Why you should not become a lean manufacturer

Here on this blog we have discussed lean manufacturing, and why you should go for it. As per the post last week, vast majority of people go for lean to get cost effective systems followed by the pressure for shorter lead time. All of them can be valid reasons to go for lean manufacturing. But there are certain set of end results you should not have in your mind when you start your lean initiative. I thought it will be beneficial to list some of them.

1. To reduce number of heads from your organization
This is probably is the most misunderstood motive in lean. The logic behind this is that, if you increase your productivity with the lean initiative, you need lesser people to do the same amount of work carried out early. So you can operate with lesser number of workers. Seems to be right isn’t it. No it is wrong. If a lean manufacturer thinks like this they are missing one important piece to complete their lean house. That is the “respect for people”.

This shows you have not understood the concepts of lean. So starting point would be understanding these important concepts before even thinking about implementing lean. Lean talks about eliminating waste not people 🙂

2. To reduce costs and achieve efficiencies and profits over night
In today’s world people want instant results. If you want to implement lean today and if you are looking to get better efficiencies and higher profits the next day or even next month, I am sorry lean will not help you. As I highlighted in the last blog, most organizations will take at least 5 years in their lean journey to achieve world class stratus.

Lean is a journey not a jump. It needs time and continuous improvement. It is not a magic pill which will make all your dreams come true in the next day.

3. Because others are following and lean is the talk of the manufacturing world
It is good to learn from others. But if you copy them you will not go anywhere. Even if you copy from Toyota’s famous Toyota Production System (also known as TPS) and even if you are a car manufacturer you will not succeed. While concepts of lean can be applied in any context, whether it is manufacturing, service, office or even military, application is unique to the particular organization.

There is no single fit which will suite everyone. This is not an exception with lean. Unfortunately if you copy a lean implementation from anywhere else and fail you will go back few steps even from where you started. So please do not blame lean for creating chaos in your organization.

4. To use tools like SMED, Kaizen and Pokayoke
If you have heard about kanban, pokayoke, Kaizen and SMED and the increase in the results they bring to the others you might want to use them too. Yes these are great tools. They are simple yet mighty effective. They have re produced these results in different conditions in different implementations over and over again. But I can guarantee you will not achieve any of your intended results, just by using these tools.

To get the results you must understand the concepts behind using these tools. You have to use them in a way it will suit your organization. Otherwise using these tools will just be a burden on your organization.

If you ask me what is the single most important thing when it comes to lean, I would say without any doubt it is the understanding the concepts on which lean manufacturing is built upon. All the listed misuses of lean are due to the lack of understanding in these base concepts. Please take your time and understands the concepts before you try implementing lean.

If you have any addition to do to this list please leave your comments.

Why do you want to be lean?

I was reading an interesting white paper titled “Extending the lean enterprise” by Aberdeen group some time back (you can download this for free by visiting this link). Some information on this whitepaper caught my attention, especially regarding what pressures drive lean manufacturing requirement.

According this research, most of the organizations (79%) are going for lean manufacturing to reduce overall operating cost of the organization. The distant second Main Driver to implement lean manufacturing is to reduce operational costswas pressure to achieve shorter lead times. This shows how much people believe in the ability of lean to reduce costs and improve their bottom lines. But interestingly this study also shows there is no single unique path followed by all these organizations to achieve these results. Most of these world class organizations have used their own ways in achieving these results although most of them are aligned with their common goal of reducing the cost. This is something important to note. As I always said throughout this blog there is no one single unique way to solve your problem, in other words a solution delivered perfect results to another organization will not be effective in your context.

Another important thing to note in this white paper is the time it has taken for lean followers to achieve world class results. Generally it has taken in excess of 5 years for lean followers to achieve truly world class performance. This means lean is no quick fix to your problem, but a shift over a period of time. You will climb the ladder with small steps over a period of time. Longer you go down your lean path, better you will get.

Most of the best performers of lean have extended their lean efforts away from manufacturing to other areas like procurement, sales and supply chain. Moving from lean manufacturing to lean enterprise is essential to achieve the best from lean. Manufacturing is only a tiny part of your value creation process. Lots of waste occurs outside manufacturing. Without solving these there is no way an organization can achieve world class performance.

