Lean Manufacturing - Research Paper Example

Lean Manufacturing Introduction The current paper proceeds to lend credence to the thesis that lean manufacturing improves productivity; reduces waste; improves the morale of employees; and raises the overall profitability of a firm. The increasing demand of consumers for the most useful products and services that has motivated industry players to find the best practice of manufacturing. Among these practices include lean manufacturing. Compared to many other business philosophies, lean manufacturing/operation can be one with the most advantages. It suggests business operations efficiency through continuous waste elimination be it on people, products or processes. This model enables companies to decrease costs thereby increasing profits, hopefully without increasing product market price. Eliminating wastes comes in all forms including materials, motion, inventory, operator time, cycle time, facilities required and space needed. More so, it entails waste reduction in setup, equipment, rejects, rework, downtime, waiting time, scrap, as well as movement or the distance a part travels. Can Lean Manufacturing Improve Productivity? In the past decade, rigorous approaches have been employed to eliminate insignificant expenditures in manufacturing. This trend has become global in scale evidenced by its adoption in British manufacturing from Japan’s car industry. The principles of lean focuses on minimizing costs induced from redundant tasks while directing the business to practices that adds value to the firm. However, it would not be good to expect maximum and lasting benefit from temporary implementation. These protocols are more on bringing about discipline, setting standards, improving cohesion across the business, providing everyone with a core ethos. It is of course significant that the system is well understood by the senior management who as expected must have a clear goal. Lean manufacturing practices are preferred in numerous manufacturing operations over traditional mass production techniques (Doolen and Hacker 2005). Contentions on lean practices arose as researchers argued that these practices are not as competitive and applicable to other operational environments, like those that prioritize considerations such as flexibility of volume, leadership in technology, speed in market and development of new products.. These researchers also identified alternative practices on operation (i.e. strategies that sustain supplemental capacity in the overall supply chain and has been observed to be advantageous). This, however, is in direct contradiction with the waste reduction philosophy of lean practices. For instance, automotive suppliers were provided more flexibility by batch production and craft production methods when quick and process innovations are of priority (Doolen and Hacker 2005). To jump start lean manufacturing, a value stream must be penetrated through the percepts of the end clients – after all, they are the ones expending for the products and services they avail. The lean principle stresses the idea of focusing attention on the complete value stream instead on the company or its functional department. To say value stream is being attended is to pay particular attention to the total band of activities and tasks needed in designing and creating product lines and services. These tasks in the value stream are done with a set of connected functions or companies tracing down from the requirements of customers to the source of production’s raw materials (Doolen and Hacker 2005). Nevertheless, in pursuit of value formation, many other practices have been recognized and implemented other than the lean philosophy. Some of the various practices that are linked with lean production system include total productive maintenance (TPM), Just-in-time (JIT) production systems, single-minute exchange of die (SMED), mistake-proofing, cellular manufacturing, and mixed model production (MMP) (Doolen and Hacker 2005). To achieve a lean company, different lean guru will highlight kaizen events, 5-S initiatives, value-stream mapping, and other related devices. Then again lean manufacturing can be as plain as a defined facility’s flow path and identified delays in production and delivery of products and services. Whatever method a company uses, lean manufacturing all boils down to waste elimination and product flow streamlining (Wetzel and Gibbs 2009). Any acclaimed system of efficiency will never benefit an industry until it perfectly matches a company’s production needs and strategies. Even though thriving application of different lean practices have been recorded – in computer manufacturing, aerospace and automotive assembly to name some – limited success in the employment of lean practices has also been documented by some manufacturing companies. Apparently, there are contributing factors delimiting the use of lean practices in increasing competitiveness. These include varying economic atmospheres, high mix, high levels of demand ambiguity, strict organizational structures, and low-volume product portfolios (Doolen and Hacker 2005). Considering these, one has to analyze its business strategy and find out if productivity enhancement program such as lean exactly contributes to it prior to choosing the appropriate system. This part is sometimes tricky. It entails careful attention to