"Lean Simplified: Part 1"

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Resources Related to Lean Simplified: Part 1:

• Lean manufacturing (Wikipedia)

Lean Simplified: Part 1

"A systematic approach to identifying and eliminating waste through continuous improvement by flowing the product at the demand of the customer."

This white paper breaks down the definition of Lean Manufacturing into easy-to-digest concepts and shares the real-life example of a subject company working towards the goal of lean.

Lean Simplified

Part 1

With all the discussion, books, websites, and other materials on the topic of lean manufacturing, it's hard to know which resources are credible much less understand the mounds of information that one has to sift through to find the basic, most relevant facts. The purpose of this whitepaper is to do just that: simplify the concepts of lean manufacturing and present them in a manner in which the manufacturer can determine exactly what is needed in the production operation and why.

This paper will also take you on a journey of how one company, a leading global supplier of reference test fuels and re-manufactured organic solvents, persists along the lean manufacturing path.

What is Lean Manufacturing?

Lean manufacturing is "A systematic approach to identifying and eliminating waste through continuous improvement by flowing the product at the demand of the customer."

Let's break the definition into parts and look at each more closely to understand what it really means. First, we'll look at identifying and eliminating waste. Various resources have identified slightly different numbers and specific types of waste, but generally speaking, they all fall consistently within the following easy-to-remember acronym:

• D = Defects and Rework
• O = Overproduction
• W = Waiting (Idle Time)
• N = Non-Value Added Procedures
• T = Transportation
• I = Inventory
• M = Motion
• E = Employees Under Utilized

Defects and rework is probably one of the most easily identifiable wastes because it's tangible; it's something people can see or feel. For example, defects and rework cause companies to spend time correcting mistakes in paperwork or fixing physical problems with machines, just to name a couple.

Overproduction can point to the obvious waste: turning out more product than what is needed by the consumer. But it can also mean overproduction of other items such as running too many reports and too many copies of them, over engineering by adding more to the process than what is needed, or having unnecessary order points.

Waiting waste can come from many sources. In general, waiting waste is time between tasks when no work is being done. But other areas where employees are potentially waiting are often not considered, such as: trucks to be unloaded, next production step, searching for materials, supervisor signatures, poorly configured work centers, or poor plant layout.

Anything that does not add value to the customer is considered a non-value added procedure. These are the items that a customer doesn't pay for such as company reviews, inspections, production monitoring, and anything else that could be considered counter productive.

Many manufacturers are not only moving products, materials, and other things throughout the building manually, but they are moving them unnecessarily. This is considered transportation waste. Another contributor to transportation waste is the poor location of shipping and receiving peripherals.

Inventory wastes can come from both shortages and excesses. Having a shortage of a material can put a batch ticket on hold resulting in the expiration of the other materials for that batch. Having an excess of a material simply results in wasted resources. Inventory waste can also come from having a poor setup for stores and bins.

Motion waste is different than transportation waste in that motion is the movement within a work area vs. the company as a whole. Often motion waste comes from poor organization of a work area, resulting in poor process flow within the area and poor work flow from one work center to the next.

The value of a trained employee often goes unnoticed by many upper management officials. But that is precisely what the "Employees Under Utilized" waste is. Employees not only need adequate training for what fits their job descriptions, but they also need to be cross trained in other related areas. Additionally, applying an employee's skills and creativity where it best fits in the company is a benefit to both the employee and employer.

By eliminating waste, manufacturers can do more with less: less time, inventory, people, space, equipment, labor, and money. To identify wastes in the work environment, manufacturers need to determine those components of the process that do not add value to the customer, and it doesn't mean just the scraps, rework, or other garbage. By looking carefully at each of the eight identified potential wastes just described, companies can begin the process of implementing lean.

When our subject chemical process company (GPC) accepted the challenge to implement lean practices, the lead team looked at each of the eight areas of waste. The waste that was most readily identifiable was the amount of clutter in several areas, but predominantly in inventory control. There was a significant amount of excess material in storage that was being saved in case it was ever needed. Management recognized that the excess had to go in order to make room for materials that were currently needed in production to make the manufacturing process more efficient. Inventory control and inventory reduction became primary goals for reducing waste and improving efficiency.

Moving on, let's look at the next two key words in our lean definition: continuous improvement. Lean principles aren't concepts companies can apply once and consider themselves done; lean principles are ongoing. It involves a cycle of constant evaluation through each stage of the manufacturing process to find gaps between what is happening in the process and what should be happening based on the demand of the customer.

One of the challenges at GPC in implementing lean practices was helping the network of employees understand that after a goal has been accomplished, there is yet the next step toward improvement beyond that to strive for. Often in traditional working environments, once a target has been reached, employees relax and feel as though their work is done. Lean practices demand that GPC workers stay focused on continuous improvement and continue to maintain momentum in finding and implementing waste reduction projects.

