Business Management
Mar. 07, 2022

What is lean manufacturing?

Ziv Benzvi

Chief Revenue Officer (CRO) - Priority Software
What is lean manufacturing?

Gaining popularity around the globe, is lean manufacturing. Although it’s not a new approach, for some manufacturers, it’s not yet a tangible reality. Manufacturers who choose to “go lean” take a vested interest in being able to “go green” by optimizing processes, and reducing unnecessary waste that presents no added value to their products nor to their customers.

With production costs on the rise, competition at an all-time high, and so many manufacturers still coping with the unprecedented challenges brought on by the pandemic, lean manufacturing can (and does!) help increase operational efficiency and productivity. No less important, it helps power sustainable production processes and reduce manufacturers’ carbon footprint.

But putting lean manufacturing processes “into practice” is easier said than done. Let’s find out why.

Going lean: What it means

Boosting operational efficiency, maximizing productivity, and reducing waste to remain competitive in the global marketplace, has never been more important to the manufacturing industry than it is today. Many manufacturers have turned their attention to lean manufacturing, often referred to as lean production, that is essentially applying a set of principles, practices, and tools to the development and manufacture of actual products.

Initiated and implemented in Japan by leading automotive manufacturer, Toyota, lean principles were the cornerstone of “just-in-time” manufacturing, whereby inventory was maintained at low “as-needed” levels. In parallel, automated processes were supervised by Toyota employees to ensure quality control, minimize manufacturing system downtime, and reduce transportation and distribution time, and in turn, lower fuel emissions.

For today’s manufacturers, implementing lean manufacturing practices begins with first identifying wasteful processes, be it costs, human resources (actual workforce skills), or materials, and then, eliminating them by replacing them with more optimized lean strategies.

The Big 5: Core principles of lean manufacturing

The five core principles of lean manufacturing are value, the value stream, flow, pull, and perfection, and are briefly explained below. When combined, and used as a platform to implement lean processes, these principles provide a feasible structure by which manufacturers can build a more efficient organization. It is important for the culture of continuous improvement to filter through all levels of an organization, from team members and project managers right up to the executive level, to create a collective responsibility for improvement and value creation.

1. Value

Value is determined by customer and just how much they’re prepared to pay for products and/or services. Only then is this value created by the manufacturer who, in turn, must strive to reduce material waste and associated costs to reach an optimal end price for the customer.

2. Chart the value stream

Identify and reduce waste by analyzing materials throughout the entire product lifecycle, from raw material procurement, through to production, and waste disposal (trash). In short, any element in the process that does not add real value, should be eliminated.

3. Generate flow

Remove operational barriers to enhance product lead time by creating optimal workflows. This ensures that processes are streamlined, and flow efficiently with relatively fewer delays incurred in production, distribution, and delivery to the end customer.

4. Establish a pull system

Start production based on demand only. A pull system is the opposite of a push system, whereby inventory is determined in advance, driven by sales or production forecasts. A pull system relies on flexible processes, where production teams can only move head to further steps in the process once previous steps are complete

5. Perfection

Continuous production process enhancements to achieve the best possible results. Driven by constant procedure and workflow assessment to consistently eradicate waste, and in turn, determine and implement the perfect system for the value stream

Putting lean principles into practice

As organizations may ‘think’ they already have the five lean principles all lined up and ready to roll into action, it’s important to understand that implementing any new process into an organization, takes a considerable amount of time – and patience. For manufacturers, going lean (and staying lean) requires continuous improvement, from the top, down. This means that lean manufacturing principles must be first, well understood, and only then, be well integrated into an organization’s corporate culture, from company management, through to department leaders, procurement specialists, shopfloor managers, operators, technicians, warehouse staff, and even drivers.

Despite the fact that onboarding a lean manufacturing approach demands a real rethinking and reassessing of corporate culture, here’s how manufacturers can implement some of the lean principles, and work towards a leaner and greener organization.

Material waste

Implement a value stream analysis (as described above) to detect wasteful or waste-producing activities throughout the production facility

Unnecessary/ unused inventory

Reduce the high costs of maintaining raw materials in stock by adhering to “as needed” principles to avoid over-stocking, especially as many raw materials become obsolete over time

Production cycles

Accelerate production cycles by implementing digital processes to automate workflows, or produce smaller batches with more stringent quality control, including alerts on defective products on the assembly line

Response time

Generate more accurate production forecasts based on actual customer needs, including the ability to respond quickly to fluctuating market changes and demands

Quality first

Implement product quality testing during various stages in the production process to identify product defects or system glitches that can potentially slow down production, and take corrective action to remediate lags in the process.

Employee power

Enable not only managers and team leaders to make production decisions, but extend the decision-making power to other employees as well, namely those responsible for quality control, machine accuracy, packing and shipping, and distribution, to improve overall efficiency, and employee productivity, and no less important, employee engagement and level of responsibility.

Customer input

Remember, that products are designed for the customer, and that customer feedback should be an integral part of the development and production process. Solicit input from customers via period satisfaction surveys, to take corrective action when, and as required, to optimize production processes and product quality

The power of ERP

Truth be told, when powered by an ERP system that automates and streamlines manufacturing and supply chain processes, the software’s robust forecasting and planning tools, BI and analytics, inventory and distribution, and other operational management modules help reduce the amount of waste throughout the production process. This includes accumulated waste resulting from defective products, overproduction, unused or excessive inventories, and even underused workforce talent.

To that end, an ERP identifies wasteful activities, processes and workflows, be it time, manpower or materials, so that manufacturers can shorten production lead times to produce more items in a shorter time, lower warehousing and inventory costs, and even reduce or eliminate unnecessary warehouse space.

Lean, but not mean? ERP systems help drive lean manufacturing forward, to create and maintain automated, optimized, and sustainable processes. With the right strategic approach to digital transformation, manufacturers are, albeit, slowly, getting on board. But to fully support sustainability and reduce supply chain waster, they must abandon legacy technology and welcome in a new wave of business management solutions. With a tried n’ true integrated approach that ventures across the entire supply chain, manufacturers will be able to streamline processes, improve collaboration, drive greater efficiency and yes, even help clean up the supply chain for generations to come.

The Author

Ziv Benzvi

Chief Revenue Officer (CRO) - Priority Software

Ziv stepped into Priority as the Chief Revenue Officer (CRO) in 2022, overseeing the company's global business operations. With a rich international background, he has spent over 16 years in the US, India, and Thailand. Prior to joining Priority, Ziv held senior leadership roles at Ex Libris (NASDAQ: CLVT) and NICE Systems (NASDAQ: NICE), as well as various sales management positions at Israel Aerospace Industries (IAI). Additionally, Ziv is a former certified attorney with a law degree from the University of Newcastle, England.