Lean Manufacturing Principles
Eliminating waste from the manufacturing
process is quite challenging,
but it is not impossible.
Many project managers within production
facilities experience the same struggles,
They have found lean manufacturing to be a
viable option.
Manufacturing operation to only produce what
is absolutely essential, ultimately ridding the
factory of any unnecessary production.
What are lean Techniques in Manufacturing
• Lean is an industrial practice where
manufacturing facilities focus on waste
reduction to create more value for the
customer. There are several different lean
techniques, allowing each organization to
fit lean into its own distinct production
process. Three of the most common lean
techniques are 5S, kaizen and kanban.
Lean Manufacturing Principles
For lean to be effective, there are a few principles and
concepts that the method follows.
• Value Identification - Identifying what customers
value is the most important aspect of lean
manufacturing. Defining value can be anything that
the consumer finds to be absolutely essential, which
can help identify the areas that consumers find to be
invaluable.
• Value Stream Mapping - Once value is determined,
then it is time to turn to value stream mapping(VSM).
This process includes identifying every aspect of
the process, from the very beginning where raw
materials are assembled to delivering the product.
This principle helps with finding the other steps that
are producing waste, ultimately enabling the
operation to develop a plan to eliminate it.
• Creating Flow - Once the plan is enacted to
eliminate the waste, the next step is
overseeing the remaining steps within the
operation. This is to ensure that there are no
bottlenecks, interruptions, or any other issue
within the process.
• Establishing a Pull - After the kinks within the
process are figured out, production flow
becomes much more faster and efficient.
This is due to the elimination of the invaluable
steps. This makes it much easier for
consumers to “pull” products from you
whenever needed.
• Seeking Perfection - Incorporating these
steps alone will greatly improve your
production facility, but lean manufacturing
requires substantial effort and a change in
mindset. It is important to view it as a culture,
requiring everyone to be on board.
Taking your process through the lean
methodology several times can help your
production facility come closer to reaching
full potential.
Along with lean principles, it is important to
be aware of common waste within
manufacturing operations.
Waste of Lean Manufacturing
• Motion - Any unnecessary movements from
machines are considered wasteful. This form
of waste can also harm the equipment or
product.
• Inventory - Excessive inventory leads to
increased holding cost, ultimately costing
your facility revenue. Establishing a
production flow that meets customer needs
when expected is much more beneficial to
your supply chain and saves you from
excessive inventory.
• Defects - Any error within a product will usually be
sent back and cost you consumers and money.
Keeping a close eye on your production and
products can help avoid this issue.
• Overproduction - This correlates with high
inventory, which also causes another string of
issues. Even though overproduction seems like it
can save you in the future, it is actually hurting you
in the long run. Therefore, only try to meet
customer requirements when they are needed.
• Transportation - Any form of transportation within
the supply that is non-beneficial is considered
wasteful. This adds up with time and waste
productivity, which is why eliminating unnecessary
steps through value stream mapping is a must.
• Overprocessing - Over processing only puts
more work in than the consumer values.
Therefore, only include the amount of
processing that is considered absolutely
necessary.
• Waiting - Wait time is one of the biggest
forms of waste for manufacturing operations.
Any time where production is halted, it is
costing your facility revenue. Eliminating this
waste can allow your operation to become
much more efficient by saving you time and
money.
Value added or Value adding
• Value added or Value adding refers to a
process within a process which transforms
raw materials or work in progress into much
more valuable goods and services to
customers downstream. It aims at increasing
its value per unit of material. An example of a
value adding steps is the processing of the ore
bauxite to extract alumina, then the smelting of
aluminium from alumina and the extrusion of
aluminium channel from aluminium alloy
billets. These are several value adding steps to
arrive at the final product which the customer
values and is willing to pay for.
• The amount of time spent on value adding
activities in a process can be compared to
the total lead time or time it takes to fill a
customer order. This is sometimes referred to
as the value added to non value added ratio.
This helps identify the proportion of time
spent on non-value adding tasks or steps in
producing each unit of output that doesn't add
value to customers.
• This can then be used as a measure or metric
to monitor continuous improvement or lean
initiatives in reducing the overall customer
lead time. When first analysing a system or
process, the value adding time can
sometimes be below 5% of the total lead time,
this could present great opportunity to
improve or streamline the process reducing
costs and improving lead times to deliver all
goods in time.
NON-VALUE ADDED ACTIVITIES
• The definitions of what constitutes a value-
added or non-value added activity vary
considerably. Value added is in economics
usually defined as the difference between the
costs of purchases and the revenue from the
sale of goods and services produced using
those services (Koskela, 2000).
• This is however not a precise enough
definition from a customer perspective since
it can include activities that do not increase
the customer value.
• A better definition is given by Womack and
Jones (1996), who see a non-value added
activity as "an
activity which absorbs resources but creates
no value".
• Unfortunately, as Koskela (2000) points out,
classifying activities into value-added or non-
value-added is problematic. People usually
annot consistently define what constitutes a
value or non-value added activity. Another
major difficulty with this classification is
employee reaction.
• An alternative to the dichotomous
classification into value or non-value added
activities is Kaplan and Cooper's (1998)
suggestion of a classification into a four-
category value-added scheme:
1. An activity required to produce the product or
improve the process; the activity cannot, on a
cost-justification basis, be improved,
simplified, or reduced in scope at this time.
2. An activity required to produce the product or
improve the process; the activity can be
improved, simplified, or reduced in scope.
3. An activity not required to produce the
product or improve the process; the activity
can
eventually be eliminated by changing a
process or company procedure.
4. An activity not required to produce the
product or improve the process; the activity
can
be eliminated in the short run by changing a
process or a company procedure.
CONCEPTS TO REDUCE NON-VALUE ADDED ACTIVITIES
This section briefly describes the concepts of
lean production, activity-based costing and
Management, and poor-quality costing, and
relate them to non-value added activities.
1. LEAN PRODUCTION
Lean production stems from the Japanese
automotive industry where it evolved from the
1950s based on Ford's production system in the
1920s (Shingo, 1984; Krafcik, 1988).Lean
production, previously also known as the Toyota
Production System (TPS) or the just-in-time
system (Wu, 2003)
• The elimination of non-value added activities is
a cruical aspect for lean thinking, where "waste"
is used synonymously with non-value added
activity.
2. ACTIVITY-BASED COSTING AND
MANAGEMENT
• As production systems were changing there
was a need to change the costing and
accounting systems in order to achieve more
precise estimations of the costs of
activities, products, services and customers
(Cooper & Kaplan, 1988).
3. POOR-QUALITY COSTING
The focus on the quality methodologies have
changed over the years from an inspection
orientation, through process control, to
continuous improvement, and to designing
quality into the product and process.
