An Introduction to

LEAN MANUFACTURING
 History of Manufacturing
CRAFT
• Made customer specific
• Each product is unique
• Variable quality / expensive

MASS
• Interchangeable - Whitney
• Division of labor – Fredrick Taylor
• Assembly lines & low variety – Ford

LEAN
• High Variety
• Small batches
• Six Sigma Quality
 What is LEAN? – Rock to Art
• “Lean is the elimination of anything not
absolutely required to deliver a quality
product or service, on time, to our customers”

• LEAN is a fundamentally different business

logic
• LEAN is based on eliminating unnecessary
actions
• LEAN links value activity in a continuous
sequence

• “Only a small fraction of total time and effort

in an organization adds value for end
customer”
 Why LEAN?
• Severe Competitions in all walks of business
• Firms face reduction in margins to keep the
market share
• Every little saving will improve the economy
• Time for every available resource to perform
the best
• Operation Cost reduction is critical to our
survival
• Profits = Price – Cost (price dictated by the
market and cost incurred by us)
• Cost = Activities involved (VA + NVA)
 LEAN – Some myths
• LEAN is a factory thing
• LEAN will not work here
• We tried it, it is another Kaizen event
• 5S is all about cleaning up your office or
workstation
• We are different, it cant apply to our
business
• Its an excuse to take our jobs away
• Zero Inventory
 Mass Production vs. Lean Production
Mass Production Lean Production
Customer Makes what engineers want Makes what customers
Satisfaction in large quantities at want with zero defects,
statistically accepted quality when they want it and only
levels. Dispose of inventory the quantities they order
at fire-sale prices
Leadership By Executive command and By vision and broad
coercion participation
Organization Individualism and military- Team based operations and
style bureaucracy flat hierarchies
External Based on price Based on long-term
Relations relations
Information Poor management based on Rich management based on
Management abstract reports generated by visual control systems
and for managers maintained by all
employees
 Mass Production vs. Lean Production
Mass Production
Culture Of Loyalty & obedience;
sub-culture of alienation and involvement based on
labor strife
Production Large-scale machines,
functional layout, minimal
skills, long production runs,
massive inventories
Maintenance By Specialists
& Quality
Design & Isolated genius model with
Engineering little input from customers
and little respect for
production realities
Lean Production
Harmonious culture of
human resources & long
term relations
Human scale machines,
cell-type layout, multi-
skill, one-piece flow, zero
inventories
Equipment management
by production &
engineering
Team-based model, with
input from customers &
concurrent development
of product and process
design
 LEAN Business System
Common
Goals
Shared Vision
Cross
functional
Policy Teams
Deployment

Value Stream
Management

Supply Chain Standard

Production
System

Extended
Tools aligned to need
Enterprise
LEAN & its Tools
 LEAN System - Benefits
The Hard Ones (typical)
• 15% growth in 1 year
• 12% Productivity increment in 1 year
• 20% Space saving in 1 year
• 90% On Time Delivery in Full
• 28% Throughputs Lead time reductions
• Improved Supplier performance
• Improved Customer Quality
• Progressive MUDA Elimination
 LEAN System - Benefits
 The Soft Ones
• Flexible structures assigned to business goals
• Roles & Responsibilities assigned to business
goals
• Process driven culture
• Visual demonstration of achievements
• Increased employee ability and morale
• Visual abnormal situations
• Focused application of resources for best return
• Believable prediction of results
 LEAN Principles
• Specify what creates value from
customers’ perspective
• Identify all steps across the whole value
stream
• Make those actions that create the
Value flow at the pull of customer
• Involve and empower Employees
• Strive for perfection by continually
eliminating the successive layers of
waste.
 What is Value?
• Value is what the customer wants, when
they want it in the expected quantity and
quality

• To establish the “customers’ wants”,

employ the QFD (Quality functional
deployment) technique

• To analyze the customers’ wants, use

KANO model
 KANO Model
• Classify Characteristics as Basic,
Performance and Delighter
• Ask Two questions
3. What if the characteristic is present?
4. What if the characteristic is absent?
• If 1=neutral, & 2=bad it is basic
• If 1=good & 2=neutral, it is delighter
• If the answer is “it depends, it is performance
 Value
Perception Reality

Activities Resource % Value to Customer in %

Produce Manuals 60% Hotline support 60%

Answer Hotline 15% Locate Repair 20%

Respond to letters 5% Respond to 10%

inquires
Locate Repair 10% Updates 5%

Revise Manuals 10% Manual 5%

availability
 Define Values in the Eyes of
Customer
• What Product / Service?
• What attributes / Features?
• What Quality Levels?
• What Delivery?
Rate
Response time expectations

• Are we measuring it? If yes, How?

