Applying lean manufacturing concepts isn’t only about cutting costs

October 2012 - Whether a manufacturer has 10 employees or 100, there are innumerable ways it can improve its operation. Rendering a more efficient operation takes more than just buying state-of-the-art equipment or hiring the most qualified workers. Implementing concepts, namely lean manufacturing, keeps existing resources firing on all cylinders.

Lean manufacturing can be a squishy term. It’s frequently misunderstood as just cost-cutting, says Chet Marchwinski, communications director at the Lean Enterprise Institute, Cambridge, Mass. Going lean will certainly lower costs, raise quality, cut lead times and deliver a raft of bottom-line benefits. But it can only deliver those benefits when understood properly.

“In a lean business system, all employees are engaged in problem-solving to provide customers with what they need when they need it, with minimum waste,” Marchwinski says. Problem-solving in a lean system relies on the Plan-Do-Check-Act cycle of continuous improvement, which proposes a change, implements it, evaluates the results and suggests action. For example, Plymouth Tube Company’s West Monroe, La., plant reduced both lubricant costs and recycling fees as a result of identifying improvement areas with its assessment checklist.

For the metal fabrication or auto production industries, implementing lean manufacturing is a competitive necessity. Trimming costs and inventories frees cash and resources, which are critical in a competitive world economy. This holds particularly true for U.S. companies contributing to a resurgence in manufacturing.

“For example, it frees office and plant space and increases capacity so companies can add product lines, in-source component production and increase output of existing products,” Marchwinski says. “Companies implementing lean can grow by increasing sales while controlling costs.”

While it’s not the only solution, tying technology more closely together is key. For instance, ABB Robotics, Auburn Hills, Mich., developed MultiMove, a software program for programming the movement of multiple robots working together.  

“This means many more tasks can be undertaken with a similar investment in capital equipment,” says Mark Oxlade, arc welding manager for ABB Robotics. Combining multiple machine processes can help forward-thinking U.S. industries withstand economic flux. 

“Lean operating should make the companies less susceptible to the swings and roundabouts of manufacturing life cycles,” Oxlade says.

Sorting out ideas

Where does lean manufacturing fit in with other practices, like Kanban, just-in-time, or Six Sigma? The Kanban system is essentially a lean tool, says Steve Barnhart, service delivery manager for the Illinois Manufacturing Extension Center. It’s a way, or process, to manage the flow of product within a facility. Just-in-time refers to making what a customer wants on demand, with the goal of reducing inventories. 

“When the customer needs it, that’s when you make it. The process is flexible and lean enough to switch over and do it when the customer needs it,” Barnhart says of JIT. “That’s what you’re after.”

Six Sigma is related to lean, but the main difference is taking non value-added activity out of a process. “It’s eliminating all things that are just waste that your customer doesn’t need,” he says. For example, Six Sigma is a set of tools that removes variability in the end result of a steel product. If a small percentage of a product is out of spec, Six Sigma can be used to find out why–whether it’s the steel supplier or the manufacturer.  

“Lean and Six Sigma work as complements of each other,” he adds. 

Reshoring, a recent trend that describes the reversal of outsourcing jobs, could be considered lean. 

The Reshoring Initiative, an Illinois-based group that works with manufacturers to bring jobs back to the United States, offers a Total Cost of Ownership software. The TCO helps companies calculate costs of  offshoring products or services versus working with domestic partners. The intent is to have companies realize it’s cheaper, more efficient and simpler to operate with local partners, instead of sending work overseas.

Bringing back work keeps lead times or deliveries from suffering, which reduces costs. “It certainly plays a part,” Barnhart says.

History points to the United States as the originator of lean concepts. It didn’t really take hold here until Japanese companies, such as Toyota, fully implemented the process and overtook the U.S. auto market because of their high quality and lean practices. Toyota in particular pioneered its Total Production System after World War II and brought it to the United States.

Marchwinski says lean thinkers mainly recognize Henry Ford as the first to integrate an entire production process at Highland Park, Mich., in 1913, marrying interchangeable parts with standard work, called flow production. It wasn’t until the 1980s that “lean” was coined as a term by John Krafcik, who worked with LEI founder Jim Womack at MIT. Today, Krafcik is president and CEO of Hyundai Motor America.

Whether incorporating Six Sigma, operating on a just-in-time basis, or tailoring a mix of these concepts, U.S. companies have options to improve operations. By running a tight ship, they can thrive and be resilient in an unpredictable economy. FFJ