Lean Manufacturing: What is it, How is it Done & Why?
Lean manufacturing has become deeply embedded in modern manufacturing – yet for many the principles of lean seem confusing and jargon-heavy. Let’s unpack lean manufacturing and look at how lean practices can give manufacturers a competitive edge.
In this lean manufacturing guide:
What is lean manufacturing?
Lean is a systematic approach to manufacturing processes that saves time, money and resources while simultaneously reducing waste and focusing on continuous improvement. Executed as a holistic business philosophy, the lean methodology delivers sustainable results and improvements within manufacturing operations.
In short, lean manufacturing is a business model that minimises manufacturing waste without sacrificing productivity.
Why is lean manufacturing important?
The terms ‘lean manufacturing’ and ‘lean production’ are often used interchangeably to describe the same approach. Regardless of the term, lean is important for manufacturing for the following reasons:
- Lean manufacturing improves overall business performance
- Lean manufacturing optimises inventory control
- Lean manufacturing improves quality while reducing cost
- Lean manufacturing is flexible and allows rapid responses
- Lean manufacturing prevents the under-utilisation of equipment
- Lean manufacturing reduces waste in perishable products and reduces dated stock
Lean manufacturing can be implemented by manufacturers of all sizes. It is beneficial to both large organisations and SMEs.
The meaning of lean manufacturing
The meaning of lean manufacturing is best summed up as waste reduction within a production system. That’s because behind every lean manufacturing operation lie practical steps that reduce waste – whether that waste be human work that adds little value, wasted time, unnecessary motion, or excess inventory in a warehouse.
Advantages of lean manufacturing
The benefits of lean manufacturing include smoother production flows, reduced cycle times, less inventory and lower production costs. A lean operation means only dealing with the supplies, equipment and labour required to meet current demand.
Space and movement are conserved in lean manufacturing facilities leading to greater production efficiency. The elimination of activities with no value-add increases productivity and improves connectivity for faster decision-making. Lean means fewer defects and errors, less time spent waiting, and less complexity.
Disadvantages of lean manufacturing
The most significant disadvantage of lean manufacturing is that it allows little room for error. Any equipment or labour failure may lead to irregularities or cause the entire operation to fall behind. In the event of a breakdown, employees may be unable to switch to another machine because with lean manufacturing, everything is being utilised.
Production disruptions can in turn lead to delivery failures and order fulfilment delays, resulting in customer relationship issues and the potential to lose business to competitors.
Similarly, the global supply chain disruptions of 2020-2021 were likely exacerbated by the global reliance on lean principles. With widespread border closures and illness, businesses that operated on slim inventory levels were quickly impacted, causing a ripple effect down the supply chain as their customers were delayed in turn.
The origin of lean manufacturing
Lean manufacturing has its origins in 1940s Japan. Toyota car manufacturers developed a series of simple innovations based on Ford’s assembly flow production to provide both continuity in process flow and a wide variety in product offerings. It was Japanese engineer Ohno Taiichi who first devised the Toyota Production System (TPS), a philosophy that would eventually be picked up by US companies and turn into lean manufacturing.
Lean manufacturing has now been adopted by industries across the globe, and has evolved since the days of the TPS. The use of automation has expanded lean manufacturing concepts, with technology focused on reducing human operator-error while maintaining lean manufacturing principles.
Today, a new generation of technology is transforming lean manufacturing with widely available cloud software, autonomous robots, machine learning and the Internet of Things, changing and tweaking lean concepts to deliver streamlined operations and real-time, holistic views of planning and production processes.
The five principles of lean manufacturing
Lean manufacturing is based on five principles – interconnected steps designed to create value and eliminate waste and redundant action. The five principles of lean manufacturing are:
1. Identify value
The first and most critical step in the lean process is identifying the value produced. Lean manufacturers should consider the product they are delivering, against the price customers pay. Using qualitative and quantitative techniques such as interviews and surveys, and with the aid of demographic data and online analytics, companies can identify value in terms of what the customer wants, how they want it delivered, and the price they can afford.
