From soup to nuts

In an effort to become more profitable, many companies are turning to ‘lean manufacturing’ – a concept pioneered by the Toyota Motor Company.

In an effort to become more profitable, many companies are turning to ‘lean manufacturing’ – a concept that comes from the Toyota Production System, pioneered by Taiichi Ohno, former vice president of Toyota Motor Company.

Practised by Toyota for many years, the system involves the examination, and then the optimisation, of an entire manufacturing process.

The result of the exercise results in several benefits for the manufacturer: quality of the product is improved, lead times are reduced, inventories are reduced and customer satisfaction goes up.

Some companies adopting TPS concepts and a system of cost reduction activities have achieved 25% or more increase in profits per year, every year, while at the same time the lead-times of products delivered to their customers has been improved. This in turn makes their own businesses more competitive.

The crux of the TPS is a disciplined attitude to seek out and eliminate all ‘waste’ in the manufacturing process. ‘Waste’ itself is defined as any action which does not contribute to ‘adding value’ in the manufacturing chain.

Rather than examining parts of the manufacturing process one piece at a time, Professor Dan Jones, the founding Director of the Lean Enterprise Research Centre, espouses the view that manufacturers should first take a broad overview of their processes and their relationship with their suppliers and customers.

‘People first need to see what’s going on in their own factories before they can improve their processes’, says Professor Jones. ‘ And the way to do that is to take a product and follow it door to door – from raw materials coming in right through to the product going out. Manufacturers need to document everything that happens through the process. When they do that, they can see which stages in the manufacturing process create the value and which do not.’

In the past, however, that hasn’t been the way that many companies have traditionally thought. The logic in the past has been to focus on the role of the machines at the manufacturer’s facility and how to keep them as busy as possible.

But ‘just because machines are busy all the time does not mean that they are doing the right thing at the right time,’ says Professor Jones.

Jones believes that instead, companies need to organise themselves around the product flow through the factory and has developed a technique called ‘value stream mapping’ that allows them to do just that.

In the mapping process, a ‘lean manufacturing champion’ at a company ‘takes a walk’ along the entire length of the manufacturing process, recording the facilities visited, the transport links and every action performed on the product.

A ‘map’ detailing all these operations is then produced and the important actions summarised briefly in order that management can act to optimise the procedures involved.

Importantly, such maps typically itemise important criteria such as the time taken involved at each of the steps in the process, the quality achieved, the number of shifts worked, inventory, and the transportation time between each step in the process.

Once the map is complete, the next step is to identify where the ‘waste’ occurs and to minimise it.

Taiichi Ohno at Toyota identified seven types of such waste in value streams; overproduction, defects, unnecessary inventory, unnecessary processing, unnecessary transportation between work sites, waiting for machines to cycle and unnecessary movement in the workplace, such as associates moving out of the workplace.

Optimising manufacturing processes by elimination of such waste then produces a leaner manufacturing environment.

Of course, such an analysis of the whole inevitably leads manufacturers to examine the tools and technologies that they use within ‘parts of the whole’ – the individual departments of their own organisation that might be improved and, indeed, how communication between such departments might be improved to optimise the organisation.

To build a completely ‘lean manufacturing’ process, it is important that companies realise that they must also develop ‘lean customer relationships’, and ‘lean product development methodologies’ too.

Lean customer relationships can be achieved through the use of e-commerce packages, for example, that facilitate customer orders quickly over the web, reducing selling and customer servicing costs.

Lean product development techniques, on the other hand, might employ techniques such as Design for Assembly that can reduce the stages and the material used in the manufacturing process, ultimately leading to a higher quality product produced at a lower cost.

Such optimisation using mapping techniques can also be performed up and down the value chain – between suppliers and their partners.

But ‘that’s not quite as easy because each company may be protective of its own position. However, if the financial and productivity gains can be shared then the advantages of optimising the supply chain become more obvious,’ adds Professor Jones.

Professor Jones will be presenting several workshops on the subject of Lean Manufacturing at the 2002 conference of the Association for Manufacturing Excellence in the UK (AME-UK) at the Subcon Exhibition, Hall 1, Birmingham NEC on May 1 and 2, 2002.