How much waste does your organization produce?

For example, do you ever have to wait for someone else to finish a task before you can get on with your own work? Do you have a large inventory of unsold stock? Do you have more workstations that you need? Or do you order materials months in advance of when they are needed?

How about flexibility? If consumers want a modification to your product, can you quickly change your processes to meet their needs?

Waste costs you and your customers money. And if your customers have to pay more because of it, they might go elsewhere. Being competitive also requires a lot of flexibility. You must be able to meet the changing demands of your customers quickly and effectively, and adapt to a rapidly changing business environment.

So, how can you reduce waste and do things more efficiently? And how can you keep up with the changing demands of consumers?

First mentioned in James Womack's 1990 book, "The Machine That Changed the World," Lean Manufacturing is a theory that can help you to simplify and organize your working environment so that you can reduce waste, and keep your people, equipment, and workspace responsive to what's needed right now.

Lean Manufacturing Basics

The Lean approach is based on finding efficiencies and removing wasteful steps that don't add value to the end product. There's no need to reduce quality with lean manufacturing – the cuts are a result of finding better, more efficient ways of accomplishing the same tasks.

To find the efficiencies, lean manufacturing adopts a customer-value focus, asking "What is the customer willing to pay for?" Customers want value, and they'll pay only if you can meet their needs. They shouldn't pay for defects, or for the extra cost of having large inventories. In other words, they shouldn't pay for your waste.

Waste is anything that doesn't add value to the end product. There are eight categories* of waste that you should monitor:

  1. Overproduction – Are you producing more than consumers demand?
  2. Waiting – How much lag time is there between production steps?
  3. Inventory (work in progress) – Are your supply levels and work in progress inventories too high?
  4. Transportation – Do you move materials efficiently?
  5. Over-processing – Do you work on the product too many times, or otherwise work inefficiently?
  6. Motion – Do people and equipment move between tasks efficiently?
  7. Defects – How much time do you spend finding and fixing production mistakes?
  8. Workforce – Do you use workers efficiently?

Note:

The first seven sources of waste were originally outlined in the Toyota production system, and were called "muda." Lean Manufacturing often adds the eighth "workforce" category.

Lean gives priority to simple, small, and continuous improvement such as changing the placement of a tool, or putting two workstations closer together. As these small improvements are added together, they can lead to a higher level of efficiency throughout the whole system. (Note that this emphasis on small improvements doesn't mean that you cannot make larger improvements if they are required!)

Note:

Although the aim is to remove as much waste as possible by continuously refining your processes, you probably won't eliminate waste completely.

Lean Manufacturing Process

The process has three key stages:

Stage 1 – Identify Waste

According to the Lean philosophy, waste always exists, and no matter how good your process is right now, it can always be better. This commitment to continuous improvement is known as Kaizen.

One of the key tools used to find this waste is a Value Stream Map (VSM). This shows how materials and processes flow through your organization to bring your product or service to the consumer. It looks at how actions and departments are connected, and it highlights the waste. As you analyze the VSM, you'll see the processes that add value and those that don't. You can then create a "future state" VSM that includes as few non-value-adding activities as possible.

Stage 2 – Analyze the Waste, and Find the Root Cause

For each waste you identified in the first stage, figure out what's causing it by using Root Cause Analysis. If a machine is constantly breaking down, you might think the problem is mechanical and decide to purchase a new machine. But Root Cause Analysis could show that the real problem is poorly trained operators who don't use the machine properly. Other effective tools for finding a root cause include Brainstorming and Cause and Effect Diagrams.

Stage 3 – Solve the Root Cause, and Repeat the Cycle

Using an appropriate problem-solving process, decide what you must do to fix the issue to create more efficiency.

Tools to Reduce Waste

Once you have identified wastes using the three key stages above, you can then apply this next set of tools to help you reduce waste further:

  • Just in Time – This is the core idea of Lean and is based on the "pull" model. To minimize stock and resources, you only purchase materials, and produce and distribute products when required. You also produce small, continuous batches of products to help production run smoothly and efficiently. By reducing batch size, you can also monitor quality and correct any defects as you go. This reduces the likelihood of quality being poor in future batches.

    (In manufacturing, a key way of doing this is to use Kanban, below.)

  • Kanban – This is one of the key ways to involve people in the Lean process. Here, you support the Just In Time model by developing cues in the system to signal that you need to replace, order, or locate something. The focus is on reducing overproduction, so that you have what you need, only when you need it.
  • Zero Defects – This system focuses on getting the product right the first time, rather than spending extra time and money fixing poor-quality products. By using the Zero Defects system, you'll reinforce the notion that no defect is acceptable, and encourage people to do things right the first time that they do something.
  • Single Minute Exchange of Die (SMED) – This helps you build flexibility into your production. For example, in the automotive industry, it could take days to change a line to produce a different car model. With SMED, the assembly process and machinery are designed to support quick and efficient changeovers. (Here, a "die" is a tool used to shape an object or material.)
  • The 5S Philosophy – Lean depends on standardization. You want your tools, processes, and workplace arrangements to be as simple and as standard as possible. This creates fewer places for things to go wrong, and reduces the inventory of replacement parts that you need to hold. To accomplish a good level of standardization, use the 5S System.

Tip:

These techniques offer proven solutions for fixing waste within your organization. However, remember first to apply the three-stage Lean process, and to deal with any issues that this raises.

Key Points

Lean Manufacturing focuses on optimizing your processes and eliminating waste. This helps you cut costs and deliver what the customer wants and is willing to pay for.

With a lean philosophy, you enjoy the benefit of continuous improvement. So, rather than making rapid, irregular changes that are disruptive to the workplace, you make small and sustainable changes that the people who actually work with the processes, equipment, and materials will take forward.

This systematic and simple approach is very effective across all types of industries. What's more, ultimately, a process without waste is much more sustainable.