2. Identify the value stream
This step uses the customer’s value as a reference point to identify all the actions and processes that contribute to that value. Any activities that don’t add value are considered waste and should be eliminated. Reducing or eliminating wasted steps unnecessary to the value stream gives the customer what they want while reducing the cost of delivering the product.
3. Create flow
Flow is a key concept of lean manufacturing. Any type of waiting is a waste. In creating a flow of value, the aim is to ensure value-adding activities flow smoothly from the moment an order is received to the moment the goods are delivered to the customer. Strategies to improve flow include breaking down each production step, flattening out the workload, and developing cross-functional teams with employees trained to be multi-skilled and adaptive.
4. Establish pull
The aim of establishing pull is to avoid overproduction and only produce the value customers need. Pull-based systems seek to maintain a balance between having the necessary materials and information required for a smooth flow of work, and limiting on-hand and work-in-progress inventory stock. Inventory is considered the largest waste in any production system; therefore, a pull-based system employs Just-in-time delivery and manufacturing to ensure goods are only created when they’re needed, and in the quantities required.
5. Continuous improvement
The pursuit of perfection, known as continuous improvement, is the ongoing effort to apply the first four steps. For continuous improvement to succeed it should be at the heart of any lean organisation. In a lean manufacturing system, all employees should strive to continually improve processes – whittling away at inefficiencies and waste in the name of creating the most value for the customer, at the lowest cost.
Lean methodology and the continuous improvement cycle
The methodology behind lean is designed to reduce any steps within a process that do not add value. Lean strategies allow manufacturers to reduce operating costs and unnecessary workforce processes. Lean practitioners have more efficient processes overall, enabling them to produce more reliable, high-quality products.
Lean methodology was initially established for manufacturers but has since evolved into an extremely popular methodology for process management across the board.
Lean management in the manufacturing industry : Six Sigma
Today, there are many different ways for managers to apply lean principles in their business. One of the leading lean management methodologies is Six Sigma, which was developed by engineers at Motorola in 1986.
The Six Sigma method provides manufacturing industries with tools for improving business processes, increasing performance and decreasing process variations. It’s distinctive for the way it qualifies practitioners using a hierarchy of karate-style belts:
- Yellow belt is a basic introduction to Six Sigma for newbies to the principles of lean
- Green belt is the intermediate program that prepares participants for work on process improvement projects in an organisation
- Black belt is the advanced program that prepares people to manage and lead project teams
- Master black belt, as the name suggests, is the prestigious program that prepares the recipients of this level to become educators and experts in the field
Kanban and lean
Based on the Japanese words for ‘sign board’, Kanban in its simplest form is the practice of using boards to make work activities visible at every step in a process, aiding the flow of information. More broadly, the intention of Kanban is to improve flow with clear, visual communication of tasks, progress and limitations.
A basic Kanban board is characterised as a vertical flat surface divided into three columns to represent the three primary states of any task:
Job notes are added to the columns on a Kanban board, moving through the workflow to demonstrate the progress of tasks through the three stages.
Today Kanban has evolved into a full philosophy for process management of all kinds and is especially used within software development. However, any business can make use of Kanban principles by using a modern software tool like Asana or Trello where users record tasks on visual notes that are moved from one side of a job board to another as they’re completed.
- Learn more: 8 Examples of Kanban in Lean Manufacturing
Another lean-related term is the concept of Just-in-time (JIT) manufacturing. The goal of JIT is to establish a workflow that reduces costs and delays within production processes and product distribution. It does this by maintaining as near to zero inventory stock across the organisation and its supply chain as possible.
Again, JIT was born in Toyota’s manufacturing plants and allowed the car maker to meet consumer demand with minimum delay and at a lower price.
