Lean Manufacturing 101: A Guide for Small Businesses

What could your company achieve with increased efficiency and less waste? Lean manufacturing offers the potential to lower total manufacturing costs and meet production budgets.

Toyota introduced the concept of lean manufacturing in the 1930s through its approach to making cars “The Toyota Way.” The approach is focused on implementing strategies that eliminate waste to improve efficiency to help companies achieve their goals.

Overview: What is lean manufacturing?

Lean thinking can help companies gain a competitive advantage over their competitors. The approach can be equally effective in manufacturing as in service-oriented businesses.

The American Society for Quality (ASQ) explains the difference between lean manufacturing and lean enterprise. Lean manufacturing refers to the process or activities it takes to make any product. A lean enterprise is the part of the supply chain that contributes to getting a product made and delivered to customers.

The Japanese managers who created lean concepts consider actions that don’t directly add value as “muda,” which translates to waste in English. Lean systems are cognizant of how these eight forms of muda contribute to unnecessary activities and expenses:

  • Overproduction
  • Waiting
  • Unnecessary transportation
  • Overprocessing
  • Excess inventory
  • Unnecessary motion
  • Making defective products
  • Unused talent

The 5 principles of lean manufacturing

Eiji Toyoda is credited with first implementing lean manufacturing strategies, but it wasn’t until authors James Womack and Daniel Jones published Lean Solutions in 1996 that the five principles were established.

The five principles of lean manufacturing are:

1. Defining value

What is it customers want, and how much are they willing to pay for it? Sometimes even buyers don’t know the answers to these questions. Focus groups, data, and talking with shoppers provide insight into pain points in their personal or professional lives. You can use that information to identify the products and services your target market is interested in at a price they’re willing to pay.

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2. Mapping the value stream

Every step of the process that contributes to the creation or delivery of products and services is part of the system’s flow. Examining each component of the process to decide if it contributes value to the end goal helps eliminate waste.

The Lean Way puts waste into two categories: non-value-added but necessary and non-value-added and unnecessary. Non-value-added but necessary waste can’t be eliminated without sacrificing the end product, but it should be streamlined as much as possible. On the other hand, non-value-added and unnecessary is pure waste that must be eliminated.

3. Creating flow

All steps within a production process are interconnected. If one piece changes, it impacts others down the line. Taking a step back to analyze the new flow to make sure all activities still run smoothly is important. Some employees may need training to work within the new system.

4. Establishing pull

Letting your customers’ interests guide decisions about what and how much to produce supports just-in-time delivery and manufacturing. That translates to having the precise items needed at exactly the right time to avoid costly excess inventory.

5. Pursuing perfection

Lean management asks every employee to strive for perfection in their tasks. Ideally, employees and company leaders offer input for continuously improving systems or processes to deliver products to customers in the most efficient and cost-effective way possible.

Advantages of lean manufacturing

When the five principles of lean manufacturing are used in the product development process, everybody wins. Customers receive the item they want at the price they are willing to pay, and the company generates increased revenues because of less waste.

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Since lean methodology improves efficiencies, it gives employees an opportunity to pursue innovations in product development or quality control that may not have previously been possible.

Disadvantages of lean manufacturing

As with any approach, lean manufacturing has its drawbacks. In 2007, Industry Week conducted a study that revealed nearly 70% of U.S. manufacturing companies used lean principles, but only 2% of them had fully achieved their goals.

The lean manufacturing process is criticized for glossing over employee safety and well-being. Because it requires perfection, it can create higher levels of stress among employees as they strive to eliminate errors.

Relying on just-in-time inventory strategies can leave companies short of raw materials or stuck with logistics challenges when politics and pandemics interrupt the supply chain.

Toyota proved that using lean principles can have a significant impact on production. However, it’s not the right answer for every company. Evaluating the opportunity before making changes can save frustration. Lean experts often offer consulting services and can help you decide if it’s the right approach for your business.

3 ways to implement lean production in your business

Cutting costs, saving time, and increasing revenues are exciting prospects. Adapting the five lean principles outlined above can help you get there. But before upending an existing system for a completely new approach, take the following three tips into consideration.

1. Assemble a team

Select employees who have a mix of business experience and knowledge of the jobs performed to achieve the production. Small teams of three or fewer people create the potential for missing valuable insights and suggestions. However, too large of a group can complicate decision-making.

However, selecting the “right” people is as important as the team size. Author Jim Collins coined the phrase about getting “the right people on the bus and the right people in the key seats,” and his 2001 book Good to Great explores ways to identify maximizing employee talents to support business outcomes.

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2. Establish a communication and feedback system

Encourage all team members to speak up so one person’s way of thinking doesn’t create roadblocks. Creating and promoting communication and feedback between team members is essential for working through disagreements or making difficult decisions.

Decide which platforms are most conducive to your company’s workflow. Shared messaging platforms and meetings can encourage the cooperation and collaboration needed for buy-in at all levels.

3. Find ways to cut clutter

Successfully implementing lean principles doesn’t happen overnight. It takes time for analysis, communication and feedback, and implementation. One way to start thinking lean is by finding ways to reduce clutter.

Strategic advertising and marketing campaigns convince business leaders they need the latest gadgets, technology, and tools to get the job done. Exploring new tools for efficiency is always prudent, but commercialization makes it easy to think that “one more” of something will make the job easier. Sometimes it just creates clutter.

Time is wasted, literally and figuratively, by tripping over a pile of “tools” when searching for the right solution. Clearing out the excess leaves you, and your employees, more focused and more productive.

Lean — not just for large manufacturers

Just because lean manufacturing processes started at an automobile manufacturing plant doesn’t mean there isn’t an opportunity to put the basic principles to work in any type of business. You have an opportunity to effectively reach your goals when you remove waste and collect and consider customer feedback to improve products and services.

Regardless of what scale you’re at, focusing on lean production is all about efficiency. Whether it gives you more time for the family or more time to pursue a new venture that you’ve been striving for, being lean helps you achieve those goals.

View more information: https://www.fool.com/the-blueprint/lean-manufacturing/

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