We have repeatedly pointed out customer focus throughout this paper, so let's look at the last part of the definition: by flowing the product at the demand of the customer. This is where we need to look at the five basic principles of lean:

1. Specify Value
2. Identify the Value Stream
3. Flow
4. Customer Pull
5. Pursue Perfection

Specifying value is the most critical point of all the principles. If you're asking yourself, "But, which value?" you're asking the right question. The same lean process, identifying wastes and other aspects we have yet to cover, applies to all the different values. For the sake of simplicity, we will only address the customer value. What this means is that if a product has features that add cost but not value, the customer will not likely purchase the product. For instance, if a customer wants a basic shirt, but the manufacturer adds a pretty logo, the cost will go up but the shirt will not have improved in overall quality, thus creating waste, and ultimately, not meeting the demand of the customer.

The value stream is the set of all the specific actions required to bring a product through the critical business tasks from raw material to finished product. The development process stream runs from the design concepts to addressing any challenges faced in engineering the product and finally to the production launch. The fulfillment process stream involves the management of the product from order-taking to scheduling delivery to getting the finished product to the customer.

The flow of a system is identifying each of the steps of production and lining them up in a continuous format. Eliminating waste and processes between steps will improve development and response times. This can be more easily visualized when we think about how we bake cookies at home. A typical consumer response might be something like: "We get all of the ingredients out of the cupboards, put them on the counter, and begin adding and mixing them as the recipe calls for them." On the other hand, a lean description might look something like this:

1. Determine how long the process will take
2. Locate the recipe and determine whether ingredients are on-hand
3. Create or clean a work surface for preparation
4. Gather all the ingredients and position them for use on the work surface
5. Gather the necessary tools for preparation

Following the steps of this process has saved the cookie maker a bundle of time because everything that was necessary, both ingredients and tools, for putting the product together was located in advance. The lean process also ensured a clean work surface in advance and ensured ample time to do the job correctly.

Customer pull is just the opposite of customer push. Often customer push methods create long response times in which companies try to convince customers that they want the item that was already designed and produced. Production scheduling is based on sales forecasts rather than actual requests. Customer pull production, on the other hand, is dictated by what the customer requests the manufacturer to make. This is also known in the manufacturing industry as just in time (JIT) production.

Lastly, pursuing perfection is a perpetual review from beginning to end of the manufacturing process, always with the goal of reaching zero waste. In reality, perfection is never really reached because no matter the outcome of each review, there is always room for improvement in reducing cost, effort, time, space, and mistakes.

GPC has embraced value stream mapping as a tool in identifying those steps in their manufacturing processes which are truly valuable to their customers and those which aren't. By quantifying the value of the various steps in any process, the company has been able to ‘lean out', or recreate their operating practices so that they deliver the value that their customers need while eliminating the steps that truly do not add value to the customer.

What Lean Manufacturing Is NOT

Lean manufacturing's primary focus is on speed and inventory reduction, while delivering product quality that meets clearly defined customer specifications. Again, looking at the value to the customer (both internal and external), manufacturers must be careful to balance the cost and time invested into a product with the quality demanded by the consumer. It is much like a three legged stool: speed, cost, and quality representing the three legs. Each leg must raise or lower in proportion to the other legs, or the stool is out of balance. Since the primary focus of lean manufacturing is to improve speed, this leg becomes the pivotal leg upon which the other two must balance. Keep in mind, however, that just because lean focuses on speed, it does not mean quality is compromised. The very nature of the principles of lean manufacturing improves the quality of the product.

The Benefits of Lean Manufacturing

The benefits of lean manufacturing are so numerous that they are quite difficult to simplify. For all practical purposes, let's say there are 5 basic benefits, with all the additional benefits falling into one of the following categories:

