Step Up to Lean
Achieve the benefits of lean, one step at a time.
By Gerald Najarian
There is no question that lean and its antecedents—Just-in-Time (JIT), flow, and demand-based manufacturing—contribute mightily to a company’s ability to deliver outstanding customer service while tying up a minimum of working capital principally in the form of inventories. The attributes of well-managed manufacturing shops have been gathered under the broad heading of lean and have been given programmatic status.
Based on a variety of research, here are the benefits claimed for lean:
- reduced cycle times: 60+ percent
- improved space utilization: 40+ percent
- higher fill rates: approaching 99 percent
- greater throughput : 25+ percent
- reduced WIP and finished goods inventory: 50+ percent
- improved quality: 50+ percent
- reduced working capital: 20+ percent
- improved worker productivity: 20+ percent
Lean can be defined as the opposite of its antonym, fat. In an economic climate characterized by unpredictable and rapid change, a fat manufacturer will not be able to keep up with its leaner and more agile competitors. Its very weight bogs it down.
A fat factory is fat in many ways—with too many people trained to do one repetitive task, with long setup times that constrain agility, with obsolete inventory, with past due orders in the queue, with high overhead costs due to product complexity. What’s needed is a diet of low fat, i.e., lean manufacturing practices. This kind of diet is a continuum of good manufacturing habits that must be regularly examined and enhanced to keep the enterprise healthy. We’ll start with the improvements that take less time to realize and are less complex and move along the continuum to the more time consuming, difficult, and more rewarding parts of the program.
Getting the process going-the first four steps
The initial efforts in getting lean should be directed toward the strictly managerial and systemic. Many early benefits such as balance and flow, lower finished goods inventories, and shorter order-to-delivery times can be realized without changing a thing about the shop floor and by working on some lean fundamentals.
Start with measurements. When beginning a journey into uncharted territory, it is difficult to establish specific goals, so direction is measured. Improvements can be measured by tracking the trend line of various numbers to see if they are going in the right direction, e.g., lower work-in-process (WIP) inventory and smaller lot sizes. Pick a key measurement for each lean initiative undertaken and begin to report out data no less than weekly. It is sometimes advisable to have more than one measurement for an initiative, but care should be taken to avoid having too many measures that complicate understanding of progress.
Schedule for lean. Scheduling is the flow component of the lean factory. Lean scheduling means scheduling to the manufacturing environment—make-to-stock (MTS), engineer-to-order (ETO), make-to-order (MTO), or assemble-to-order (ATO)—in small finished goods lot sizes as close to the customer order as possible and with component buffer stocks maintained as far back in the process as possible. A good example of lean scheduling is an HVAC equipment factory that schedules air conditioners and water heaters for final assembly to the customer order quantities due in a two- to three-day bucket and maintains layered buffers of raw and fabricated components common to most end items. The fat opposite to this type of lean scheduling is the old available-to-promise logic that drove companies to long customer lead times with high finished goods stocks.
Key measurement: shop order due date performance-percentage of orders completed on or before due date.
Forecast lean. Even though many think that lean/JIT operations should not have to forecast, but should merely manufacture to customer order as received, not all operations are amenable to this approach. After all, in order to schedule material receipts and fabricate components before final assembly, one must have some idea what might be demanded. Hence, lean forecasting. The rule here is this: As you schedule, so should you forecast. Since a lean operation carries as little finished goods inventory as is humanly possible, the forecast is going to be used to maintain the necessary buffer stocks further back in the supply chain, i.e., raw material and component stocks. You may need to or wish to forecast to the finished SKU level, but the objective of such a detailed forecast is to drive the common raw and fabricated parts production close to the customer order. It is a good idea to get a forecasting system that gives you probable forecast error so you can cover potential error with raw material stock and ensure customer service in a tight lead-time environment.
Key measurement: the number of shortage incidents, to be shown as an absolute number and reported weekly.
