I am a trainer and consultant in lean manufacturing, Six Sigma, quality management, and business management.
What is Lean Manufacturing
What are the Benefits of Lean manufacturing? What are the advantages to your business of implementing Lean Production methods or even within a service organisation? Lean manufacturing is both a business improvement philosophy and a collection of well proven tools to improve your production processes. Lean is about defining value as perceived by the customer, the actual features and services that they expect.
Once you have defined value according to the customer you then begin Mapping the value stream from raw materials to the customer, then make that value flow at the pull of the customer whilst working towards perfection.
To do this you must respect all of your employees and involve them in a continual drive to improve your business, without this respect and involvement no improvements will be sustainable.
Lean manufacturing is not just about waste reduction as many definitions and sites here on the Internet say, lean is customer value and making that value flow; see what is lean manufacturing.
Lean Manufacturing Benefits
History of lean manufacturing
To be able to implement lean manufacturing and achieve lean production processes you must have an understanding of the history of lean manufacturing, you need to know how it has developed and the issues that were overcome.
Lean has an a very long history, the roots go back to Ford's production lines for the model T and before. The works of Taylor and Gilbreth all impact on lean, their ideas along with Ford were adapted by Toyota to begin to form the Toyota Production System (TPS) which is where lean has come from.
Toyota took these ideas and combined them with the works of Deming, Shewhart, and Juran to give employee involvement and a drive towards continual improvement.
With Taichii Ohno's identification of inventory through overproduction as being the biggest waste in manufacturing the principles of Just In Time (JIT) were born, producing what the customer wants when they want it without it being delayed of caught up in inventory.
Lean manufacturing was bought to the west in the 1980s as many companies began to realise that they were slipping far behind their Japanese competitors and they needed to gain the benefits of Lean.
Elimination of the Seven Waste
Lean Prevents Waste
You will hear a lot about removing waste from your processes when you talk to people about lean, most practitioners work hard to identify and then eliminate every instance of the seven wastes that they find within your processes.
However many forget to look at what the customer really wants and they end up making wasteful processes more efficient, so you get better at doing something that the customer does not even want.
Implemented correctly Lean does not identify and remove waste it prevents the waste from happening in the first place.
Benefits of Lean Manufacturing
Lean Manufacturing is a business improvement philosophy that has developed over many years (as well as a collection of lean manufacturing tools), it is a method to better focus your business on the true needs of the customer to help you prevent waste from being built into your system. There are many benefits that are associated with lean manufacturing and for service industries also. I detail many of these benefits below;
- Improved Customer Service; delivering exactly what the customer wants when they want it.
- Improved Productivity; Improvements in throughput and value add per person.
- Quality; Reductions in defects and rework.
- Innovation; staff are fully involved so improved morale and participation in the business
- Reduced Waste; Less transport, moving, waiting, space, and physical waste.
- Improved Lead Times; Business able to respond quicker, quicker set ups, fewer delays.
- Improved Stock Turns; Less work in progress and Inventory, so less capital tied up.
- All of the above have financial impacts on your business, as well as helping you become a business that can better react to and meet your customer's needs.
Lean Helps you Grow your Business
Would your business benefit if you could offer your customers shorter lead times, greater reliability, lower prices etc? Of course it would, lean production processes will give you all of these advantages over your competitors.
In addition to this lean will reduce your internal costs, your processes will be more efficient, less wasteful. You will have less of your businesses cash tied up in wasteful inventory and work in progress enabling you to spend it where you want.
Lean will improve your staffs morale as they become more and more involved in your business and improving what you do, their motivation will improve dramatically.
Historical Benefits of Lean at Toyota
Actual Benefits of Implementing Lean Manufacturing
What I have written above is all very flowery, but what is the reality, how good is lean manufacturing at delivering the savings that i highlight above, how much can productivity improve, how much space can you save etc? Below I will give you some data from the work of the Manufacturing Advisory Service (MAS) in the UK, a service that is promoted through the department of trade and industry to provide support to UK manufacturing.
MAS has been running improvement projects (typically based around a kaizen blitz) across many hundreds of companies to implement various aspects of lean for the last 8 years or so, the data that I will produce below is the reported improvements from these different projects, being a compilation of many hundreds of projects the data is quite robust. Each project is normally run for a around a week, the aim being to give the skills to run these projects to the companies to allow them to continue to run projects. These projects are based on Lean Manufacturing techniques, the aim being to reap the advantages of lean production methods and processes.
Percentage Improvement Due to Lean
Average Improvement figures for MAS projects;
- PRODUCTIVITY +25%
- SCRAP -26%
- SPACE -33%
- DELIVERY +26%
- STOCK TURNS +33%
As you can see these improvements are very significant, these are the average figures for many hundreds of projects. What is stopping you from learning how to implement lean manufacturing to help you gain these Lean manufacturing benefits for your business? These are also just one off projects, not a sustained drive to implement lean manufacturing. You can achieve far more than this!
