Lean Manufacturing: Cut Your Operating Expenses

Learn how you can apply lean manufacturing to your business and help reduce waste as well as boost manufacturing efficiency.

Operations managers discussing areas for improvement

Published 27 Jun 2022

What is Lean Manufacturing?

Lean manufacturing is a practice that maximizes productivity while minimizing wasteful activities within a manufacturing operation. Lean principles see waste in any activity that doesn't add value to the customer. The advantages of lean manufacturing include shorter lead times, savings on operating expenses, and better product quality.

The continuous improvement process, also known as lean production, is a manufacturing technique that has influenced production systems worldwide and in other industries such as healthcare, software, and service sectors.

How Does It Work?

An essential component of lean manufacturing is eliminating waste to improve a process continuously. Lean manufacturing creates value for the client by delivering process improvements and reducing non-value-added waste.

Processes, operations, products, or services that require time, money, or expertise but do not add value to the customer are known as non-value-added waste. These might include underutilized expertise, excess inventories, and inefficient or wasteful processes and procedures.

Removing these inefficiencies throughout the entire supply chain to the customer can help reduce costs, streamline operations, and ultimately result in savings for a particular product or service.

Why is Lean Important?

Lean manufacturing aims to minimize waste in the workplace, whether it’s idle workers, flawed procedures, or unused materials. The purposes for doing so vary depending on perspective, but they may include increasing profits and offering customer services. Whatever the underlying intentions are, there are four key advantages of lean manufacturing:

  • Eliminating waste – Waste negatively influences cost, delivery dates, and resources. It adds nothing to goods or services.
  • Improving quality – The increased quality allows businesses to stay competitive and meet customers’ ever-changing demands and wants. Keeping up with these expectations and desires keeps you ahead of the pack, allowing you to maintain high standards in quality improvement.
  • Reducing costs – Improving procedures and material management will reduce costs associated with storing more goods than needed.
  • Reducing time – Time spent employing inefficient working methods is also a waste of money. At the same time, more efficient approaches result in shorter lead times and enable items and services to be delivered faster.

Five Principles of Lean Manufacturing

Five key principles of lean manufacturing help businesses implement lean and achieve the best results. These are:

Define Value

Value is the amount customers are willing to pay for items or services. Companies should strive to reduce waste and costs by establishing this value while generating maximum profits.

Map the Value Stream

This principle aims to discover waste and potential improvements in the flow of material and other resources needed to create a product or service. The value stream includes the whole lifecycle of a good, from raw materials to disposal. Each stage in the production process should examine waste for removal and eliminate anything that does not contribute to the value of your operation. Chain alignment is a popular method of doing this.

Create Flow

Flow aims to lower operational hurdles to boost lead times. It ensures that processes run smoothly and without delay, minimizing waste. Production methods that are disrupted or out of sync incur expenses, and maintaining a constant flow for production or service delivery is part of creating flow.

Establish Pull

Pull systems operate on the principle that they begin producing only when needed. It is opposed to the push systems utilized in Manufacturing Resource Planning (MRP) systems.

Push methods establish inventories based on sales or manufacturing expectations at the time of purchase. However, because many forecasts are inaccurate, there may be too much or too little product manufactured to meet consumer demand. It might result in more warehousing expenses, delayed deadlines, and poor customer satisfaction.

A pull system only works when there is demand and requires flexibility, communication, and efficient procedures to succeed.

Pursue Perfection

Kaizen is a method of continuously improving your processes through enhancements to your procedures, done by reducing waste and continually refining manufacturing processes. Similarly, Lean manufacturing necessitates ongoing evaluation and modification of operations and methods to identify the ideal solution for the value stream.

Continuous improvement should be integrated into an organization’s culture and tracked via metrics such as lead times, manufacturing cycles, throughput, and cumulative flow to make a significant and long-term difference.

Lean vs. Kaizen

Each approach has its strengths and weaknesses. Lean is a methodology that emphasizes efficiency and waste reduction. Many manufacturing companies utilize Lean principles, where time is of the essence, and even minor changes can make a big difference.

Kaizen, on the other hand, advocates the approach of “continuous improvement.” This approach emphasizes constant small changes rather than major overhauls. You can apply it to any business area, from customer service to product development.

Both lean and kaizen have their place in quality improvement, and the best results often come from combining the two approaches.

Lean vs. Six Sigma

Six Sigma is a data-driven management approach that seeks to evaluate and eliminate process faults to improve quality, similar to Lean.

While both methods aim to decrease waste, they use different strategies. Lean believes that waste results from additional steps, procedures, or features that customers do not feel adds value, whereas Six Sigma perceives waste as a consequence of process variation.

Combining Six Sigma and Lean can create a data-driven approach known as Lean Six Sigma.

Advantages and Disadvantages

In certain circumstances, lean manufacturing has several benefits and drawbacks; these include:

Advantages

Saves Time and Money

The most apparent benefit of lean manufacturing is cost savings. Companies of all sizes and levels of output may profit from more efficient production, distribution, and storage processes. Time savings allow for quicker product delivery and superior customer service. It can also help save money by reducing labor costs.