Balance and cross-train for lean. Balancing a plant in lean terms means to adjust the rate of output to the rate of demand. Balancing the load in a plant to the rate of customer demand flies in the face of traditional (fat) manufacturing thinking, which would prefer to run at the machine rate. Lean balancing introduces three concepts—rate setting, queue limits, and cross-training of the work force. Rate setting means abandoning the doctrine of full utilization of all lines all the time. If a line is rated at 100 pieces per hour and demand comes out to 75 pieces per hour for the period in question, then the line is run at the demand rate. Queue limits refers to the idea of never letting the queue of demand exceed a set number of production days, when demand is greater than the maximum line rate. With rate setting, some workers will be idled. With queue limits, some will be required to work the necessary overtime to ensure timely customer shipments. Both concepts relate to cross-training-idled workers can work elsewhere in the plant and can work overtime on another line if and when needed.
Key measurements: finished goods inventory turns and labor time per piece per line. Turns should go up and labor time should be flat to down.
Right in the middle
As you move along the lean continuum, you will need to focus on organization and how work is done in the various shops in the plant. These steps will likely require physical changes in the floor layout and modification of work practices to eliminate fat and enhance flow. After these are implemented, lower WIP inventory, smaller lot sizes, and better quality will result.
Cellular organization. Not every part of the typical fabrication/assembly plant or process plant can be completely organized in product-oriented cells. For example, imagine the plant that assembles products from injected plastic and stamped metal components. It would be impractical and cost prohibitive to have injection molding machines and stamping presses for each of a multitude of product family cells, but the final assembly operations can be organized by product family and buffered with components to ensure availability and flow. Buffer stocks and their use in a pull system are discussed in the later steps. Similarly, in a process-type operation such as private label foods, while bottling or canning lines are organized in product family cells, they produce the actual food in common vessel and pipe centers with small buffers, if any. Here are the attributes of a lean-oriented cellular operation.
- No subassemblies and operations in sequence.There are no subassemblies made in a lean cell. If the bill of material (BOM) calls for a subassembly, we incorporate the subassembly into the overall process of putting out a final product from the cell. As the previously batched subassembly (whether component or final assembly) is made, it is immediately passed on in the correct sequence to the next operation.
- One-piece production. Frequently dismissed as an ideal, one-piece production is a must in cellular operations. There are no queues between operations in a lean cell. No queue means that the varying speeds of each machine or manual operation must be keyed to a demand rate of the customer or operation it is feeding that doesn’t exceed the rate of the slowest machine or operation.
- Flexible layout and worker proximity. One of the prime objectives of a cellular layout is to be able to flex the output of the cell according to the demand rate. Flexing almost always has to do with the amount of labor assigned to the cell. Therefore, a flexible layout should accommodate changes in its worker compliment to make the best use of the total factory labor force. Cells that are U- or J-shaped facilitate such flexibility by enabling workers to stand back-to-back as well as side-by-side, thereby facilitating mobility in the cell in terms of performing multiple operations when necessary. Such layouts are in contrast to the traditional fat layout in long assembly lines where workers in side-by-side formation cannot turn around to do another task.
- Worker in motion multitasking. In an advanced well-laid-out lean cell, workers are doing more than one specialized task, whether operating a machine or performing manual tasks or functioning as the material handler. This mobility avoids the mental fatigue inherent in doing a task repeatedly in the same space and saves labor cost.
We abandon here the fat model of functional organization and layout of plants—functions once grouped into centers of functional activity are now resident in the product cells. Where there is not enough functional equipment to deploy in product cells or it is truly impractical to do so, cells are simulated using a pull system.
Key measurement: WIP inventories. They should be trending down.
Setup reduction for short cycles. The ability to produce in small lot sizes and level load mixed model production lines is dependent on short production cycle times, which in turn are dependent on rapid changeover from one model in the line to the next. If the models are not produced in small lot sizes, batch production to avoid frequent changeover will still be the mode. Successfully balancing the line and setting the overall rate at the demand for all end items, but then losing the customer service and finished goods inventory benefit of producing models in a short cycle defeats the purpose of balance. To keep finished goods inventory at the absolute minimum and ship product within the stated lead time, it is an imperative to make small lots in a short cycle. The cycle time to make a scheduled lot of a product is the elapsed time from the point that the previous product ceases manufacture to the point that current production is in the distribution area. The principal amount of time elapsed in making a lot of product, other than the actual manufacturing touch time, is setup time. If setups are reduced to their minimum, then the lot size can be set to its smallest amount consistent with the quantity needed in that scheduled time bucket.