business and operations strategy analysis in terms of the objectives of the process enhancement activity. Same goes with the evaluation of the leadership commitment towards the program, the company’s compliance to the corporate culture change, and identifying the right people to assume the right positions. To go lean is to satisfy these requisites (Bicheno & Holweg 2009). The intensity of lean system implementation across industries and firms is relative factors such as organizational, operational or economic (Doolen and Hacker 2005). There are companies whose strategic concentration pools on the viable market placement by means of new product development. This means that they perceive productivity measures and process improvement unnecessary to their competitive gain. Evidently, senior management in companies with this schema may not support the idea of lean particularly when waste elimination is centered on shop floor. Logically, any process improvement scheme will find no place of success without the support of top management. Lean manufacturing is viewed as most beneficial for companies who regard operational capabilities as a competitive gain. Top management in these companies is more complacent of the systems and productivity enhancement that lean or in any case other process upgrade programs can bring. Still, top executives have to entirely understand the phases of lean implementation so that their motivation will not falter until positive results are realized. This implies that they need to be totally sold out with the idea and accept lean as an integral part of the entire business strategies and operations. This is crucial especially for executives who are at the manufacturing or operational areas or those who are at the division level (Bicheno& Holweg 2009). For high volume companies, lean manufacturing is apparently advantageous since they are engaged in a recurring or cyclic process. In metalcasting, for instance, one may have difficulty identifying how lean operation can directly contribute to its strategies considering its low to medium production of a variety of parts in a day. However in some enterprises having batch operations making an assembly line is difficult. It is hard to find connection in the many separate procedures feeding on one principal process. Lean manufacturing can come and take manage in the metalcasting business since it can identify predictable causes and effects in manufacturing and in the process eliminate them. Lean can also be implemented in inventory management. Inventory is an outlay a company cannot claim until delivered and paid by the customer. Availability of money for regular operations falls short when more inventories left sitting on the shop floor (Wetzel and Gibbs 2009). To illustrate, if an enterprise has $20 million sitting inventory and purged $10 million of it, that’s a liquid notes to the metalcaster’s account. In times the company looks for hard cash, it should realize that it has invested in its own factory, this is what lean operation makes visible. Employing lean operation also enhances efficiency, safety, quality and lead times. Cutting the glut out of the metalcasting course shows glitches in the company which usually lead to downtime and errors. In a lean operation, say the casting which is piling up at the trim press rear in a permanent mold facility will be cleared, whereas in a non-lean operation this instance can just be viewed as a part of a fitting workflow. Lean operation helps the bottleneck become visual, therefore making the management address the cause of its occurrence (Wetzel and Gibbs 2009). Furthermore, lean operation is very resilient. Say your production cost is $70 million and market cost is $100 million, your profit then is $30 million. If your company managed to make the system lean, a possibility of reducing the production cost to $60 million is high and this leads to higher profit. This also assures lesser impact to the business in case the costs of raw materials increase, your competitors will upscale prices but your lean system gives you buffer to retain prices. Can Lean Manufacturing Reduce Waste? There are three distinct strategies usually talked about in contemporary supply chain management. Lean management pertains to the reduction of waste. Waste can be categorized in the following areas: extra processing; motion (including people movements); inventory; waiting; transportation; defects; and overproduction. To illustrate, most transport suppliers will be accustomed with just-in-time methods for consistently delivering small numbers of product line-side to curtail storage, capital outlay, double handling of product and the likelihood of damage to stocked components (Cole 2009). To fully understand the idea of lean is to develop an eye for wastes. In most industries there are seven wastes which need to be identified and eliminated to achieve a lean, fat-free operation: time, inventory, motion, overproduction, defects, unnecessary processes and transportation (EauClaire 2009). After the eye for wastes has been developed, waste elimination must take place quickly. Customers would not opt to pay for products and services knowing the company spend for unnecessary processes or wastes time, making the prices high. This also responds to the principle of giving the clients the value they want. Also, its effectiveness also lies on