Pull vs push production
JIT works on the foundation that goods must only be produced and moved based on actual demand or consumption. This is sometimes called ‘pull production’ – where work is ‘pulled’ through the factory in response to a sales order.
Typically, the parts needed to begin the order are held in stock, while the parts required to complete the order are purchased responsively. It’s an approach that keeps inventory costs low while allowing for rapid fulfilment – which is key to the JIT manufacturing philosophy.
Successful pull production, however, generally requires online manufacturing inventory management software. When a manufacturer receives a sales order, a good software system lets them quickly and easily:
- Ship any assembled stock immediately
- Begin production based on what can be manufactured using components held in inventory
- Order the remaining components needed to complete the order
Lean manufacturing vs Just-in-time
The key difference between lean manufacturing and JIT is that lean principles focus on the customer and JIT focuses more on the internal aspect of the manufacturing process. JIT can be implemented as a component of lean manufacturing because JIT helps eliminate the waste that is excessive inventory stock.
Lean manufacturing and technology
Recent research shows that technology and lean methodology have a complementary effect on business performance, and this can be easily seen in manufacturers using Unleashed software.
An integrated manufacturing inventory management software package like Unleashed brings many lean-like advantages, with perhaps the most obvious being the way it allows for a Just-in-time manufacturing approach.
Just-in-time manufacturing and Unleashed
Rather than being a static document, a sales order in Unleashed becomes an interactive launching pad for the full purchasing, manufacturing and despatch process.
Because Unleashed always gives a live view of stock on hand, when a sales order arrives the available quantities – and locations – of required items are immediately visible, and the purchase can be fulfilled from within the sales order.
However, in a JIT environment it’s not economical to hold large quantities of stock at all times. So Unleashed allows for split shipments, with orders being part fulfilled – and the remaining items ordered from a preferred supplier from within the supplier management section of the software. Again, all of this is actionable from within the sales order and can be completed in a matter of seconds.
Where JIT manufacturing really comes in to play, however, is through Unleashed’s online Bills of Materials. These ‘recipes’ detail all of the parts and processes required to assemble a manufactured item. So when a sales order is received, the manufacturer is automatically prompted with the precise quantity of stock needed to fulfil that order – taking into account any items that have already been despatched, or that have been assigned to production.
It’s this responsive and ultra-precise approach that allows SMEs in particular to keep their stock on hand costs low and still serve their customers rapidly, while dramatically minimising production waste and over-purchasing.
Software features that support lean manufacturing
Other features within Unleashed that support lean manufacturing include:
- Online B2B purchasing portals for clients, plus eCommerce integrations – maximising process flow, and reducing non-value-adding admin
- Supplier lead time KPIs – for effective supply chain management
- Low stock alerts – to maintain lean stock on hand levels
- Batch tracking – to reduce inventory expiry and waste
- Barcode scanning – to instantly record stock movements and update inventory
- Production waste tracking – to monitor improvements over time
- Work in the cloud – run your business from any location with internet access, on any device – and ensure all staff are working from a single source of truth
Advantages of Just-in-time manufacturing
While cost cutting is a primary objective of being lean, JIT also prioritises the efficient use of time, effort and resources. In practice, this can mean ordering more frequently from local suppliers as opposed to ordering in bulk from cheaper, international suppliers to reduce the time wasted in transportation. This can result in a more environmentally friendly operation, and a more resilient, smaller supply chain.
JIT also eliminates waste from overstocking and storage of inventory stock. It boosts productivity by reducing the time and resources required for manufacturing processes, and can eliminate bottlenecks and improve quality.
Disadvantages of Just-in-time manufacturing
In JIT manufacturing there is less room for error. JIT relies on lean inventory or inventory stock supplied on an as-needed basis. The concept of lean does not allow for large quantities of buffer stock, therefore JIT production is less able to adapt to a sudden increase in market demand.
Production downtime may also occur when there are supply chain disruptions or suppliers are unable to meet their obligations.