 What to measure? Measure
• % On time delivery to customers What matters
To customers
• Do we meet what we promise our
customers? 120 80
• Cycle time & Throughput 100
60
• Quality – RTY (rolled throughput yield), TDU 80
(total defects per unit) 60 40
• Productivity – (Units produced / man-hour)
40
• Work In Progress Inventory 20
• 20
Purchased Inventory
• Quality, Delivery, shortage frequency of 0 0
purchased items 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
• Annual Inventory turns
• Finished Goods inventory Quality Cost Delivery
• Floor Space consumption (total sq ft x
Rs/Sqft)
 Value Adding Activity
• Activities within the company or supply
chain for which the customer would be
happy to pay for

• An activity that changes the size, shape,

fit, form or function of material or
information as to satisfy customers’
demands and requirements
 Non-Value Adding Activity
• Activities that do not contributing directly
to satisfying customers’ requirements

• Activities that consume resources but do

not meet the customers’ demands or
requirements

• Necessary Non-value adding: NVA that

are necessary under present operating
system & will take time to eliminate
 Value Stream

Information Flow

Customer Value
Order
Sales & Operation Finance
Design Entry &
Mktg
PPC

Material Flow
 Value Stream
• “The entire set of activities that requires to
design, produce and deliver a product…”

Design Purchase Manufacturing Quality Finance Sales

Continuous Improvement

Strategic Management / Policy Deployment

HR Development
Order Fulfillment

Sales Acquisition

New Product Development

Technology Plant & Equipment

 Why Use Value Stream Mapping?
• Helps us Visualize Flow
• Helps us see waste, more importantly, the
sources of waste
• Ties together Lean thinking principles
• Forms the basis of an implementation plan
• Shows relationship between material and
information flow
• Enables us standardize operations and
paves for continuous improvement
 Sample Map of Value Stream
Supplier Customer

1000/day 800/day
2x/week

2x/day
Machine

M-2
C/T - 10s
C/O - 90m Testing Packing
D/T - 18%
Q - 7% M-1 M-2
C/T - 30s C/T - 10s Shipping
8 days C/O - 5m C/O - 30m
4 days
D/T - 3% D/T - 10%
Q - 16% Q - 6%

3 days 4 days
6 days
Subassy

M -4
C/T - 30s
C/O - 30m Note: Value Adding time is 70 secs
D/T - 14%
Q - 11% Inventory is 23 days!
10 days
 Process Activity Mapping - GOJO
Time in
Activities FLOW VA Location Distance secs People Cycle time

Remove part from machine O Y Molding 1

Inspect the parts N Molding 1

Pack the parts T N Molding

Parts waiting D N Assy 345600

Place the part in machine T N Assy

Insert ball in the pump body O Y Assy 2 1 2

Pack the pump body in bags N Assy 86400

Spring assembly in spout O Y Assy 10 1 8

Prepare for Assembly O N Assy 14 1 8

Stamp assembly O Y Assy 12 1 8

Pack the parts in poly-bag N Assy

Parts waiting / curing D N Assy 86400

Scanning machine O N Assy 10 1 10

 WASTE
• “Any activity that absorbs resources but
does not create value…”

• “Waste is so often in front of us that we

always do not see it!”

• “Most of our processing is a waste and it is

an ongoing process to remove waste from
each layer as to reach perfection”
 OHNO’S SEVEN WASTES
WASTE IMPORT
• MUDA of Waiting (material)
• MUDA of Inventory
• MUDA of Motion (man)
• MUDA of Processing
• MUDA of Over Production
• MUDA of Re-work / Reject
• MUDA of Transportation
 EIGHTH WASTE
• Untapped Resources (Brainpower)

• People are told to do & not asked to think

• Problems are overlooked & opportunities
missed
• People lose motivation at work
• Management spends time dealing with
day-to-day affairs in lieu of focusing on
longer-term issues
 Sources of Waste
 Layout (distance)  Functional organization
 Long setup time  Excessive controls
 Incapable processes  No back-up / cross
 Poor maintenance training
 Poor working methods  Unbalanced workload
 Lack of training  No decision rules
 Lack of adherence  No visual control
 Ineffective scheduling  Supplier quality
 Poor supervisory skills  Lack of workplace
 Inconsistent organization
performance measures
Value Flow at PULL of customer
Four Key Elements of making Value Flow:

