Lean Manufacturing to Lean Enterprise

Can you truly say that only investing in lean manufacturing principles on the production floor will result in an effective system? Of course not—in order for the system to be effective, you must implement lean principles throughout the organization. Lean enterprise focuses on the whole operation by changing how the business is run, eliminating waste in all areas of the business, both operations and manufacturing.

The lean enterprise system is a proven methodology, otherwise known as the Toyota Production Method to eliminate waste and continually improve all operations within an organization. The concept is built on the foundation of employee empowerment, mutual respect and customer satisfaction.

Some people may scoff at the concept since this is a shift in traditional management’s way of thinking or operating—however, this is necessary if you want to improve quality and functions through improvements in operations, sales, administration and production. By eliminating waste, you will shift the focus onto processes that add customer value. Eliminating waste also frees up valuable resources, such as capital, human, building and machine resources.

By implementing lean enterprise principles, you are able to incorporate:
  • A Continual improvement processes company-wide
  • A Production schedules that are customer driven, not forecasted
  • A Pricing based on the market rather than cost, giving the organization a higher competitive advantage
  • A Lowered operating costs company-wide
  • A Higher employee morale
When lean principles are implemented enterprise-wide using the value stream maps that have been developed, waste is eliminated across all departments within an organization. It is important to remember that to be truly “lean” and eliminate waste these principles must be implemented throughout the organization in order to experience lasting change. This requires focus on lean principles from the product and service area, suppliers, distributors, customers and the various departments in the organization.

Effectively implementing lean principles enterprise-wide requires your organization to combine leadership, change-management practices, and the computer systems/tools that all affect the transformation to lean principles throughout the organization.
To accomplish the strategic business goals and objectives, every person throughout your organization needs the tools that do the following:
  • A Make it possible to establish lean principles and practices that are predictable and repeatable throughout the organization;
  • A Work together to not only integrate the value stream mapping and the components associated, such as analysis, implementation, etc., but also to enhance all facets of the value stream maps;
  • A To create a system that will make communicating easier and more efficient across your organization to make continuous improvements and aid in the changing of the culture due to implementation of lean principles; and
  • A Everyone to grow within the new systems of operation.
To truly experience the great benefits of a lean organization and greater profits, your organization must be completely committed to the full implementation and execution of lean principles throughout the organization, eliminating waste and improving quality—regardless of the department.

This article was submitted by one of our contributors

What is Lean Management?

Last week when I said “it can be tricky to answer the question, what is lean management?” This is an explanation I got some time back to the same question from one of our contributors. I thought of sharing it with you now since it might make more sense with my last week’s post.

Lean manufacturing has been a business “household” name for quite some time, but what exactly does it mean? Lean manufacturing is really a way of managing, so lean management is really probably what you would want to refer to it as. It simply means a system for organizing and managing all aspects of a business’ function by creating a principles, practices and tools in order to develop goods and services with higher quality and fewer defects. The general outcome is to do this by using less effort, space, capital and time than the mass production system of yesteryear.

I’ll be you didn’t know that it was actually Henry Ford that developed the first production system? He coined it “flow production”. The Japanese took Ford’s ideas and further developed the principles due to their constraints on limited human, financial and material resources—this was largely due to the effects that WWII had on the country. However, through their persistence and determination, the Japanese developed the Toyota Production System (TPS).
So how do people actually manage their resources in a lean manufacturing environment? Of course this will depend on what your thoughts are for what resources consist of. In a lean manufacturing environment, the focus will be the products and the resources needed to make the products.

One such resource is the inventory. Controlling inventory will determine the overall efficiency within your organization. High inventories results in low inventory turns—this means that efficiency is low or the process is not working. For instance, if there is a lot of inventory in raw materials not being used for making the customer-ordered product, then there is an issue with the supplier, which needs to be dealt with in order for lean manufacturing to work in by eliminating waste and reducing costs.

Production is not the only place that management of the resources must occur. It also needs to occur within the other departments, as they all affect the production of the product in some way, whether it is managing the human resources, or managing the materials, it all goes together. For instance, if there is a lot of inventory sitting around, then there is a problem within the marketing and/or sales team’s efficiency.

When you have a consistent focus on all aspects of the supply chain, then there is more focus on the areas where inefficiencies occur within the process. The true way to manage resources with a lean management focus is to lower your margins by having higher inventory turns—knowing how each area affects the other will help you to move to managing the resources effectively and efficiently.

Lean Management – The End of Management By Exception

As I have always emphasized on this blog lean is not just a set of tools. It is a process based on lean thinking. Management in a lean environment is not an exception. Lean management is the force behind any successful lean manufacturing implementation.

What is Lean Management?

Question above can be a tricky one to answer. But simply put lean management can be defined as using lean concepts in managing the organization. For an example managers will be looking at the value stream of the organization and question the none value adding activities continuously. They will define the value in the eyes of customers in the process, unhiding huge amount of waste in the system. A lean manager will not misuse lean to reduce their head count.

What is Management By Exception?

If put simply management by exception says “if everything is going OK, managers do not have to interfere. They will act if the system faces an exception”. This is an old management technique followed mainly by managers of larger organizations. This will reduce workload for the managers and will build a sustainable system.