Three real world examples of lean manufacturing
Many companies have effectively implemented lean manufacturing, and larger organisations such as Dell and BMW are seen as benchmark examples. However, there are also examples of how lean manufacturing works just as effectively for SMEs, such as Sager Beer Works.
BMW’s lean manufacturing
Lean production is at the core of BMW’s value chain. The car maker built a record 2.51 million cars in 2021 – just over 6,000 cars every day – and leans heavily on JIT coordination for lean efficiency, productivity, and continuous improvement. BMW has developed value-added production principles to create better flow, and repeatable, robust processes for complete value stream optimisation.
Dell and lean manufacturing
Dell was a pioneer in lean manufacturing and even offers training in the Six Sigma framework. Their made-to-order PCs were made possible through JIT inventory and robust supplier networks – and the lower inventory costs unlocked by lean manufacturing gave Dell a competitive edge.
Today the company is staying true to the lean principle of continuous innovation by revising its manufacturing processes. Dell has re-engineered their systems and rationalised its technology infrastructure. The company’s strategy is to streamline its lean principles to evolve as a global business with greater flexibility to adapt to changing market conditions.
Sager Beer Works and lean manufacturing
Sager Beer Works in Rochester, New York, knows that lean manufacturing works for SMEs and craft breweries. That’s because partner and brew master Paul Guarracini, a supply chain manager and lean systems director, bought his experience of implementing lean methods in the US, Europe, and Asia, and applied them to his brewpub.
The successful craft brewery and taproom is a good example of how lean methods are an effective way for SMEs to gain a competitive advantage; Paul is now active in educating other independent brewers in lean manufacturing techniques.
Time to get practical: Where to start with lean manufacturing
There are numerous lean manufacturing tools, production methods and lean manufacturing techniques that organisations can embrace regardless of their size. The following are a few of these tools and processes:
5S in lean manufacturing
5S is a visual system of management based on the five Japanese principles of Seiri (sort), Seiton (set in order), Seiso (shine), Seiketsu (standardise), and Shitsuke (sustain). The 5S principles are systematically applied to organise workspaces in order to improve flow, reduce process numbers and eliminate waste.
5S in practice
Follow the 5S rules in your own business to see immediate benefits:
Seiri / sort
Sort through workspaces and keep only the essential materials required to complete tasks. Anything not used to complete work processes is removed from the work area.
Seiton / Set in order
Organise everything left in the workspace and ensure each item has a designated place. Position materials in a logical way that make tasks easier for workers to complete. This setting in order also involves ergonomic assessment of the workspace to ensure employees don’t need to bend, strain, or make extra movements to reach items.
Seiso / Shine
Keep workspaces clean and well organised to optimise value-driven work. Make the workspace shine by cleaning and maintaining the newly organised space including any necessary maintenance on machinery, equipment, and tools.
Seiketsu / Standardise
Develop a set of organisational and process standards that specify the rules for how and when sort, set in order and shine tasks will be performed. Standards and procedures can include tools such as lists, chart and maintenance schedules.
Shitsuke / Sustain
Conduct regular audits to ensure that the new disciplines and practices are being maintained and sustained. To achieve this, it is important for organisations using the 5S system to include employees in the process, educating and encouraging active participation in 5S.
Bedding 5S into the workplace
5S rules are an easy and logical way to increase understanding of lean principles. The simple steps of 5S are a foundation of Six Sigma, and a simple starting point for implementing lean principles into a business.
Use these five steps to guide your roll-out of 5S in the workplace:
- Train employees. Provide staff with 5S training to ensure they understand the systems and feel adequately prepared for the implementation of 5S. This also demonstrates the business’ commitment to the lean philosophy.
- Build a team. Select a reliable, engaged and committed team to champion the 5S system and help drive its success.
- Provide resources. Design a program for implementation and allocate the time and resources to it.
