In the 1980s, lean was often equated with mean eliminating jobs and closing
facilities to add to the corporate bottom line. Today it more often indicates
a redeployment of personnel and resources to facilitate growth. With todays
tight job market and increasing global competition, running lean may be a companys
only option.
Championed by the Lean Enterprise Institute in Brookline, Mass., the concept of lean business operations has its roots with Henry Ford but has grown and evolved with the input of corporate giants such as General Motors and, more recently, Toyota.
This is really a whole business system with principles that run through everything from product development to how a company deals with its suppliers to how it delivers end products to its customers, says James Womack, president of the Lean Enterprise Institute (LEI). This is a system where a company can cut product-development time in half or more, cut labor content in half or more, cut capital costs in half or more and cut the facilities needed the bricks and mortar in half and in some cases by as much as three quarters.
A company ends up being more responsive to customers needs, instead of pushing things at them, trying to convince them they need things you have already made. The hard part is trying to transition the big production companies.
Five major corporate partners (including Delphi Automotive and Lockheed Martin) have worked with LEI to help design transition programs. In addition, the principles are also being used in low-volume, ultrahigh-variety manufacturing operations such as the aerospace industry, says Womack. The institute is working with organizations outside of manufacturing operations, including health-care organizations, construction companies and the Canada Post Office.
Locally, CAMP Inc. offers a program consisting of several elements, which include seminars, individual training tools and customized consultation programs that encompass the entire transition from traditional manufacturing and business-operations techniques into the world of lean-business operations.
Right now we have a schedule of seminars that runs through the end of December, says Roger Fisher, CAMPs senior consultant of lean operations. There will be a series conducted in the Greater Cleveland area as well as ... in the Greater Akron area.
There are various elements that go into the entire lean process such as cellular
manufacturing, setup reduction, value-stream mapping and total production maintenance,
adds Jim Triner, manager of new-product development and industrial marketing
at CAMP. We also offer companies an overview called Lean 101, which basically
familiarizes a company with all the terms and explains how lean manufacturing
can significantly add value to their operations and increase productivity.
Put simply, lean thinking works to eliminate waste in operations through value-stream mapping. The process encompasses the entire operation, from how materials are received from suppliers to how end products are shipped to customers, evaluating where value is actually added in operations. This offers a clear view of the companys current position and evaluates both information flow and manufacturing flow in the same picture, including business processes such as order entry, order processing, production control and pacemaker loops.
Then we start looking up and down the supply chain, says Triner. We look at the supply chain from their customers standpoint, what their customers needs are and determine how they could improve things for their customers. Then we look down the supply chain at their suppliers and determine what they are going to start asking their suppliers to do to help them maintain this lean capability.
Then we start to look at things like product life-cycle, market drivers for their business and how to optimize their production systems to meet with their customers demands, says Fisher. The whole process really starts with what customer demand is, so the company doesnt overproduce and build up inventories. It gives them a more flexible work force; they should be able to adjust their manufacturing operations to meet with customer demand.
Womack offers an example of how the program might work for a midsized manufacturer.
Imagine a company is making a widget that will be used in a final assembly for the automotive industry, Womack says. As you start to walk in backward from the shipping area, you will find a considerable amount of inventory has been built up to buffer against customer demand. And the further the company is back up on the value stream, the more volatile customer demand becomes, so naturally the buffer inventory becomes larger.
In other words, if you look at the value stream from retailer to wholesaler to original equipment manufacturer to first-tier parts supplier to second-tier parts supplier to raw materials, inventories grow because customer demand becomes more volatile due to customer reorders. Customer response-time starts to stretch as well as inventories.
Lets say this widget company is a tier-one parts supplier, says Womack. The company is going from manufacturing no widgets on one day to 1,000 widgets the next day, even though their customer is using widgets at the pace of 100 a day, because downstream there are buffer inventories and safety stocks that someone thought was a way to minimize logistics costs.
So our imaginary widget plant maintains a lot of storage area because it must not fail to ship; however, maintaining the inventory holds no true economical value. In fact, there exist inventory-carrying costs. The inventory takes up space. It has to be heated and cooled. It has to be counted, and it frequently has to be moved; all of which add costs and man-hours to the widget manufacturers operations.
So the first thing that goes, if you run a very lean system, is excess inventory, Womack explains. You have an extremely small safety stock, maybe only a few hours worth of widget production, because you have been able to level your customers orders.
Heading back from the shipping area, many midsized manufacturing operations, including our widget manufacturer, are departmentalized into areas such as washing, welding, painting, heat treating and assembly.
Typically, many products have to go through many departments to actually get made, says Womack. So as you go through a plant, you will see small piles of inventory waiting to go through machines that are typically as big and as fast as possible. In the lean way of doing things, the company would rightsize those machines and line them up in a row.
Instead of flowing parts from one department to the next, which could take weeks, our widget manufacturer lines up production so that a molding or stamping machine dovetails into a painting station, which dovetails into final assembly. This way the entire manufacturing process is cellularized, which in turn matches throughput with stack-processing time. In other words, things arent made before theyre needed.
All of the area the widget company once needed to maintain inventory, and all of the transit space needed to move inventory, suddenly disappears. The entire system has become vastly more responsive.
In our larger corporate partners [that implement] these disciplines, we routinely see massive plants are half empty, Womack says. Nothing happens to direct production tasks, except they have been lined up in a row. Then you have multiskilled workers who can perform multiple tasks, so you can speed up or slow down the rate of cell production by adding or detracting people to deal with fluctuations in demand.
The example is typical of what might happen in a midsized manufacturing environment,
Womack adds. All of the indirect effort disappears, as well as all the managers
who were trying to deal with the complexity of every activity. If you dont
have an independent paint department anymore, then you dont need a manager
of the paint department. If you dont have to move inventory from department
to department, a lot of people who were driving forklifts could actually go
to work making parts that create value.
Can lean become mean? It is a question that only the individual companies can answer. First of all, many people are underutilized in many current operations, and you always hear about the shortage of qualified people in manufacturing careers, says Triner. Its typical to see production increase by more than 50 percent using the same people.
So if a manufacturer wants to get into new markets or new areas of sales but doesnt have the personnel, they can start freeing up some of their existing people who are in non-value-added operations and transfer them to manufacturing operations. They dont have to perform a job search, and they often dont have to increase overhead.
Another limitation to growth or entering new markets for many Northeast Ohio companies is lack of space, says Triner.
When they clean up their operations and eliminate inventories, they increase the floor space, essentially doubling the area they can utilize to manufacture, he says. We often have them clean out and sweep the area so they can see exactly how much room they have to grow. Think of the costs in moving or building a new facility. By using lean business strategies, they have increased the available productivity of their people and also their facilitys capability as well.
Several area companies have already implemented lean business strategies and are beginning to see the benefits, among them Kennametal Inc. and Ridge Tool, both in Elyria, Triner says.
What is good for manufacturers will prove to be good for employees in the long run, Fisher says. If a company can be more cost-effective, more competitive and can deliver product quicker, they are going to secure existing business and gain business for the future. This process also helps manufacturing employees by better utilizing them, cross-training them and in helping them to develop more skills so they can compete in the market.
That is the certainly the altruistic side of the ledger. In the end, however, companies may have to implement lean strategies just to keep up with other companies that are already there.
So it becomes a question of pay now or pay later, Fisher admits. If a company
takes proactive steps now, they will secure business and begin to grow. This
way they will be on the plus side of the ledger whenever everything shakes out.