Lean organizations according to this report are managed by people who understand the concepts of lean. In the days of TQM (Total Quality Management) quality is identified as a responsibility of management not entirely of the worker. Similarly it is very important for a lean organization to have a leadership who understand lean concepts and follow them. Managers will be working to achieve these lean objectives which will result in lower costs, lower lead times and higher quality. Workers will support the system by adding their suggestions in continuous improvement processes.

I really enjoyed reading this report. It was very informative. In fact I have sent the link for you to download this before. You can download this report for free by following this link.

Please leave your comment by clicking the comments link below

Lean Manufacturing in AC vents manufacturing – Part 2

This is the part 2 of this series. Read Part 1 first

Observations are consolidated, reviewed and following actions are defined using different tools (Cause & Effect Diagram, IS / IS Not, Situation Mapping, differentiating between Value Added & Non Value Added operations & assembly specific requirements):

  1. Operations F G & H can be combined to 1 operation, hence reducing 2 operations.
  2. Operations K L & M can be combined to 1 operation, hence reducing 2 operations.
  3. Training to operator for in-process inspection in there respective cell. Self certified parts leave from the respective cell.
  4. List of value added operation & Non value added operations made.
  5. Many Inspection stages – Operation C / E / G / J /L /N are inspection stages – it is observed that independent inspection stages not required after every stage as they are non value added operations – build the concept of self certifying the parts. Hence reducing the stages from 6 to 2 (Only 2 critical stages are maintained, these are considered as Required Non value added operations), hence reducing 4 operations.
  6. Movement of operators & line stoppage can be avoided by adding an additional person to monitor the stock in the bins and refill as and when required as that in super market. This shall be maintained by implementation of KANBAN cards.
  7. Considering to Balance the process /operation time where a ever possible.

Considering all the above points’ modifications following activities are done:

  • Modification in assembly fixtures initiated to combine the operation.
  • Unwanted inspection stages are eliminated and modifications done in the existing 2 stages to ensure that all the product requirements are inspected.
  • Assembly cells re-structured and finally the Present layout mapping as below is achieved. (Following layout is achieved)

Work Cell - After Implementation of leanIMPROVED SITUATION OF AIR VENT ASSEMBLY LINE

Following are the cycle time for the improved process:

Leveled Production (Heijunka)
Observations after the process re-structuring:

  1. First piece from comes out after only 204 sec from the start of assembly line.
  2. Thereafter time required 68 sec / part.
  3. Person added to refill the bins – hence no stoppage of assembly for refilling of parts.
  4. Manpower used 8 operators + 1 person for refilling the parts = 9 nos
  5. Overtime not required.
  6. Unnecessary stages are eliminated.
  7. Stages / Cycle time is tried for balancing however there is a scope for lot of balancing.
  8. Some Inventory still exists at T-U / V-W operations.
  9. Supervisor is more confident to meet customer requirements.
  10. Maximum Non value added operations eliminated.
  11. In the existing situation 415 parts can be produced against the requirement of 400 / day.
  12. Space utilized is reduced to 7.2 x 2.2 meters.

Quantifiable Benefits are as follows:

  1. First and foremost benefit customer requirement can be meet in the normal working hours. Hence the sales increased from the normal shift working without any overtime.
  2. Increase in production quantity from 307 to 415, generating the spare capacity for 15 nos extra.
  3. Reduction of manpower from 15 to 9 nos. Hence the savings of 6 x 6000 = 36000 INR ($900) / month
  4. Overtime payment is nil i.e. the direct saving of $ 805 / month
  5. Overtime 2.2 hrs x 15 operators x 37.5 INR = 1237.5 / day
  6. 1237.5 INR x 26 working days = 32175 INR / month ($805)
  7. Hence the total direct savings per annum is $ 900 + $ 805 = $ 1705 / month x 12 months = $20460 p.a.
  8. Inventory level is reduced, however not eliminated.
  9. Spare space of 4.3 x 1.1 meters generated.
  10. This study has helped to learn more on improvement and to implement on other assembly line.

