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What is lean manufacturing

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The lean manufacturing is a way for companies to be more competitive in a global market environment and in a customer-centred supply chain organisation.

Instead of being purely focused on maximizing its efficiency and resources utilization, the goal is to improve the customer service and reduce its cost on a global scale, which represents a major shift from internal based systems - e.g. maximizing the resources - to external based systems more customers oriented.

Traditional production control systems (MRP, MRP-2) from the supply chain are mostly used to build buffer stocks and manage capacity buffers to avoid any disruption in the very uncertain customer demand. Planners using MRP are often planning with a higher standard lead time than actual to tackle demand variability and avoid any disruption.

The consequence of demand uncertainty was tackled by high inventory levels and capacity buffer to be able to fulfil the customer orders.The other way to respond to variability was to setup a bigger capacity than requested by the customer demand, but excess in capacity is neither not viable on the long term.


New manufacturing response


The supply chain response to higher demand variability comes from moving quickly and smoothly the goods through the entire value chain, from raw material to finished goods while eliminating the waste within the process itself:

• Maximize the throughput
• Minimize inventory and operating expenses

Some sudden change in demand is volatile but the mechanism on the supply chain is the bullwhip effect that increases the variation at the semi-finished and raw material levels.
It means that a light change in demand upstream is generating amplified changes downstream and as a result an emergency mode management where manufacturing planning tries to follow the variations but with poor results due to a late respond and a lack of capacity available.

Other responds could be to make high inventory to tackle demand variation, or to split the time horizon to plan separately the short, medium and long term with the negative effect of re-planning again and again instead of solving the real issues.

Standard manufacturing layouts are departmental objectives or work-centred – meaning that raw material, semi-finished and finished assembly departments are separated per resources for better increasing local efficiencies. The supply chain path then not optimized and no clear respond to demand variability is then possible, generating many idle times in the flow and non-value added.

The lean manufacturing is the response for having a synchronous flow of material tied to actual consumer demand.
Instead of local optimums, the global supply path efficiency is measured which implies to redesign from scratch the processes and find out the non-value added activities representing more than 90% of time.

Here are the main waste factors in modern manufacturing:

• Waiting : Unbalanced line where an operator is waiting for the preceding operation before starting his own

• Faster than necessary pace : if operators of two adjacent operations work are different paces then a temporary storage is then required

• Motion : If operators has to look for parts or wander for some tools, it causes unnecessary move usually due to poor work centre layouts

• Rework : Area dedicated for rework

• Over-processing : Operations not required by customer but done due to lack of standard procedures

• Over-producing : Keeping the machine running to increase its utilization rate, generating high inventory

• Conveyance : Moving the parts between operations/departments/factories due to poor layout integration

• Inventory : Consequence of other wastes and inadequate practices

The tool available to do so is process mapping and focusing on activities which are wasteful, in order to understand the non-value activities.

The process mapping should list all activities in the factory from raw material reception till finished good shipping, and be represented also with an aerial view of the facility. Operation process times, idle times and inventory buffers need to be carefully described in order to total up the actual lead time versus value-added time troughout the entire supply chain.

Analysis usually reveals that a very small time is spent on a value added activities and the rest in moving, storing and waiting for parts.
Also a complete analysis of the planning execution process is done at the same time, in order to highlights wrong behaviours and method that contribute to inefficient execution of the schedule.


Implementing a lean manufacturing program

The first enabler is to get rid of the current performance measurements, usually based on department efficiencies toward process measurement.
Productivity and labour efficiency should not be anymore the only metrics for a given department otherwise all actions will be done for local optimisation instead of global.

The goal is to put in place a more balanced scorecards with overall on-time delivery performance, inventory level, schedule adherence, etc...
The second enabler is to make a continual planning process, with daily buckets in the short-term, weekly buckets in the mid-term and monthly buckets in the long-term in order to provide a unique plan for the factory with tasks made in sequence.

All the manufacturing constraints troughout the whole supply chain should be integrated while building the plan, with continuous review and update to optimise the supply path.
The third main enabler is to redesign the facility layout toward process-based instead of function based, in order to move toward flexibility and increase the throughput. This is made by splitting and overlapping the batches, redesigning the shop floor in U-shape or in a more continuous resources flow.

But lean synchronous manufacturing requires also setup time reduction, effective maintenance plan and visual triggers within the shop floor.


Setup reduction

The changeover time is a key element to achieve lean manufacturing as it enables to release smaller batch size and increase flexibility instead of launching large batches that increase inventory and reduce the customer response.

On the other hand, reducing the batch sizes can be uneconomical if changeover times are the same as before. The method to reduce changeover time is to understand what happen in internal and external time. Internal time is defined as actions that can only be done when the machine is idle, whereas external time is the actions that can be performed while the machine is still producing throughput.

lean manufacturing
The goal is to analyse the current time taken (setup job, wash die, prepare tools, run first off, inspect & adjust...) and identify which components are currently external and internal.
Then an action plan is made to convert the internal actions to external time.

Visual management

Visual management is the key for success in lean manufacturing, as this represents the communication trough the factory and triggers signals.
The first tool to setup is the kanban - Just in time manufacturing which allow to link events with manufacturing process with signals of cards to avoid over-production and control the parts replenishment.

The downstream operation is pulling the upstream operation so as to manage the supply path in order to have a continuous flow without disruption.
The second tool is to take daily actions to stick to the manufacturing plan in order to understand the issues and their causes that prevent to achieve the schedule.
The morning meeting is appropriate to manage the daily production and continuous improvement.

Upon to the visual management, the bills of materials (BOM) should be reviewed to simplify their structure and make them stick with batch process and manufacturing layout. The goal is to look for opportunities in the supply chain to simplify the material requirement and reduce the BOM levels.

Moving forward to assembly postponement and late differentiation will reduce inventory and decrease the risk of holding wrong inventories.


The transition to a lean manufacturing organization requires a fundamental change in the way the supply chain is done and needs a complete lean program manager to make the changes for a better supply chain response to the market demand.
Change requires significant commitment and focus and cannot be done in short term but planned for mid-term to achieve significant results.
But for sure throughput will be maximised with a lower inventory cost and operating expenses to achieve sustainable margin on the long go.

Last modified on Thursday, 23 August 2012 10:50

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