understanding what exactly the customers are looking for, not just the general dimensions, but the very intricate detail. For instance, efforts to make a part extra appealing may not be essential in the production process. If coating a gear adds no worth, drop the hiccups to eliminate extra energy, time, and materials. Workers also need to recognize that if the waste remained at the blind end, rival enterprise will find the slack and it means bad news (EauClaire 2009). Once the wastes are identified, the company must take note of the five lean principles in waste elimination: identifying the value stream, specifying value, pull, flow, and perfection (Doolen and Hacker 2005). Toyota for example, reduced wastes from business operations and saved countless notes in the process. ‘Flow’ hunts down manufactures across departments and ‘pull’ stimulates flow. In this manner, the enterprise redirects itself focusing on the ‘pull’ of the client’s requirements. Muda – the Japanese label for waste – becomes eliminated when the company finally re-engineers itself toward perfection and its core value. The genuine concentration of this is radically reducing wasted effort and time as identified by the external client. External clients are the end user of your products, meaning if they are willing to spend for something, then it is value added, otherwise it is not (Thilmany 2005). Ultimately, lean manufacturing saves money and time and it contributes to the victory of a new product. Its processes concentrate on effectiveness and simplicity. During its course, every activity is evaluated to conclude whether or not it adds worth or value to the product. Lean product development permits communication between multi-sectoral groups, abridging and keeping the development system moving forward. It also smashes down the barriers of internal department issues in relation to various managers with many projects who concentrate on departmental actions instead on product success or failure (Miller, Richmond and Bowman 2006). Can Lean Improve the Morale of the Employee? Everything has a trade-off. There may be an assured return on one’s investment, but lean implementation has its costs. Aside from being a long term commitment, firms must also invest in their employees which would include on-going trainings. While individuals have potentials in coming up with great outcomes, but one could not succeed in fulfilling something he not adept with; firms’ employees must have the right level of competence and confidence. In this light should we appreciate that a typical time scale for lean implementation is understandably three to five years. Rushing the staff can result to loss of significant human resources. Changing the company’s culture and employee’s norms regarding the proper way of doing things takes time (Cole 2009). In lean, it is a usual perception that manpower may need to be trimmed down in order to save from reduced costs. Laying off employees is an easy way to reduce a firm’s costs- salaries and benefits in particular. However, this can also have a repercussion on the expenses because firms, after the lay-off, spend on severance and outplacement services. (Bruno 2008) These may also result to hurting the worker’s morale most especially if they think that the lay-offs were not handled well. Moreover, it may even limit revenue growth resulting from unhappy workers- even if company’s payroll costs were cut. Another danger in laying-off is the possible elimination in the roster of employee skilled worker. The effect of which can be felt once the climate gets back to normal and the firm is required to employ new workers. This will put the business in a competitive disadvantage (Bruno 2008). Companies who are involving employees in the process of cost-cutting are said to benefit from it. Employees usually have their ideas on getting the work done more efficiently and less expensive. When they start to get involved in making their companies lean, firms will more likely experience success. Employees will continue the practice as long as they know they are safe. These companies, according to analysts, are those chosen by Wall Street when making stock picks, because during a downturn like a recession, aside from trimming costs, there are also cuts on redundant workers resulting to a lean company with a more productive labor force (Bruno 2008). Lean is actually a practice of continually determining and eliminating insignificant waste in an organization. Laying people-off, working few staff for longer hours, and limiting all activities at lower costs without considering quality are tags that people usually associate with ‘Lean and Mean’. Ironically, the phrase of ‘Lean and Mean’ is exactly the opposite of the practice of lean. Thinking abut the principle of lean may bring us to the realization that some positions in an organization, like the managers and supervisors, are actually non-value adding (NVA). That is looking at the very nature of their work. But can organizations push through without those positions? The principle in lean suggests that these positions be examined whether or not they are in support of the real goal providing the lowest cost and at the same time, the highest quality for the customers, that is, without sacrificing efficiency. They also try to see things that can be reduced or eliminated to go in line with the principle of lean. One