Partnering with your competition – A Lean thought

Lean ideas come from various people. Most of the times those people are not known for their lean manufacturing capabilities. I found one such idea from an online video when some manufacturers demonstrated their processes. So I thought of sharing that with you.

You have competition because there are other people doing the same or similar business in the market. Isn’t it? When you have competition this means your competitor needs almost identical raw materials and machinery and processes to carryout manufacturing. So you and your competition both have a set of common requirements. How you fulfill them. I am sure you will be talking to the suppliers and to your customers separately. This makes perfect business sense. But how about partnering with your competition in fulfilling your requirements? Sounds shocking? It will be, in a traditional business context. But in lean manufacturing suppliers and customers are always treated as partners. I am simply asking the question why shouldn’t we apply the same to the competition as well. We of cause will have to think little deep from a business sense in this. But there are endless possibilities, both you and your competitors can benefit as a result your customers will benefit. Let’s look at an example.

If you are in the business of assembling bicycles, you will need gear wheels. Your competitor also will need them. You might be buying them form a supplier who is located in China and your competitors will also buying from him. When you place your orders separately, supplier will take order by order, finish them and ship to you individually. Each one of you have lower bargaining power with the supplier, and you also will loose money on freight. Doesn’t it make sense to combine both orders and send a single order to your supplier (I understand there are some legal aspects you have to cover before you do this). Supplier will get more clarity regarding the order and from the suppliers point of view you will not be competing for his capacity. Sound great isn’t it?

Think about it. If you do you will discover endless possibilities to eliminate waste from this world.

Implementing Lean manufacturing in our Organization – Part 3

This is the Part 3 of this series. If you have not read the Part 1 and Part 2 please read by clicking the links

If you have anything to say, Please leave a comment by clicking on the “Comments” link at the bottom of the post
5) Bottleneck Management
To ensure the bottleneck process (define as any part of the enterprise that limits the throughput of the whole process) is not being affected by other variables, Bottleneck management process is crucial – this is done by ensuring continuous supply of materials, availability of skilled people, reliable machine and methods to ensure high machine uptime.

6) Small strategic buffers or Chokotei (see Figure 7) are placed at bottleneck processes, to maintain a steady flow throughout the process. These buffers cater for short but frequent interruptions such as machine jam, model changeover, material replenishment, protect bottleneck process etc. With this strategic buffer put in place, our system uptime increases.

Buffers between work stationsSmall buffer to ensure downstream process continue production when upstream process changes model.
Buffers to help smooth operation
7) Standardized work
Along with all the above initiatives, there is a need to develop Standardized work for all the processes including model changeover, part replenishment, equipment maintenance etc. Performing to standard work allows clear and visible operation. Any deviation from standard work would immediately surface abnormality. This will create an opportunity for improvements. Problems need to be resolved immediately using the 5 Whys or DMAIC techniques. The PDCA approach is adopted to ensure problem does not recur after countermeasure is taken.

8) Frequent Changeover through SMED
The daily planned schedule is to run every part, every day in small lot sizes. To do this, there must be available time leftover within a day after meeting customer demand. Figure 7 shows how to compute number of changeover allowable. The shorter the changeover time, the more changeovers can be done.

Lean SMED calculation
Small lot size run is made possible by frequent model changeover. The SMED technique (see Figure 8 & 9) is used to reduce set up time so that the manufacturing system is flexible and can quickly response to any sudden customer change. SMED (single minute exchange of die) together with quick changeover features incorporate into machine, tool and fixtures help to achieve our changeover target to less than one minute

5S-Quickly find tools
Change over time reduction with lean manufacturing and SMED
9) Financial Impact and Results
Through a concerted team effort and with the implementation of the lean concepts, the organization has been able to exceed the original goal set. The daily volume increases by 50% from 18,000 to 27,000 within a month. There was a tremendous annual cost saving of US$600K and further cost avoidance cost saving (overtime) of at least US$200K.
Lean manufacturing results

Lean and green manufacturing

We have discussed the relationship between lean manufacturing and green initiatives earlier in this blog. For the past few weeks there were some news items popping up in my inbox about lean and green initiatives. It is very interesting to see people looking at lean for help in protecting environment apart from the productivity improvement and related advantages.

