What Is Lean Manufacturing?

People who don't know about lean manufacturing, also called "lean production" and "lean enterprise," often jump to the conclusion it simply means doing more with less, and that this is accomplished simply by having everyone work harder. Nothing could be farther from the truth. More is done with less by having everyone work smarter. According to published data, people who work in true lean enterprises (which means the whole organization is lean, not just the manufacturing) are significantly happier with their jobs on average than those who work in traditional businesses. Why? A fundamental reason is they are empowered to make decisions and to get things done. Those closest to a problem are considered to be in the best position to deal with it rather than some boss in an ivory tower who may not know what is really going on. So, people who work in a lean enterprise have more control over their jobs and their destinies.

Lean manufacturing is distinguished by six key attributes:

The workplace is safe, brightly lit, orderly, and immaculately clean. Products are produced on a just-in-time basis, only to customer demand (not to forecast). Products are made in continuous flow production lines which are scheduled according to customer demand, using pull-scheduling techniques.

The highest quality possible (Six Sigma) is built into products and processes, not inspected in. Equipment is programmed to detect defects, and operators will shut down a production line for quality reasons. Mistake proofing is used extensively. Root cause problem solving skills are finely honed. Throughout an organization, teams of employees are empowered to make key decisions. Organizations are flat, with limited layers of management. Shop floor employees are cross-trained to perform multiple tasks and jobs.

In manufacturing facilities, visual management techniques are used extensively. Management is by sight, not only by computer.

In every department and area of a lean organization from the Chairman's office to the shipping department, there is relentless pursuit of waste reduction. "Simplify, simplify, simplify!" is the battle cry. Continuous improvement never ends in a lean enterprise. The core idea is that any and every activity or expense is to be eliminated that does not, in the view of the end user, add value to a product. This includes all functions and processes wherever they may be, not just unnecessary or redundant work on the factory floor. Elimination of inventory, for example, is especially critical since inventory tends to hide manufacturing and distribution bottlenecks that need to be identified and opened up. Moving goods, parts and components in and out of storage is considered a waste of time and money.

What strategic advantages do lean enterprises enjoy over their mass manufacturing competitors? There are several. First, a lean producer is typically the low-cost producer in its industry. This allows the lean enterprise to set the market price, as lean-producer Dell Computer has done in the PC world. Why? Lean manufacturing often requires half the space and 25 to 40 percent less direct labor than mass manufacturing. Inventory is often cut to two or three days supply, freeing up huge sums of money that would otherwise be tied up, along with enormous amounts of space that would otherwise be required for storage. As you know, in the high tech arena especially, inventory that sits in a warehouse for any length of time before it is sold may end up being a worth a lot less than it was the day it was made.

What else? Lean manufacturing turns out high quality products. Because defects are virtually eliminated, customers are happy about the quality they receive. Next, back orders become a thing of the past. Lean producers make what a customer wants when he wants it, so users get what they want, and they get it fast.

This leads to what may be the biggest strategic advantage of lean-speed. Speed is the hallmark of a lean enterprise in several ways: speed of delivery of product that's configured as customers want it, speed with new product introductions, speed in management decision-making because the organization is flat and bureaucracy almost nonexistent. Speed can be a critical factor in success because a nimble organization unburdened by inventory can take full advantage of changes in the marketplace as they occur. Meanwhile, non-lean competitors will be scratching their heads, wondering what happened. Our book Lean Transformation: How to Change Your Business into a Lean Enterprise is perhaps the most popular "how to" book in the world for taking a company lean.

Another of our titles, Product Development for the Lean Enterprise: Why Toyota's System is Four Times More Productive and How You Can Implement It, is the most popular book for those who want to unlease creativity in new product development and open wide the flow of new products. Another title, Lean Enterprise Leader: How to Get Things Done without Doing It All Yourself tells empowered team leaders how to get the most out of the teams they lead. Order these books today. We'll get them right out to you.