Financial Benefits of Lean
Financial Benefits of Lean Manufacturing
The financial benefits of Implementing Lean Manufacturing are highly significant, everyone of the improvements mentioned above will impact on your bottom line in some way. They may also release much needed capital back into the business.
If you reduce the amount of work in progress (WIP) and finished goods that you are holding then you automatically reduce either the cash tied up in that stock or reduce your borrowings from the bank.
The improvement in efficiencies that you gain allow you to make more products for same overheads, improving your profits. The reduction in the need for things like forklift trucks and other things for moving inventory around also reduces your costs.
The reduction in waste and defects immediately adds to your profit and so on.
Implementing Lean Manufacturing has immense financial benefits to your business and these benefits are sustainable if you ensure that lean is integrated into the culture of your business. These benefits are often far more than can be achieved by offshoring (outsourcing overseas) and allow you to retain control of the quality of your products and services.
By implementing Lean you will become far more competitive in both the prices you can charge and the effectiveness of the services that you can offer thus enabling you to win more business and grow your business further.
Lean Office benefits
Links to help you Benefit from Lean Manufacturing
The following are useful links for business support and lean manufacturing resources.
http://www.ifm.eng.cam.ac.uk/ Having worked for the Institute for Manufacturing at Cambridge University I can heartily recommend them as somewhere to go to for more information and help with implementing Lean Manufacturing. If you want to gain the benefits of Lean Manufacturing this is an ideal place to start.
http://www.thecqi.org/ As a member of the Chartered Quality Institute I can also recommend their publications and other services to help you improve your business performance.
http://asq.org/ American Society of Quality can help you in much the same way as the CQI in the UK can help you to improve your business skills and processes.
http://www.bis.gov.uk/ UK Department for Business Innovation and Skills can be of great help if you need training providers and even financial help in the form of grants. Contact them for help in defining your training programs for lean implementation to help you get the advantages of lean production processes.
http://www.businesslink.gov.uk/bdotg/action/home UK Business Link is a broader based business support body in the UK but can help you in much the same way that the MAS can. They may have access to other funding sources and other support that can be used in conjunction with that from the MAS.
http://www.smmt.co.uk Society of Motor Manufacturers and Traders in the UK has a large range of publications and other services that can help your industry implement lean manufacturing.
http://www.aiag.org/scriptcontent/index.cfm Automotive Industry Action Group will help you in the US in much the same way that the SMMT can provide help in the UK.
These Links will help you to find more information and support to help you improve your business through implementing lean manufacturing and other business improvement techniques. Correctly implemented the benefits of lean manufacturing will make your business far more competitive and successful, so go gain the advantages of lean production processes today!
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Eman on December 27, 2017:
Many thanks so much for sharing this useful information and knowledge with us.
Dr. Rochelle on November 23, 2016:
Thanks for your info on Lean Method. You just save my day for my assignment in UP. Thanks a lot!
Tony (author) from At the Gemba on March 29, 2015:
Hi Rand49er, depends how you define a "one time only gain"; many times reducing inventory will result in improvements in quality, reductions in scrap, improved efficiencies, reductions in the need for moving stuff around and the associated equipment used, storage space etc. All of these savings are there day after day, year after year.
The aim of any lean implementation should never be to remove people from the company but to release them for additional business or to work on improvements. However this is a long standing debate and many do see lean as a quick way to make significant savings through manpower reduction; something that quickly works against those making the implementation.
rand49er on March 28, 2015:
Let me temper this a bit. Inventory reduction is a one-time-only gain. Still advisable because it means better response time to your customer which means the customer has less reason to go elsewhere for product, but it's a one-time deal. However, reduction in defects (scrap) has raw material benefits in perpetuity; it will always be a benefit. Reduction in rework and gaining productive efficiency will only be realized if you reduce labor, which means getting rid of people which will have a negative morale impact. I would suggest, instead, to add business now that productivity has been realized. You should be able to produce more product, so use those trained employees to your advantage.
Tony (author) from At the Gemba on April 12, 2012:
Hi Gilberto, thanks for reading about the benefits of Lean Manufacturing, I hope that you got what you needed from the article.
Gilberto Granieri on April 12, 2012:
Very good and accurate description.
Good stuffs to refresh the main points and also to give the Trend.
Thanks for sharing this with us.
Nandha Kumar on August 17, 2011:
the topic is something new for me .really i have gained some knowledge in the process..i hope this will be our future manufacturing
RichardCMckeown on May 30, 2011:
WOw, Great information, Thanks for sharing.
Tony (author) from At the Gemba on July 25, 2010:
Lean Manufacturing has been around for many many years now, many large companies have groups that implement it in one form or another to great effect within their organizations. The benefits of Lean Manufacturing can be enormous, it is just such a pity that so many companies feel that they do not have the time to implement it!
Thanks for your comments Glassvisage.
glassvisage from Northern California on July 24, 2010:
I had never heard of this before! Obviously you know quite a bit about it. Thanks for sharing this... It sounds like the way that manufacturing may go in the future.