Key measurement: average cycle time per line.
Standardized work for lean. The operation sequence of work tasks and the times set as the standards for accomplishing them found in the router modules of enterprise resources planning (ERP) and materials requirements planning (MRP) systems fall short of real standardization. Work standardization in a lean environment requires real industrial engineering of tasks and times to ensure the exact same work is done at each operation in realistic times to discourage shortcuts. This type of standardization is a hallmark of the renowned Toyota Production System. Engineered work goes beyond specifying what is to be done to how it is to be done in detail. For example, if an operator is to fasten one part to another with a ratchet device, the work standard would specify the number of turns of the device required to achieve the best connection, and the workers would be trained to perform the work exactly as called for by the standard. Such standardization ensures consistent quality for the customer and avoidance of rework.
Key measurement: first time quality, i.e., the number of usable parts transferred out of the cell as a percentage of total cell production.
Self-inspection. There is no place in a lean process for inspectors. The traditional inspection after the fact has to be supplanted by in-line inspection by the workers. A significant attribute of lean is quality resulting from one-piece production and work standardization. Self-inspection, both in the product cells and in the common centers, should be added. Self-inspection is largely a discipline to be enforced against clear quality criteria provided to employees and reinforced with quality inspection training. The rule in a lean environment is that defective production may not be passed on to the next operation.
Key measurement: first time quality, i.e., the number of usable parts transferred out of the cell as a percentage of total cell production.
The final four
The following are advanced lean concepts in which the process is synchronized, suppliers are treated as partners in the supply chain, cell workers are making decisions about the running of their operation, and continuous improvement is centered on the constraint.
Pulling for lean.A pull system is not dependent on how information is transmitted. The best known is the kanban card approach, but there are numerous ways of sending pull signals, from computer messages to ping pong balls. What is important is this-that demand at the last cell controls the process and that as demand reduces the buffer inventory in the final cell, a signal is sent to the preceding operation to replenish the buffer. This repeats itself in preceding operations all the way back to raw materials storage many times daily.
The Toyota bin and card approach is a good example. A final assembly cell withdraws from its buffer inventory a bin of parts from which to assemble a lot size of finished product. It sends a card to the machining cell that makes the parts as a signal to produce a fresh bin of those parts. The machining cell in turn withdraws a bin of steel from its buffer stock to use in complying with the replenishment signal just received and sends a card to the raw steel storage area as a signal to transfer a bin of steel to the machine center. As cycle times decline, the bin sizes (i.e., the lot sizes) will become smaller and the lean objective of rapid flow with minimum buffers will be realized.
Key measurement: inventory balance percentage. Finished goods as a percent of total inventory should decline, and the raw materials and components percentage should increase.
Lean materials management. Materials management in a lean environment is focused on lean purchasing and lean storage.
- Lean purchasing. In lean purchasing, the old emphasis on price as the dominant standard of value is abandoned in favor of the total value received in quality, delivery reliability, lead time, information sharing and design cooperation, and administrative simplification. A supplier that meets these criteria will take cost and time out of your lean processes. When suppliers provide quality materials, the time and cost of incoming inspection is no longer incurred. Short lead times reduce the amount of inventory needed. With information sharing and administrative simplification come vendor-managed inventories and elimination of the paperwork and communication involved in issuing releases. Lean purchasing is a one supplier at a time certification program.Key measurement: the dollar value of material purchases obtained from certified suppliers.
- Lean storage. One approach to lean storage is to have materials delivered directly to the line by the supplier. This eliminates double handling of materials and requires that cells be designed to accommodate orderly material storage. The second approach is to kit the required materials well in advance of the time bucket in which they will be used and deliver them to the line early.
Key measurement: average cycle time per line.