By its very concept of eliminating waste lean provides the best platform for any manufacturer who is looking to be green in their manufacturing. No waste means less consumption of resources and less waste as output. So it is very handy not only in limiting the usage of natural resources but also in less pollution due to low waste outputs.

In one of the posts on environmentalleader.com, they discus about the concept of “lean and green purchasing strategy”, its opportunities, challenges and benefits. There are some staggering figures in savings for those who participated in the exercise. But more than anything else I found it is interesting to see that most of the manufacturers using their efforts and results as a marketing initiative. This goes to show the need for green manufactured product in the market and the marketing opportunities comes with it. This will help long term sustainability of the system.

In much more specific case, one of the retail giants “M&S” and one of the state of the art apparel manufacturer MAS holdings in Sri Lanka opened a green manufacturing facility in Sri Lanka. In their website MAS Holdings say “MAS Intimates Thurulie will also become the world’s first lean and green manufacturing facility, designed for MAS’ lean manufacturing standard. Based on the renowned Toyota Production System, the MAS Operating System (MOS) is geared towards the elimination of waste both in material and process in order to achieve higher efficiencies. MAS Chairman Deshamanya Mahesh Amalean declared that “We have always excelled in ethical business practices and MAS Intimates Thurulie brings in the environmental focus to complement our excellent work in social sustainability. Today MAS has set a tough global benchmark to show what the future of manufacturing will be – ethical, efficient and sustainable.”

I am very pleased to see words like sustainability, ethics and efficiency are related with lean (or Toyota Production System) apart from common goal of elimination of waste.

With these initiatives I believe lean is achieving new heights. It has evolved from manufacturing, to the entire supply chain to the environment and community. As it has always been this goes to show that lean concepts are universal.

Lean manufacturing and automation

Lean manufacturing and automation goes hand in hand for most of the manufacturers. Although lean dose not mean automation, automation can be a useful tool in lean processes. Automation will bring higher quality, repeatability, and consistency to the particular process. It is important to look for the possibilities of automation in a lean environment. So the question is what can we automate? What will help automation?
Process which,
  1. Are repeated over and over again
  2. In every cycle there is no decision making is required
  3. Are with same inputs and outputs
Can be automated. But the possibility of automation depends upon the technical feasibility, cost effectiveness and other interests of the organization. It is very important to understand, if the process doesn’t require any human intervention like subjective decision making (Ex: Color and shades for a car) in theory that process can be automated. 
So how can we make processes which can be automated? One of the most important concepts of lean manufacturing, standardization makes it possible to automate the processes. Standard processes define a way of operation. There is almost no requirement of human intervention to make the process happen. If it goes wrong, humans can analyze to find root causes and cure the root cause to solve the problem. 
Lean provides a perfect ground for automation. But the decision to automate the process needs careful analysis. The technical feasibility, cost effectiveness of automation, environmental and social factors can influence the decision on automation. 
In a concluding note, automation should not be looked as a way of reducing the head count. Lean manufacturing is built on respecting human resource. By removing that pillar or by weakening it, you can not become a lean manufacturer. Automation is to liberate people from their repeated tiring work, not to remove them from their jobs.

Lean manufacturing brings results to “Symmons Industries”

It is amazing to see how fast lean manufacturing is revolutionizing the world of manufacturing. I have described lean as common scenes manufacturing in many of my earlier posts on this blog. Today I read a news article which proved these. This story tells us how easy is to improve any process with little bit of guidance and creative thinking. Especially it quantifies some of the benefits of lean manufacturing.

Story was on “Symmons Industries” based in Massachusetts. They have implemented lean in their manufacturing facilities with the intentions of improving their manufacturing processes. These are some highlights of their lean journey.

