names because of their incredible focus on quality and customer service e.g. Toyota, Honda, Nissan, Sony, etc.

Traditional Manufacturing

Traditional Manufacturing methods were developed during the age of mass production, which focused on economy of scale and machine utilization. It created the idea that if the machine was idle, it was loosing money, so it was kept running at all costs. Traditional companies achieve customer satisfaction by maintaining large inventories in anticipation of customer orders. They did this by keeping a machine running with a specific setup for as long as possible to reduce the unit cost. This method of manufacturing is known as "Batch and Queue" because parts are made in batches and upon completion they are moved and placed into a queue where they wait for the next operation to become available . The main problem with this practice is machine set-up times define the length of the production run time. Long set-up times do not allow for smaller runs because it would be considered ridiculous to take six hours to set-up a machine and only run it for an hour. There are many other disadvantages with Traditional Manufacturing:

A product encounters a combination of three things:

1. Its being moved to the next location.

2. Its being processed.

3. Its waiting for the next activity.

Studies have shown that in a traditional business, during the total time time for a product to go through the manufacturing process it moves or waits 95% of the time. Its only being processed for 5% of the total lead time. This leads to:

• Difficulty when trying to schedule the job because of the time a product is simply waiting for the next process to become available because of long changeovers.

• A higher percentage of lost production time, because while the machine is down, nothing is produced.

• Higher levels of poor quality because if parts are made in batches, they can be made incorrectly and the problem will not usually be noticed until the next operation starts to work on them. This results in a higher level of rework, which is costly and ties up valuable resources.

Lean Manufacturing

Lean Manufacturing focuses on the waste within a process. Examples of this waste is finding ways to reduce changeover and cycle times. Doing this will give more flexibility by producing smaller quantities of parts. It results in reduced inventory, shorter lead times and allows for more frequent deliveries to the customer.

The ultimate goal of Lean Manufacturing is to reduce waste in order to produce what the customer wants, when they want it and deliver it in the fastest time. This is a total turn around from the traditional focus on economy of scale, because the focus of Lean Manufacturing is to achieve "Continuous or Single Piece Flow". A simple way of understanding this concept is "Make one, pass one". This can only be achieved by linking operations to eliminate or reduce the total time a part is traveling or waiting in between each operation, and this includes downtime caused by long machine set-up times.

During the process of creating product flow all activities are identified and categorized as "Value Added" or "Non-Value Added." When you know which part of the process is a "Non-Value Added" activity, you can eliminate, reduce or combine it. Before implementing a Lean Manufacturing program, it is not unusual to find that Non-Value Added activities (Muda) make up 95% of the total lead time required to ship a product . So, can you imagine what the impact to the bottom line would be if waste was reduced by 5% or more!