Environmentally Friendly

Time, money, and resources are all wasted through inefficiency. It may save energy and fuel costs by eliminating unnecessary procedures. Using more energy-efficient equipment has a noticeable environmental benefit, as does using more efficient equipment.

Improves Customer Satisfaction

Improving the delivery of a product or service, at the right cost, to a consumer increases customer satisfaction. It is critical for business success since happy consumers are more likely to return or recommend your goods or service to others.

Disadvantages

Employee Safety and Well-being

Focusing on eliminating waste and streamlining processes can result in overlooking the pressure on employees with a small margin for error in the workplace. This can lead to long hours and a high rate of accidents.

Hinders Future Development

The emphasis on eliminating waste that comes with Lean manufacturing might lead management to remove aspects of a firm that are not considered critical to the current strategy. These may, however, be crucial to a company’s legacy and future growth. Lean can result in an excessive focus on the present and a lack of attention to the future.

Difficult to Standardize

Some people believe that Lean manufacturing isn’t rigid, stating that developing a typical Lean production framework is challenging. It may give the impression that lean is a loose and unstructured approach rather than a strong one.

The Eight Wastes of Lean Production

The eight wastes of Lean are concerned with processes throughout the business, such as product creation, specialized service development, and other activities. These are:

  1. Defects
  2. Overproduction
  3. Unnecessary Transportation
  4. Non-Value Added Processing
  5. Unnecessary Motion
  6. Waiting
  7. Excess Inventory
  8. Unused Talent

How Can Lean Manufacturing be Implemented?

Lean is commonly understood to mean “waste elimination and improvement in quality and production times, as well as cost savings.” It is one way of approaching lean manufacturing. But it may also be done using the Toyota Way, which encourages company leaders to focus on improving processes over waste.

Both methods have the same objectives, but Toyota’s Way entails eliminating waste naturally rather than seeking it out. Followers of this approach to implementation claim that it provides a system-wide viewpoint that may benefit an entire organization rather than only targeting specific pollutants.

The Toyota Way is a framework for reducing an organization’s operational complexity to comprehend better and manage the workplace. This technique also utilizes mentoring known as “Senpai and Kohai” (Senior and Junior) to help foster Lean thinking throughout an organization’s hierarchy.

Tips to Implement Lean Processes

There are four stages to designing your lean project management system:

Design a Simple Manufacturing System

The quicker you can monitor and improve your systems by eliminating waste, the simpler they become.

Keep Searching for Ways to Improve

Managers and team members should be encouraged and aided in finding methods to enhance procedures and routines. It is essential to have an honest assessment of processes to identify areas for improvement. The more specific these improvements are to your company and procedures, the more effective they will be.

Continuously Implement Design Improvements

You must include them in your plans, methods, and processes to improve. Improving isn’t enough; you also have to put them into practice. Similarly, there should be some assessment to show that improvements have occurred. It’s often more beneficial to make small, continuous changes than large, broad ones.

Seek Staff Buy-In

You must win the support of your staff to complete the first three stages effectively. Management may put it at risk if employees do not support it.

What is an Example of Lean Manufacturing?

Lean manufacturing involves analyzing every step of the production process to find ways to save time and resources. For example, one common Lean manufacturing technique is known as Just-In-Time (JIT) production. It involves scheduling deliveries of raw materials and components to arrive precisely when needed, without any inventory waste. By reducing the amount of time that raw materials sit idle, Just-In-Time production helps to minimize waste and maximize efficiency.

Another common Lean manufacturing technique is known as continuous flow production. It involves designing the production process so that each workstation can quickly replenish the necessary supplies. It allows work to proceed smoothly, without any interruptions or delays. As these examples illustrate, lean manufacturing is all about finding ways to eliminate waste and optimize efficiency.

Lean Manufacturing Tools

Implementing a Lean management system is possible with the help of several Lean manufacturing tools, such as:

  • Single-Minute Exchange of Dies (SMED) – a rapid technique to move from one manufacturing procedure to the next
  • Value stream mapping – a value stream map aids executives in identifying process improvement possibilities by displaying each stage of the production process
  • 5S – a method for organizing a workplace
  • Kanban boards – visualizes workflow
  • Poka-yoke – error-proofing
  • Total productive maintenance – enhances the integrity and quality of manufacturing procedures
  • Rank order clustering – production flow analysis
  • Single-point scheduling
  • Redesigning working cells
  • Multi-process handling
  • Control charts – for workload checking
Robertson Paredes

SafetyCulture staff writer

Rob Paredes

Rob Paredes is a content contributor for SafetyCulture. He is a content writer who also does copy for websites, sales pages, and landing pages. Rob worked as a financial advisor, a freelance copywriter, and a Network Engineer for more than a decade before joining SafetyCulture. He got interested in writing because of the influence of his friends; aside from writing, he has an interest in personal finance, dogs, and collecting Allen Iverson cards.

Rob Paredes is a content contributor for SafetyCulture. He is a content writer who also does copy for websites, sales pages, and landing pages. Rob worked as a financial advisor, a freelance copywriter, and a Network Engineer for more than a decade before joining SafetyCulture. He got interested in writing because of the influence of his friends; aside from writing, he has an interest in personal finance, dogs, and collecting Allen Iverson cards.