1. Material Handling - Utilizing lean principles means that materials move fewer times, with shorter distances, and with simpler routes. These add up to a significant savings for the manufacturer due to fewer delays, less tracking efforts, and less confusion. In other words, material handling becomes more efficient.
2. Inventory, Scheduling, and Production Control - With a customer demand flow to production, companies are able to reduce the amount of on-hand inventory, thus decreasing the amount of potential waste in both expired materials and in reduced floor space for storage and manufacturing. Fundamentally, excess inventory hides problems. By reducing inventory levels, manufacturers discover a wide variety of process improvement opportunities that, once corrected, help them to become much more effective competitors in today's marketplace. By reducing inventory levels, they are also able to increase inventory turns which means the inventory will be more in balance with current demands. This, in turn, creates better supplier relationships as manufacturers regularly re-order products needed for manufacturing. From a scheduling perspective, creating more batches in smaller lot sizes enhances the overall manufacturing flexibility. The less inventory a company has in its value stream, the less the lead time will be from customer order to delivery.
3. Quality - In traditional manufacturing, quality becomes compromised when a product is discovered to be defective. A product must move many times, often between several departments, making it very difficult to pinpoint where the defect occurred. With a single piece flow, the defect affects only 1 single part thus eliminating long hours of isolating and investigating different parts of the process to find the problem. Forming an effective problem solving group also becomes a challenge across departments as nobody wants to take responsibility. With single piece flow, each team is focused on its responsibilities and is motivated to avoid future defects.
4. Employee - As mentioned above, in a lean manufacturing environment, each team is focused on its goals and work results. Problems are typically identified right away, and team members receive immediate feedback on their work. Team success builds employee morale. With team problem solving, the focus is directed to the processes and not the individuals. In addition to a boost in morale, employees will also benefit from a safer work environment. Less inventory means less clutter; fewer people and machines means more light and space with which to work and move; and a better layout of machines makes the physical work for employees easier.
5. Customer - Improved quality along with shorter and reliable response times is a recipe for happy customers. Having happy customers ultimately impacts the bottom line for the manufacturer as each customer becomes a repeat customer. It's a win-win for each party.
   The team at GPC is realizing many of these benefits, and continues to explore opportunities for creating and continues to explore opportunities for creating efficiencies. GPC management remains firm in their commitment to continue down the Lean Manufacturing journey. The rewards, as we will read more about in Part 2, are measurable and motivating.

Summing it Up

No matter the type of manufacturing you are in, these basic lean principles, applied and adhered to, serve to improve all aspects of the company operations. If your company is not already engaged in a lean process, it's clearly time to think about it and look closer at lean practices—Charles Theisen, CPIM, CIRM

About the Author

Charles (Chuck) Theisen is a Supply Chain Industry Specialist with over 30 years experience in Supply Chain operations and business systems. His operations experience includes production scheduling, materials management, transportation management, business system support, and business systems management. Chuck has many years of experience in Supply Chain operations and consulting including warehousing, shop floor control, and related information systems. His consulting experience includes systems selection, implementation and usage, and operations and process improvement. He is a seasoned professional with strong communication skills, experienced in working with all levels in an organization.

Currently, Chuck is the Director of Implementation Services for ProcessPro, developers of ProcessPro® Premier ERP software. He works extensively with clients of ProcessPro to improve their Supply Chain effectiveness, with the primary focus being on Materials Management and Manufacturing Operations.

About ProcessPro

ProcessPro is the developer of the leading ERP software, ProcessPro® Premier, for the highly-regulated process industry. Excelling in the small to mid-sized market, ProcessPro provides an affordable ERP solution to those who must adhere to strict QC and government regulations including FDA, cGMP, 21CFR Part11, Bioterrorism, HAACP, and more. ProcessPro® Premier seamlessly integrates all aspects of plant operations, from beginning order entry through manufacturing, packaging, shipping, and accounting. ProcessPro® Premier is a fully-integrated, real-time solution. This ERP rises above other industry software in production capabilities, financial integration, user interface, system functionality, flexibility, and more. ProcessPro® Premier is available with full source code and can be customized to fit an organization's unique business needs. For more information, visit www.ProcessProERP.com

About GPC

GPC is a leading global supplier of paint solvents, test fuels, and paint-system recycling technology for the automotive industry. Their customers include automotive manufacturers and suppliers, as well as chemical and pharmaceutical companies, in the United States, Canada, Mexico, Europe, and South America. The company has supplied custom-blended solvents, test fuels, calibration fluids, and refined products to the automotive industry for over 70 years. Its products are used in OEM assembly, engine, and component plants, and throughout the industry's supply chain.

GPC manufactures paint-related products and cleaners for a wide variety of industrial uses, as well as calibration testing fuels for use in the automotive industry. Paint-related products include paint-line and booth cleaners, purge solvents, and thinners.

References:

The Benefits of Lean Manufacturing: Single Piece Flow. Gembutsu Consulting. 2009. 16 February 2009. www.gembutsu.com/articles/leanmanufacturingprinciples.html

Epply, Tom. "Lean Manufacturing Implementation." Continental Design and Engineering. 2008. 16  February 2009. www.continental-design.com/lean-manufacturing/handbook-1.html

Lean Manufacturing Principles. Strategos Consultants, Engineers, and Strategists. 16 February 2009. www.strategosinc.com/lean_benefits.html

McCabe, Dr. P. "Defining Lean Manufacturing." Lean Manufacturing Guide. October 2001. 16 February 2009. www.leanmanufacturingguide.com

Womack, James P. and Daniel T. Jones. Lean Solutions: How Companies and Customers Can Create Value and Wealth Together. New York: New York, 2005.

Womack, James P. and Daniel T. Jones. "Principles of Lean." Lean Enterprise Institute. 2008. 16 February 2009. www.lean.org