may think that lean may actually be ‘mean’ because it somehow promotes the advocacy of eliminating positions, like those of managers and supervisors. Lean, however, is also about sustaining the organizations culture which means that no one should be eliminated or wasted. Reductions and improvements are to be done. People in positions (e.g. manager, supervisor, and HR) considered NVA are to be reassigned to a position or task where they would be able to add more value to the company. (Jones 2009) Individual growth is important among employees. People obtain this growth when they see greater results from their efforts and know that they have become more effective. Lean helps the firm focus on their goal and set aside things that are not contributing to their mission. This is important on all offices and area in a company (e.g. sales offices, engineering offices, administration offices, research offices, and the factory floor). This also makes everyone working towards the attainment of the company’s goal. Employees will understand the need to minimize unnecessary effort and work toward that. This increases their morale and makes them more efficient and effective. Individual growth is then realized. (Holmes 2007) The management of human resources has been considered significant in lean implementation. (Agrawal and Graves 1999) Highly skilled and highly qualified personnel plus high-end software and machine results to a working environment that brings about maximum productivity. This usually happens when employee’s morale is appraised and goes well with Lean practices. A good example to look at is the situation between Wing designer and manufacturer Airbus UK. Their employee’s expertise was well complemented by a well developed software and hand held machines. This resulted to a more productive working day for the staff, and therefore gave the firm higher productivity (Lean manufacturing techniques increase production and morale at Airbus UK 2005). In light of the companies’ aim to achieve competitive advantages, many have resorted to exploring lean methodologies. Their thinking usually revolves on getting experts from outside sources to help them be directed as they undergo lean transformation. However, despite the advantages of acquiring outside consultants, conversion to lean can also be made possible through the utilization of inside sources. Internal resources can be helpful accomplishing lean conversion. This is another reason why lean is inconsistent with lay-offs (Jones 2009). Cohesion among employees is one vital factor that makes firms work well and be more productive. It requires all stakeholders (e.g. employees, partners, stakeholders and managers) to respect as embodied in the lean culture. The development of the skills and capabilities of the employees through frequent and effective communication and by a vision and goal shared and understood by everyone has been reflected on the Toyota way. (Sowards 2009) When conversions happen in firms, it is important that the management give equal importance and considerations to all aspects of the conversion. Overlooking certain less significant things can actually have a negative effect in the transformation in the long run, or may contribute to the failure of total and sustainable conversion. Companies who adopt lean programs and are already investing a lot for the transformation, often times overlook one essential factor. That is, they fail to see the need for a leader who is capable of sustaining the program as planned. Companies usually focus on hard operational tools like just-in-time production, and often give less importance and at times even fail to check on the softer side like the development of leaders who can bring boardroom plans and concerns with the shop floor effectively, as reported in “From lean to lasting: Making operational improvements stick”. Characteristics of leaders that can be really effective in dealing with other employees and at then same time attain maximum results are also included in the report. Can Lean Raise Overall Profitability of A Firm? A relevant inquiry in lean manufacturing is on its contribution on the bottomline of the firm. While lean manufacturing may increase productivity, it is sensible to examine whether such increased productivity will eventually contribute to the profitability of the firm. Lowering costs is somewhat parallel to increased profitability. By implementing lean manufacturing, the firm is given the ability to produce higher-quality products at decreased costs with faster response times. This results to greater market share and increased profits margin and (Lean manufacturing implementation 2003). An example of a firm that benefited with their lean operations is APEX. APEX is Toyotas partner-supplier. The thrust of the firm is to establish a stable organization by focusing on few yet strong companies and growing their relationships with these companies. When APEX engaged its forklift business with TOYOTA in 1993, it dawned to be the start of the establishment of its biggest partnership. The following 15 years of APEX with Toyota became fruitful and this was marked by the winning of APEX of the Toyota Supplier of the Year award. This success was credited to the implementation of lean manufacturing. Lean manufacturing reduced costs and increased profits of APEX among other benefits such as making their