4 lean manufacturing fundamentals you can count on

Originally imported from Japan in the 1980s, lean manufacturing continues to play a key role in every successful U.S. manufacturer. Lean companies make their products as efficiently as possible, using the least possible staff time, equipment and working capital.

Take just-in-time (JIT) inventory management. This efficient supply chain strategy reduces inventory costs — such as storage, insurance, pilferage and obsolescence — through inexpensive, reliable overnight shipping and online order fulfillment. When implementing JIT, however, plant managers need to understand the trade-off between reducing inventory carrying costs and meeting customers’ imminent needs.

Increased global competition and declining operating margins make these four lean manufacturing fundamentals especially important in today’s marketplace:

1. Waste not, want not. Lean manufacturing limits the amount of time, materials and other resources that are required to produce a finished product. Are your dumpsters full each week? If so, there may be an opportunity to reduce the amount of materials necessary to produce your goods. Waste also involves underutilized labor and inventory, defective products, and disorganized assembly line layout.

Lean manufacturers organize work spaces to expedite workflow, which limits unnecessary movements or steps employees must make to complete repetitive tasks. For example, suppose an employee spends an hour of each eight-hour day walking back and forth to an outside storage facility to obtain parts. This unnecessary transport time results in a 12.5% reduction in productivity.

2. Commit to quality. Poor or inconsistent quality can destroy your business. Yet ensuring the highest possible quality for every product shipped out the door is easier said than done, especially if your operations are streamlined.

Quality is everyone’s job, but it starts with your top executives. Management must share customer feedback with subordinates and provide frontline workers with effective quality control (QC) tools. Effective QC procedures are necessary to ensure product defects are caught and corrected before products ship to customers. Train employees how to use equipment properly, spot defects and errors, fix today’s mistakes — and prevent the same mistakes from occurring tomorrow.

For example, suppose a small aftermarket automobile manufacturer installs a sophisticated computerized system for detecting defects in its precision milled products. This QC tool will help catch problems early in the manufacturing process. However, you must prevent employees from becoming complacent. They still need training on how to spot packaging errors, with the aid of the computerized QC system, as parts roll down the assembly line. Such standardization will improve workflow and increase efficiency in the workplace.

3. Create a consistent workflow. Lean manufacturing principles discourage dramatic production fluctuations, because such fluctuations can lead to overtime pay, sloppy workmanship and stressed-out workers. Instead, management should forecast demand and produce consistent output each period. Ideally, inventory on hand, not additional output, should be used to shore up gaps when large customer orders arrive.

Accurate forecasts require close contact with your customers. Some customers grant suppliers access to their enterprise resource systems to monitor inventory levels and anticipate demand. Salespeople can also forewarn plant managers of large orders in the pipeline, as well as the loss of a major customer, so the factory can gradually adjust production as needed.

4. Put people first. Successful lean endeavors encourage happier workforces. A happy worker is typically a productive worker, who is likely to show up on time and take pride in his or her work.

Lean manufacturing is a continuous improvement process that relies on everyone in the organization to identify opportunities to enhance efficiency. Successful lean initiatives hinge on people who are armed with common sense and accountability.

If you would like more information on integrating lean processes into your operations, contact us.

About the Authors

John E. Jenkins
John E. Jenkins
Partner, Taxation Services


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