• TAKT
• FLOW
• PULL
• IMPROVE

 Continuous Improvement in pursuit of

perfection!
 TAKT Time
• The Available operating time to satisfy
customer demands
• Establishes the pace, beat or cadence of
the process
• Takt time is used to balance the various
loads and identify the bottlenecks in the
process
Net Available time per day in
seconds
 TAKT Time = -------------------------------------------------
Customer demand per day in pieces
 FLOW
• Product or service does not stop once it is
launched
• “No de-tours”, “no back-flows”, “no waiting”
• Interruptions to in-flow work process are
drastically minimized
• Vigorously respond to flow stoppages with
dedicated approach

 “When information and material flows in opposite

directions, the third flow – CASH FLOW starts
pouring in”
 PULL
• Work does not move until there is a need
from the next process step
• Make only what is wanted; when it is
wanted
• Compare the volatility in orders with
volatility in demand
• Inventories needed to support a given
level of sales (KANBAN)
“Organizations are to be structured so
customer can pull the value from the
producer”
 Impact of One Piece Flow

Op #1 Op #2 Op #3
Batch Flow 1pc/30min
10 min 10 min 10 min

Op #1 Op #2 Op #3
One piece flow 3pcs/30min
30 min 30 min 30 min

200 Piece Batch One-Piece Flow

Cycle Time 100 hours 30 min

WIP 600 3
 Batch Flow & One-piece Flow
000 B C D 000 B C D
A A
00 00

A 000 B C D 000 A B C D
5 00 0
0

10 A B
000
00
C D 000 A 0 B 0 C D

15 A B C 000
00
D 00 A 0 B 0 C 0 D

20 A B C D 000
00
0 A 0 B 0 C 0 D 0

Different Process
Process time = 1unit / 1min
The Process & Situation

6 min 4 min 4 min 3 min

“We’re getting 2.5 parts/man-hour; we need

3.0 parts/man-hour.”

•Total time to produce one (1) part = 6+3+4+3 = 16 min

•Total man time to produce one part = 6 x 4 = 24 min
•Efficiency = 67%
 First Improvement

6 min 3 min 4 min 3 min

•Total time to produce one (1) part = 6+3+4+3 = 16 min

•Total man-time to produce one part = 6 x 3 = 18 min
•Productivity = 80 parts / 3 people = 3.33/man-hour (33% gain)
•Efficiency = 89%
• …… “but we’re still working overtime!”
Realization of Takt Time

6 min 3 min 4 min 3 min

Productivity = # Parts e.g., 2.5/man hr

Man Hours

Capacity = Time available e.g., 80/shift

6 min
 Second Improvement

6 min 3 min 4 min 3 min

•Supports 2 lines & can •“Parts fall off the line”

operate 24 hours/day
•Capacity = 120/shift
• Capacity = 240/day,
allocated per line/product •Efficiency = 10/12 = 83%

•Requires no additional
support personnel
•Material transport
simplified
Plant 1 Plant 2
 Perfection
• Continuously monitor, evaluate and
assess the process
• Every incremental improvement uncovers
the future flow of speed
• Eliminating wasted steps and defects
• Reducing inventories and volatility
• Cutting management time devoted to fire-
fighting and negotiating
“The whole enterprise must pursue not its
competitors but perfection”
 Three Main Pillars of LEAN
• The management of processes and an
integrated logistics flow

• The management of relationships with

employees, teams and suppliers

• The management of change from

traditional mass production
Fundamental Objective of LEAN
thinking
• Shift the focal plane of management to
differentiate Value from Waste

• Start with primary actions affecting each

product, rather than organizations,
technologies and assets
 Input: Organizational attributes of
LEAN
• Integrated One-piece
flow
 Small batches
 JIT made
 Low inventories
• Defect Prevention
• Level Scheduling
• Production pulled
 By customer
 Not pushed to suit machine
loading
• Team based work
organization
 Multi-skilled
 Few indirect staff
• Active involvement
 Root cause analysis
 Eliminate NVA & Variability
• Close Supply Chain
Integration
 Partnership not adversarial
 Overall Summary
• LEAN is not just manufacturing

• LEAN is no quick-fix – it has a long history

of success

• As the “onion is peeled”, LEAN is ongoing

as priorities change

• LEAN is the foundation of competitiveness

 LEAN Road Map
Commitment
To LEAN Develop Focus on
LEAN Value Stream
Structure
Adapt LEAN

Decision to
Pursue
LEAN Focus on Create
Continual Implementation
Improvement plan
Pilot LEAN
Implement
ation Implement
LEAN
projects