Lean maintenance. There is no place for the “breakdown approach” to maintenance in a lean organization, yet the preventive maintenance approach can result in over-servicing and unrealistic amounts of machine downtime. In lean maintenance, maintenance decision making and some actual maintenance is actually performed by the producing department’s work force. Popularly known in recent years as total productive maintenance (TPM), this approach assigns the cell workers with such maintenance tasks as cleaning, lubrication, wear parts replacement, minor repairs, and daily precision and preventative checking. Cell workers and maintenance workers actually collaborate on who will do what tasks, when, and how frequently. Lean maintenance transforms maintenance from an annoying overhead activity into an integral part of the manufacturing process.
Key measurement: line uptime—the number of clock hours a line runs as a percentage of the number of hours it was scheduled to run.
Opening the bottleneck. A plant cannot manufacture more product than can pass through the bottleneck center, and the other centers should not be run as though it could. Instead, a protective WIP buffer is allowed to exist in front of the bottleneck center, and WIP is scheduled into the bottleneck center according to shop order due date. Every plant has a bottleneck. A lean shop enhances flow and increases throughput by continually opening the current bottleneck, waiting for the next one to appear, and then opening that one. There are numerous ways to open a bottleneck: overtime, an additional shift, using floaters to keep the center running through scheduled breaks and lunch periods, outsourcing, or additional machinery. Continual focus on breaking the current constraint, thus increasing throughput and profit, becomes the operating mode of continuous improvement in an advanced lean organization.
No matter where a company is in its efforts to become lean, whether beginner or black belt, one is always in the process of becoming lean. Lean is a continuum because circumstances change and the essential steps outlined here will be upgraded frequently as time goes on. The continuum is a cycle—factory management goes through the twelve steps of the lean continuum and then refines them over time to keep the fat out of the operation. Will it work in your plant? Absolutely. Lean is not plant or industry or process specific. It is anti-fat specific. Take up the challenge and see the results in synchronized and profitable and lean operations.
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Fat versus Lean Table
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| Plant Attribute | Fat Manufacturing | Lean Manufacturing |
| Measurements | Standard cost variances; emphasis on labor efficiency and overhead absorption; static goals | Dynamic goals and data; emphasis on manufacturing process and quality measures; focus on continuous improvement |
| Scheduling | Available-to-promise orientation; tolerance of past dues; building finished good to level load; long runs and large lots | Scheduling to the environment; small lots close to the customer order |
| Forecasting | Done annually without benefit of a periodic SOP review; used for finished goods production only | Reviewed monthly in an SOP setting; used to drive buffer stocks; has probable forecast error capability |
| Demand balance | Run lines to capacity all the time; full utilization of the capacity; inflexible work force | Run lines to the demand rate; queue limits policy to ensure customer service; cross-trained workers |
| Plant layout/organization | Functional orientation; production of subassemblies in large quantities; linear layout; labor immobility | Organization in product cells; one-piece production of final cell product; U-shaped layout; worker in motion |
| Setup time | Long and inefficient setup practices accompanied by long run cycles and large lot sizes to amortize the setup | Rapid and well-planned setups permitting small lot production and short cycle times |
| Work standards | Imprecise and outdated work standards | Precise work standards based on current and realistic industrial engineering |
| Quality inspection | Inspection after the fact by dedicated inspectors; high reject rates | Self-inspection by the workers in the cell; no defective goods moved to next operation; low reject rates |
| Material flow orientation | Push approach: make parts in advance of need based on the schedule for the center | Pull approach: make parts only when signaled by extinguished buffer stocks |
| Materials management | Price-only purchasing: supplier as non- participant; materials stored off line with delivery as part of the cycle time | Full value purchasing: supplier as partner; materials stored at the line |
| Maintenance | Breakdown maintenance or strict preventive maintenance according to the machine manufacturer’s schedule | Total productive maintenance in which cell workers perform routine maintenance tasks and participate in maintenance decisions |
| Bottleneck management | Constraint center treated as a perennial problem with little focus |
Constant focus on the constraint resource as an opportunity to increase throughput by breaking the bottleneck |
This article appeared in the January 2003 issue of APICS The Performance Advantage Magazine
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April 7th, 2011 at 9:17 pm
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