Lean Production: Concept and a way of thinking

By Pritam: 10 March, 2014,

Definition

Lean production is a sociotechnical production system with a primary objective of eliminating waste by concurrently reducing or minimizing supplier, customer and internal variability. (Verma and Boyer, 2010)

How was it invented?

The two dominant but fundamentally different approaches to production in the 20^thcentury have been the conversion and flow models respectively. (Koskela, 1992)

Mass production systems have been considered to focus primarily on the process of conversion illustrated in the above diagram. The conversion model of production breaks the manufacturing process down to a series of activities, each of which converts an input to an output. This can be seen in the diagram below. This model uses the batch and queue theory. (Womack, 1996)

The theory states that for machines to achieve a high utilization rate they must be run continually. Parts are hence manufactured in large batches at one process within a plant and then queued for the next process. This results in large inventories from high work-in-progress levels (WIP), bottlenecking and other manufacturing problems.

(Diekmann, et.al., 2004)

The above diagram represents a generalized flow model of production. The idea of production as a flow process is central to lean production. The flow process does not view the production stream only as a group of conversions, but as a mixture of value adding and non-value adding activities. (Koskela, 1992)

The above diagram shows how the flow model contributes in improving efficiency of the value adding activities and reducing their cost, but also minimize or eliminate non value adding activities. All elements of the production process are enhanced as a result of waste elimination and improvements in conversion activity. The flow process emphasizes the constant movement of components from one value adding activity to next, eliminating large buffers, also reducing the WIP levels. This is also referred to as single-piece flow (Womack, 1996). A drop in WIP levels leads to reduction in the amount of inventory space required. Capital required to produce and stock extra inventories of partially completed products also drops. Low setup times and WIP levels can help manufacturers to be more responsive to market conditions. The producer as a result, lets the customer or market pull the production.

(Diekmann, et al., 2004)

The concept of lean production has its roots in the assembly line manufacturing methodology developed by Toyota for efficient automobile manufacturing, known as the Toyota Production System (TPS). The idea of producing only required units, at the time needed and in the needed quantities, to eliminate unnecessary and intermediate and finished product inventories is central to the Toyota Production System.

(Verma and Boyer, 2010)

As an aftermath of the Second World War, businesses like the Toyota Motor Company (established in 1937) were facing material shortages coupled with small production volumes. This enforced the need to raise the levels of productivity to those found in large volume production, but with utilizing materials efficiently to produce only the required amount of products.

(Toyota Global, 2014)

The company hence adopted an improvised version of the Ford Production System developed by Henry Ford during the early part of the twentieth century. Some scholars still credit Henry Ford for founding the original principles of lean thinking in doing so. One of Toyota’s lead engineers, Taiichi Ohno had studied the Ford Production System in America. Ohno studied and mastered the system and was tasked with conceptualizing the Ford Production System in a Japanese context. Ohno introduced new, additional principles and approaches to further enhance the effectiveness of the Ford Production System.

(Verma and Boyer, 2010)

The aim of lean production is combining the quality and flexibility offered by craftsmanship with the low cost advantages of mass production. Lean production is regarded as the third step in a historical progression in industry that began with the age of craftsmanship, followed by the methods of mass production to an era that combines the best of both worlds. (The Economist, 2009)

Lean Thinking

Lean production as a concept was originally developed for manufacturing automobiles. The same principles and techniques however, can be applied to companies that operate in other industries. It is argued that lean thinking is more than a set of techniques and approaches but rather a mindset for all employees and managers with waste elimination and variability reduction in all business processes being the main focus.

(Verma and Boyer, 2010, p 449)

Womack, Jones and Roos (1991) describe the five core components of a lean production system as follows:

Lean Principal 1: The value in a lean production system should be defined from the customer’s point of view for each product family.

Lean Principal 2: Each production step should be evaluated in terms of its contribution to value creation. Those actions that do not add value should be eliminated.

Lean Principal 3: the value creating sequence of steps should be organized in a tight and integrated sequence to develop smooth flow toward the customer.

Lean Principal 4: Instead of organizing production to push finished products to the customers, products pulled by the customers should be the driver for planning, organizing, and scheduling upstream production activities.

Lean Principal 5: All members of the organization should pursue perfection through continuous improvement.

(Verma and Boyer, 2010, p 450)

In the above diagram Shah and Ward (2007) state a lean production system to be comprised of three constructs related to customers, suppliers and internal processes. Each individual construct relies on different underlying concepts. A just-in-time inventory management system, customer involvement, different aspects of production processes are some examples of these concepts.

(Verma and Boyer, 2010)

Waste elimination in Lean Production

The idea of value from a customer’s point of view is central to lean thinking. Customers will refuse paying for a product or service that fails to offer value.

In a lean thinking framework, all production activities are carefully evaluated, ensuring that the customer finds the finished product or service valuable. This enforces the need of eliminating or minimizing all non-value added activities. The types of waste in a production system can be broadly categorized as follows:

Muda: A Japanese term for production activities that are wasteful and do not add value to the goods or services.

Mura: Waste associated with the unevenness of the processes.

Muri: Waste resulting from overburden or unreasonableness.

(Verma and Boyer, 2010, p 450)

The three general types of wastes namely muda, mura and muri are found in different forms within manufacturing and service systems. The above diagram provides a breakdown of the different forms of waste in system that contribute in overproduction, loss of time, lengthy production processes, increased waste as a result of large inventories and so on. Reducing the impact of different forms of waste shown above requires careful systems thinking, long-term commitment to continuous improvement and the co-operation of all members of the organization to identify wastes, troubleshoot and formulating approaches that lead to reduce all wastes.