Special section – Lean manufacturing – a remedy for tough times

Materials World magazine
3 Jul 2009

Ian Wilson, Business Improvement Practitioner at The Manufacturing Institute, UK, takes a look at what lean manufacturing can mean to organisations.

Lean is a management methodology that provides the perfect ‘medicine’ for surviving and thriving during bleak trading conditions, as well as optimising shrunken budgets.

But this powerful cure is not a quick fix management fad, it has a track record of more than half a century – dating back to Japan in the 1950s. In a country rebuilding its shattered post-war economy, the Toyota motor company developed a production system that has underpinned the company’s success and given rise to the lean movement.

Lean is a tried-and-tested formula that is driving major efficiencies in the manufacturing industry and is increasingly being applied across other sectors – from healthcare and retail to banks, offices and government departments. It presents a no-nonsense solution to raising performance and reducing production costs – by cutting out the inflating factors that waste time, money or resources.

Timing is everything

The Toyota Production System rejected the belief that productivity could be raised by working ‘longer, harder and faster’ and presented the ‘just in time’ alternative. This focused on delivering the right products to the right place at the right time – anything not involved in achieving that objective was deemed suspect waste.

The principles of lean apply to the whole enterprise, including the supply chain, the product development process and the provision of service and back office support.

Those who are most successful in leveraging the full value of lean embed its powerful systems into their business strategy and use its ‘True North’ principles as guidance. Everyone, from top floor to shop floor, is immersed in the methodology and fully involved in organisational improvements.

This enterprise-wide approach is captured in the Shingo Prize recently introduced to the UK by The Manufacturing Institute based in Manchester. This gold standard of lean provides a blueprint for organisational improvement and deep cultural change.

Cause and effect

Many companies pursuing lean are surprised by how much of a difference it can make to their bottom-line. One common example is the amount of lead time that some manufacturers build into their process – 95% of which is often not adding value. With that degree of waste, there is a lot of scope for improvement, so eliminatingit will have a positive effect on other costs.

Lean manufacturing aims to compress time and focus effort on activities that give the greatest results. The methodology follows five main principles:
• Specify what creates value from the customer’s perspective, i.e. what the customer is willing to pay for.
• Identify all the steps across the whole value stream, tracing the sequence of processes – from raw materials to finished goods – that deliver customer value.
• Make sure those steps flow better – ensure actions which create value flow properly, and eliminate delays and interruptions to create a smooth process.
• Only make what is pulled by the customer and deliver it just-in-time, activating the process when the customer wants it, not when you want to supply it.
• Strive for perfection by continually removing successive layers of waste, which is defined as anything that does not add value to a product of service.
• Typically, if you quarter your leadtime, you double productivity and reduce costs by 20%. This is known as the 1/4:2:20 rule. Typical results include:
• Halving lead times and doubling of stockturns.
• 30-50% reduction in floor space requirements.
• 20-40% increase in overall equipment effectiveness.
• Reduction in administration and co-ordination activities.
• Improved customer satisfaction.
• Increased profitability.

Products count

Many companies are removing waste from their processes, but fewer are applying this to their products. Lean thinking can be extended to the design and development of products.

For many firms, effective innovation may be more critical to business survival than production costs. In today’s more demanding economic climate, customers increasingly require new or improved products, at lower cost and in half the time.

Lean identifies bottlenecks in design and development processes that add unnecessary delays and cost. It can help create a more efficient system that reduces time to market without compromising on quality.

Lean has a key role to play in new product development and the improvement of existing products, including idea creation, design for manufacture, assembly and test, rapid prototyping, product portfolio management, market and competitor analysis, risk management, sales forecasting, setting key performance indicators, and value analysis to reduce the cost of existing products.

One company that has incorporated Lean into its product development is Money Controls in Oldham, which produces coin, bill and cashless systems for amusement arcades, banks, car parks and other uses.

The company worked with the Manufacturing Advisory Service (MAS) at The Manufacturing Institute to develop an intelligent new coin sorter to replace one that was losing market share. The manufacturing costs of the existing prototype were too high.

Brainstorming workshops were organised by MAS, which brought improvements leading to a 10% cost reduction. The sorter is now a competitive product for the global market.

Further information: The Manufacturing Institute

Electronics business switches on to savings

Wigan-based electronics manufacturer C-TEC has switched on to productivity savings of £100,000 as part of its business improvement drive.

C-TEC is an independent manufacturer of life safety electronic equipment, including fire alarm control panels; and voice alarm, disabled refuge, nursecall and audio-frequency induction loop systems.

The company has worked with the Manufacturing Advisory Service (MAS) North West at The Manufacturing Institute to run its factory on lean principles.

On moving into new facilities, C-TEC worked with MAS to set up a state-of-the-art electronic
production and assembly facility – designing a lean site layout that reduced space use by 10% while speeding up and smoothing workflow.

The company produces speedily to customer orders, rather than stockpiling products. This has saved the business £10,000, helping to improve cashflow.

Having achieved process productivity gains, the company is now focussing on its machine productivity and implementing strategies to ensure continuous monitoring of performance and preventative maintenance to minimise machine downtime and maximise throughput.

Stephen Collier, Manufacturing Director of C-TEC, says, ‘In the spirit of true lean excellence, we are continually improving the way we operate and refining our processes, and are confident that we can raise productivity by a further five to 10%’.

Green light for packaging company

Cheshire-based Packaging Automation, whose heat sealing machines are used by the global food, healthcare and DIY sectors, has been working with the Manufacturing Advisory Service (MAS) at The Manufacturing Institute to boost productivity. One such project was to speed up manufacture of Packaging Automation’s new generation Vision 400 machine.

This began with a rethink of how the sourcing and build process was managed – breaking down the build into discrete sub assemblies to plan component manufacture, labour requirements and ‘just in time’ part deliveries to support a smoothly sequenced modular build.

As well as reducing manufacture time from nine weeks to 13 days, and gaining four days additional capacity in the machine shop, the approach relieved cash flow as the company ordered components and materials as needed, rather than holding them as £100,000 worth of stock. The new assembly methods have been captured in a detailed build manual and the same approach is now being applied to the company’s other key machinery products.

The traffic light, or Andon system, was introduced to identify the root of production problems and design them out. Traditionally, assembly teams rectified most build problems themselves as this was perceived as quicker and less disruptive. But it also meant that issues remained hidden and the same problems occurred repeatedly.

The Andon system, which is used in the automotive industry, shows a green beacon light when production is running perfectly. This is switched to red if the assembly team encounters a problem, signalling an immediate request for help from the team leader to address the issue and agree a course of action. It is then turned to orange to indicate action underway. Once the problem is fully resolved the light is switched back to green. Downtime is automatically recorded and the issues can be analysed and countermeasures discussed and applied.

An added bonus is that Packaging Automation designed and built its own Andon system, which it plans to manufacture on a commercial basis.

Mick Davis, General Manager for Packaging Automation, says, ‘By challenging traditional methodologies and setting out clear standards and protocols for the way we do things, our productivity has improved. We are also raising quality and staff morale, by involving everybody in the improvements’.