- Engage staff. Encourage staff to contribute their thoughts and suggestions, and listen to their ideas and provide resources to help develop them. Recognise effort with tangible and intangible rewards.
- Measure results. A simple 30-second test will determine if the 5S system has been implemented successfully. Materials, tools, information, and documents should be easily accessed in less than 30 seconds. Act to remedy any steps that fail the 30-second test.
Kaizen in your workplace
Kaizen means ‘change for better’ in Japanese and in business refers to a mindset of continuous improvement. Kaizen is about small incremental changes that over time yield big results.
Kaizen pursues continuous improvement across leadership, culture, processes, productivity, safety, technology, and quality. For Kaizen to be successful in any workplace it requires the involvement of all employees from top management to admin and operational staff.
How to spot Muda
Muda is the Japanese word for waste. It refers to activities that add no value to what the consumer is willing to pay for. Some waste activities are necessary to support value-add ones, while others need to be identified because they can restrict flow and can result in longer lead times. Spotting Muda in manufacturing requires an assessment of the following:
- Overproduction. This is the most obvious waste in manufacturing. The production of more goods than consumers demand will lead to additional costs and elicits the appearance of the other six wastes of lean. This is due to surplus products or tasks using excessive motion, longer wait times, and extra transportation. Additionally, if occasional defects do occur during overproduction, rework will be required on more units.
- Inventory. Inventory waste is waste associated with unprocessed inventory and is anything that the customer is unwilling to pay for. Excess inventory is often the result of a company holding surplus inventory stock to mitigate against production delays, meet unexpected demand, or other inventory control problems. This excess inventory stock increases storage and depreciation costs but often does not meet customers’ needs or add any value.
- Motion. Motion waste is the unnecessary movement of employees or machinery, especially those that cause injuries or prolong production. Develop a process that enables workers to complete tasks with the least amount of movement.
- Over-processing. This is largely the addition of extra product features that won’t be used and may also include rework or the use of more materials than necessary. Even over-processing waste increases resource costs without adding value to the end user.
- Waiting. This is the easiest waste to recognise because waiting waste occurs whenever goods or processes are not moving. Examples of waiting waste include employees waiting on inventory stock, machinery breakdowns or equipment sitting idle. It is easily identified because the most obvious thing to detect is lost time.
- Transportation. This waste is the movement of resources or materials that doesn’t add value. Additionally, double-handling and the excessive movement of goods not only waste time and resources but can also lead to items being damaged.
- Defects. Defect waste is when goods are produced that are not fit for use. They may require rework, or if significantly defective will become scrap. Defective work that goes back into production costs time, productivity, labour, and tools without adding value.
Is there value in a lean manufacturing qualification?
Lean certifications ensure practitioners understand and can effectively apply the lean philosophy to real-world situations. Training and development are gained through numerous methods with understanding demonstrated by comprehensive practical and exam-based assessments.
As technology and lean manufacturing evolve, lean practitioners can continue to build their knowledge, skills, and experience through recertification or higher-level training.
For many SMEs lean is best adopted informally, with the lessons of lean manufacturing applied in a common-sense way. Using the right manufacturing software can also give your business the advantages of lean thinking without the training, as many of the principles are baked into the flow and efficiency of modern cloud-based software.
However, as a business grows, the advantages of formal training in lean manufacturing likely grow with it.
Should you hire lean manufacturing certified staff?
An increasing number of studies have found that lean manufacturing has significantly contributed to a company’s success. Lack of effective leadership, logistical support, and communication are some of the reasons companies are unsuccessful in lean implementation.
Along with poor plant layout and quality variations of raw materials, these challenges can be addressed by employing lean manufacturing certified staff. Though hiring lean certified staff needs continuous upper management support to generate results.
How do you get lean manufacturing certified?
Lean philosophies are becoming standard practice in contemporary manufacturing enterprises. In response to this, there has been a growth in education and training providers that offer certifications and accreditation in lean and Six Sigma concepts.