Lean Management Vs Management by Exception

When it comes to management by exception, processes will run without any hindrance if they are bringing in the expected results. They will be questioned if they are not performing up to the expectations. But lean management is about continuously removing waste from the system. So even the best processes will be questioned. They will be changed and reengineered to remove waste from the system and to realize value to the customers. But in the case of failure, processes will stop immediately and problems will be solved.

In lean management, involvement of a manager is very high. A lean manager will not stop just at developing a strategies and policies, he will have to come to the work floor and make it happen. This thinking is eminent with the lean tools like “Go and See for Your Self”.

So in a lean environment management by exception is not applicable. Management by involvement or lean management is the way to go.

Why I like recession – A lean manufacturing perspective

Have you heard all the horror stories of recession? Do you think it is bad? This is a lean manufacturing perspective to recession. As usual you can leave your ideas on this post as a comment to this post.

Today the economy has slowed down globally. People are losing jobs and big companies are collapsing. These are obviously not good signs. But if we Recession - A lean manufacturing perspectiveanalyze the situation carefully, especially with a lean perspective, you will find it might not be all that bad in the bigger picture in long run. Below are few thoughts on positives recession can bring to any (lean) organization.

1. People will have to be satisfied only with what they want. So the market will actually be in control. Just advertising will not sell. So manufacturers have to “react to the actual demand” of the market. They cannot just produce something in bulk and create demand for themselves with huge advertising campaigns and similar means. So they will have to be demand driven. This is what lean concept of pull manufacturing is. This will reduce the unnecessary inventory, working capital. Obviously good for the world isn’t it.
2. Organizations can not waste time and energy on experimenting with new things. They cannot buy time and do nothing in the name of experimenting with new technology, machinery and processes. They have to use their existing resources and do better just to be in the game. This is great news for the organizations since most of their problems can be sorted internally. It is good time to start step by step improvement by getting the views of all the employees without looking for high cost, high tech solutions to solve your problems. Continuous improvement or Kaizen is a tool used by all the successful lean manufacturers all over the world.
3. Organizations have to change; there is no other option in recession times. So if you were facing heavy resistance in implementing something new, time could not have been better for you. Especially if you wanted to implement lean, time is ideal for you. You can easily bring the cultural shift lean brings to the organization without much of resistance, because otherwise you will be not in the business anyway. Toyota might not have created its famous Toyota Production System or TPS if it had a huge market willing to buy anything for any price. Those pressures from the market created a crisis and lead the way for lean. It is a similar situation for all of us all over the world. So capitalize on these times, even if your organization is not in the verge of collapsing you can certainly do better with lean techniques.
4. Bigger players and monopolies might tumble creating new windows of opportunity for the new comers to the businesses. This is great news for all the small business owners to become big in your industry. You cannot become big in the same industry doing all the wrong things those big companies did like having huge overhead structures, inefficient manufacturing and distribution techniques and so on. So you have to be better. You have to be lean even if you do not want to use that word.
5. When organizations start to lose nice profits they were enjoying earlier and may be start incurring losses, they have to have a relook at each and everything they do. This opens up large number of ways for improvement by eliminating wastes involved. Management by exception will not work anymore. Managers will have to be in the floor and know what is going out their exactly. They will see the way they waste up to 95% of their resources. This can be the starting point of your lean journey.
So in simple terms, recession times will get read of all the money wasting unfit organizations from the system and will open the ways for more efficient operators. Only the fittest of fit will survive the game. Just like natural evolution I believe this is for the betterment of the world itself. To survive these tough times you have to be lean, whether you use those words or not.

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A lean thought on green car

After I studied lean manufacturing concepts I couldn’t help of thinking common issues in lean lines. When I heard about the “Green Car” or the “Electric Car” I evaluated it using lean concepts. As you know lean concepts can be applied virtually anywhere. This is why lean gurus say “Lean thinking is universal”.

The hype of electric car comes with its green label.  A lean thought on the Green CarIt promises a clean drive. With the move towards green technology worldwide electric car catching the imagination of the world. These vehicles do not generate any smoke and produces very minimal sound and heat compared with a traditional machine. So seems to be clean isn’t it?

But the question is from where they get required power from. Generally this will be from the grid. You will be charging your vehicle just like you charge your mobile phone at your place. Where do you get this energy from? Mostly from power plants across the country. How do they manufacture electricity? Mostly by burning fossil fuel like coal and other heavy petrochemicals. So in fact when you charge your vehicle, you are burning possible fuels and emitting pollutants to the environment.

Secondly how do you store the energy, using batteries right? (According to my knowledge this is the most popular way of storing the energy). They are heavy making the vehicle heavy. So vehicle becomes less energy efficient. When it comes to disposal they can be toxic to the environment. There will be losses in electricity transmission from power station to your home where you charge your vehicle. Again wasting more.

When you think in lean ways, you will just moving your waste (pollutants like CO2) from your eye sight to another central location. This is exactly opposite what lean proposes. Lean wants to unhide the waste so that it can be treated. On the other hand lean wants to treat the root cause of the problem not just the symptoms. Here the symptom is the pollution, and the cause is the usage of fossil fuels.

So unless you produce your electricity without fossil fuels, you will not be reducing the actual pollution. So you have to treat the cause by using renewable energy sources. I would like you to use a lean technique like “5 Why” to get deep in to this. If you have some time you can share your findings with us by leaving a comment on this post. I can guarantee you; you will find some amazing root causes to this problem.