workers more independent as well as personally invested and involved in the success of the company and quality of its products. Lean manufacturing is also described as a method of improving business processes such that more value is created less work. A rule of thumb is that if a business process does not add value to the firm in any way, more specifically on the product then it is creating waste. If a company wishes to save money, then it can benefit from lean manufacturing (Wetzel and Gibbs 2009). This is because lean has a primary goal of identifying and eradicating waste in all work activities. If one would consider a process in the context of the timeline of material, activities, and information flows, and chart the process from start to end, there will be identified a significant amount of waste. These areas are those which are more of a waste than value-added activity (Wright 2008). Therefore, implementing lean manufacturing will result in increased efficiency and will ultimately improve the bottom line as well as remaining competitive in a global market (EauClaire 2009). An area that may be examine, and there are a lot more others, is the inventory. Lean thinking will promote the business to the next level of efficiency even in inventories. While the idea of large inventories is not necessarily incorrect, having a large level of inventory may be a sign of inefficiency. It should be noted that the firm which can efficiently deliver the meaningful solutions and products to the public are the more successful ones. Inefficient solutions are inferior; and inferior products lead to a decreased bottomline (Rizzo 2008). Lean manufacturing can help in identifying and eliminating wastes in the handling of inventory and will enhance the bottomline eventually. An example of an industry that gains from lean manufacturing is the cosmetics industry. In order to achieve operational excellence, globally excellent cosmetics manufacturers turned to lean manufacturing practices such as the employment of the next-generation rapid microbiological testing methods (RMM). RMM is a tool to save more on operations by reducing costs the company incurs throughout the supply chain that lead to financial performance that is directly measurable. Global manufacturing companies realize huge cost savings by driving new efficiencies throughout the supply chain. New technology can reduce manufacturing cycle times and throughput (Lieberman 2008). Conclusion The increasing demand of consumers for products and services that brings the highest utility for them has motivated the industry players to find the best practice of manufacturing. Compared to many other business philosophies, lean manufacturing/operation can be one with the most advantages. . It suggests business operations efficiency through continuous waste elimination be it on people, products or processes. However, not all companies could become successful in implementing lean due to varying economic atmospheres, high mix, high levels of demand ambiguity, strict organizational structures, and low-volume product portfolios. It is best to first evaluate if lean is suitable before engaging to it since such practice requires a long-term commitment. To fully understand the idea of lean is to develop an eye for wastes and there are several areas of wastes to start from that are common to all firms. It also reduces wastes by eliminating redundancies in people, process and product but it is should not be readily equated to cutting manpower. With wastes on a low, costs are also decreasing, increasing the bottomline. It is important to ensure that the increased in productivity will eventually lead to an increase in profitability. References Agrawal A. & Graves R. J. (1999). 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Lean manufacturing techniques increase production and morale at Airbus UK. (2005). Aircraft Engineering and Aerospace Technology, 77(1), 77-78. Lieberman, C. (2008). Reveal hidden revenue in your supply chain. Global Cosmetic Industry, 176(11), 50. Miller, S., Richmond, J., and Bowman, A. (2006). Streamlined from the start. Mechanical Engineering, 128(3), 30-32. Rizzo, K. (2008). Lean manufacturing: Slim your waste. PackagePrinting, 55(2), 58. Sowards, D. (2009). Lean and mean. Snips, 78(3), 20,22-24. Sun, W. (2008). Lean changes mindsets. Industrial Engineer, 40(2), 24.  Thilmany, J. (2005). Thinking lean. Mechanical Engineering, 127(7), A4-A6. Wetzel, S. and Gibbs, S. (2009). 8 answers to your lean questions. Modern Casting, 99(4), 19-24. Wright, D. (2008). The Toyota way. Security Technology & Design, 18(11), 20.  I. Introduction A. The rationale for lean manufacturing II. Can Lean Manufacturing Improve Productivity? A. Justification for the use of lean manufacturing B. Concerns on lean manufacturing C. Jumpstarting lean manufacturing D. Related devices that improve productivity E. Factors that delimit the use of lean F. Lean manufacturing for high volume companies G. Lean manufacturing in inventory management III. Can Lean Manufacturing Reduce Waste? A. Lean management for the reduction of waste B. Developing an eye for wastes C. Five lean principles for waste elimination D. Lean for effectiveness and simplicity IV. Can Lean Improve the Morale of the Employee? A. Training employees as an investment for lean manufacturing V. Conclusion A. Lean and Profitability Read More