Other lean manufacturing terminology
We’ve covered the main concepts in lean manufacturing – here are some other terms you may come across.
Control charts are used to check workflows and determine how much variation exists in a process. Variations that sit within organisational control limits demonstrate that processes are working, while variations outside these control limits indicate there are problems that need correcting.
Jidoka literally means ‘automation with a human touch’. The lean principle of Jidoka is where machines stop automatically upon detecting any abnormal condition and human operators fix the defect to prevent the issue from reoccurring. The four basic elements of Jidoka are detection, stoppage, response, and prevention:
- Detection: Each piece of machinery should be installed with a system for detecting irregularities such as product defects and equipment failures.
- Stoppage: Machines should automatically stop working when an anomaly occurs, ceasing production to contain the issue. Mechanisms should be in place for operators to manually stop production if they notice any abnormalities.
- Response: When auto-stop mechanisms halt production, operators must evaluate the situation, take necessary action, and call for assistance if required. Remedial activities should be undertaken within a set timeframe and a decision made whether to resume production.
- Prevention: If quick fixes enable production to continue, managers should retrospectively investigate the problem and implement permanent solutions. When the issue persists past the set timeframe, a designated team is tasked to investigate and address the root cause to ensure production continues as quickly as possible.
Multi-process handling is when a machine operator sequentially undertakes multiple process tasks that contribute to materials flow. These multi-process operations are critical to the success of JIT manufacturing operations, which rely on cross-trained, multi-functional teams capable of performing several tasks in the production line work cell.
It is therefore imperative that multiple skills training is provided to employees expected to handle multi-process operations. Simplifying machines and processing steps is also key to the success of multi-process operations.
Poka-yoke is the concept of mistake-proofing. Based on the theory of preventing errors before they occur, poka-yoke helps minimise waste by stopping defective items from moving down a production chain. The system is designed to help staff find and correct defects before they reach the next phase of production.
Poka-yoke applications can be preventative safety measures such as interlock switches in manufacturing that shut off equipment when the machine guard is lifted – or light curtains that detect when someone is too close to a dangerous machine, switching it off to prevent injuries. Examples of poka-yoke in daily life include the use of sensors on building, elevator, and train doors, overflow outlets in vanity basins and the spelling and autocorrect functions on electronic devices.
Single-point scheduling attempts to counteract the difficulty of scheduling at several different points within a value stream. Some processes move faster – and others slower – than the average, resulting in parts moving through the system at varying speeds. Scheduling fluctuations are even more complicated when scheduling is done at multiple points along the value stream.
To avoid inventory stock being scattered along the value stream, a pacemaker tool is used to request production from upstream processes. Upstream processes will not produce materials without receiving a pull signal from the pacemaker. The processes downstream of the pacemaker are therefore managed to maintain a continuous flow.
Total productive maintenance (TPM)
Based on the 5S component of lean manufacturing, the aim of TPM is to circumvent breakdowns, accidents, defects, and disruptions caused by equipment stoppage. TPM strategies operate on the premise that everyone with a manufacturing facility should participate in maintenance, not just the maintenance team.
By utilising the skills of all employees, maintenance can be integrated into everyday tasks to improve manufacturing quality and integrity. Preventive maintenance and TPM work order scheduling can be automated using software solutions that help manage, monitor, and control all maintenance activities.
Value stream mapping (VSM)
VSM is a visual tool that uses flowcharts to document each step in a work process. VSM provides an overview and an easy analysis of the current state of a business’ value chain. By illustrating and analysing material flow, VSM identifies waste and bottlenecks, reduces process cycle times, and maximises use of resources.
Work cell redesign
A work cell is the common-sense arrangement of resources in a manufacturing or business environment. Work cell redesign determines the family of parts necessary for production of a product, and establishes the machinery, equipment and personnel needed within the work cell to get the job done. Much like the 5S principle of ‘sort’, work cell redesign aims to eliminate time and movement waste.