  1. Changing from forecast manufacturing to demand based manufacturing – In pure lean terms this is the application of pull system of manufacturing. Facility will not manufacturer based on assumed demand (which is the forecast), but to the actual demand of the market. The result is reduction of inventory and shorter lead times. The numbers they have achieved are amazing. This article states that they have reduced their finish good inventory by 98 %( from $3.8 million to $50,000) and lead time from two weeks to 98% shipped within 2 Days.
  2. Reduction of setup time and transportation – They have reduced their setup time to 15 minutes from 12 Hours by analyzing the system and using technology and automation carefully. Obviously this will improve the systems response time and will make the system very flexible.
  3. Simplification of ERP process – Simplification is a key concept of lean manufacturing. With the reduction of inventory levels there is no requirement to track the stocks in multiple levels. Simply they have incorporated their kanban process to signal the ERP system about the movement and back flushing will reduce the inventory so there is no need for a separate system entry.
  4. Improving the communication and integrating lean elements – communication between teams will make the system very transparent. Ideas will flow freely. Seamless integration and flow is very important lean concepts.

All the factors put together they have achieved 98% reduction of their finished goods inventory, lead time reduction from two weeks to 2 days(98% of the order) and importantly 55% improvement in sales. Low cost and higher volumes of sales, haven’t you dreamed about this one day. Lean manufacturing have made the dream come true for “Symmons Industries”. I think this is great example of application of lean and its benefits.

Resources:
http://www.arcweb.com/txtlstvw.aspx?LstID=bf17553d-733e-4f34-af70-d6a87c752416

Lean manufacturing stories? Send me, I will share it with the world

I have been publishing my thoughts and findings on lean manufacturing for almost two years now. I found it’s interesting and joyful to do something I really believe in. meanwhile I build a good online community too. Most of them have contacted me sometimes with thank you and sometimes with their questions or experiences. I was always fascinated about the concept of having my users involved actively in the discussion of lean and related topics. So I thought of sharing your ideas and experiences on lean manufacturing of cause if you wish to.

If you wish to share your thoughts or experiences on lean manufacturing and related topics I am willing to give you some space here on my blog. Send me an email to azabadurdeen@yahoo.com with your mane and the story. I will share it with the world.

Lean manufacturing, Six Sigma and Total Quality Management

A research by Bain And Company have revealed very interesting facts about usage of management tools and the satisfaction rates executives are achieving. Total number of management tools used by industries has increased from 13 to 15 in past two years according to this report. Leading tools in terms of usage and satisfaction levels are not lean related. Tools like strategic planning and CRM (Customer Relationship Management) leads the way.

But interestingly lean manufacturing has achieved significant recognition both in terms of usage and satisfaction. Lean operations show a comparatively lower value in terms of usage globally but higher satisfaction rates. North America seems to be leading in lean manufacturing in terms of usage, Latin Americans seems to be not using lean manufacturing much but interestingly they have achieved highest satisfaction rates. Asia and Europe are using lean in their organizations somewhat equally. In Asia Chinese are not using lean as much as other Asia Pacific countries does. Larger companies are using lean manufacturing most and they have achieved higher satisfaction rates than the rest of the bunch.

On the other hand Six Sigma has lost it ground. Six Sigma has is down both in usage and satisfaction levels when compared with lean operations.

Total quality management has a wider usage and higher satisfaction levels in the global scenario. TQM has outscored both lean manufacturing and six sigma in terms of usage and satisfaction levels. North America shows very low usage of TQM compared to the rest of the world. Asia Pacific region have used TQM heavily and interestingly have reported lower satisfaction than the rest in the bunch.

In total for me the trends seems to be varied according to the region. While North America seems to be moving towards lean manufacturing, Asia Pacific seems to be using TQM and six sigma in their organizations. Latin America has very lower usage of lean manufacturing and yet has reported very high satisfaction levels. Based on this information Latin American countries can be expected to move towards lean manufacturing in the future.

This report is a great way to understand the trends in the glob. To find this report do a simple Google search with “Management Tools and Trends 2007”

Reference: Management Tools and Trends 2007 By Bain and Company