A Competitive Edge: The Principles of Lean Manufacturing

Abby Baumann Jan 14, 2022

Lean manufacturers strive to eliminate waste. They eliminate excess inventory, reduce manufacturing lead times, and address inefficiencies. These manufacturers will tell you that becoming lean is hard, and that it’s a journey — not a destination. Success hinges on understanding the five principles of lean manufacturing, and detailed, real-time knowledge of what’s happening in the factory. In this blog, we’ll talk about where lean manufacturing got its start and explain these principles in detail.

A Brief History of Lean Manufacturing

Lean manufacturing is often thought of as a Japanese approach to manufacturing, although the history is a little more complex. Lean manufacturing was created and pioneered at Toyota by Taiichi Ohno and Eiji Toyoda and grew to become the Toyota Production System (TPS), with “lean manufacturing” and “TPS” now used interchangeably. Ohno and Toyoda drew influences from sources like the Ford Motor Company and mechanical engineer Frederick Winslow Taylor.

TPS is about doing more with less. It focuses on reducing waste and inefficiencies by removing buffers and activities that don’t add value. It’s believed the resource shortages Japan faced during the 1950s and early 1960s were also motivating factors for this shift.

As Japanese car companies entered the U.S. market, domestic manufacturers started looking at what made them so competitive. Throughout the 1980s, numerous academics studied the TPS, which was often referred to as the “Just-in-Time” system. One of those researchers, John Krafcik, christened the approach as “Lean Production.”

Two years later, in “The Machine That Changed The World,” James Womack, Daniel Jones, and Daniel Roos coined the phrase “lean manufacturing.”

The 5 Lean Manufacturing Principles To Give Your Business a Competitive Edge

Lean manufacturing, as defined by Womack and colleagues, is broader than the TPS. It’s a methodology based around five key principles. Understanding these is central to lean thinking.

1) Identify Value

Start by understanding what the customer is paying for. It’s impossible to start a lean journey without knowing this. Only when you define “value” can you determine what adds value and what does not.

Businesses often think they already know what the customer values, but this can lead them in the wrong direction. A better approach is to use one or more of these tools:

  • Voice of the Customer (VoC)

  • Buyer Utility Map

  • The Kano Model

  • Customer Journey Maps

  • Empathy Maps

Example of Identifying Value

Consider a foundry that produces metal castings to customer order. They believe the customer wants high quality metal castings of a certain weight, size, shape, and appearance. However, the true value for the customer is that the castings hold components that perform a specific function, like gears in a pump.

2) Map the Value Stream

Once you understand what the customer is paying for, identify the steps that turn raw materials into finished goods. This process is called value stream mapping (VSM).

VSM entails identifying everything that happens to the raw material on its journey through the factory. This includes transport and delays or queues, as well as processing steps. This is documented in the “current state” flow chart.

A couple tools for mapping the value stream include:

  • Process family identification: Mapping products onto processes in the factory

  • Walk the flow: A walk through the entire production process following the route taken by the selected product

Example of Mapping the Value Stream

Sand casting a pump housing is a complex manufacturing process. It starts with melting metal and producing the sand pattern, and ends when the cast housing is loaded onto a truck for delivery (some lean practitioners extend VSM across the whole supply chain).

Throughout the process, there’s a lot of movement. Materials wait on inspection or may get stuck at bottlenecks. The customer isn’t paying for these activities, so they are non-value adding parts of the value stream.

3) Create Flow

Having identified the value stream, the next main principle is to think about how material or product flows along the stream.

Review the VSM flow chart to identify steps that add value (in terms of what the customer is willing to pay for), and those that are non-value adding. Then, produce a future- or desired-state chart defining the steps that are required for the production process. This focuses on linking value-adding steps and minimizing those that are non-value adding.

In many manufacturing operations, a major step in creating flow is to get away from batch manufacturing. Batching is common in high-mix low-volume manufacturing because it maximizes machine utilization and supports automation by minimizing changeovers. However, there are queues at each step of the process, which can cause delays and build up excess inventory.

Methods for eliminating non-value adding activities include:

  • 5S: Workplace organization method based on five steps (sort, set in order, shine, standardize and sustain)

  • Single-Minute Exchange of Die (SMED): Method of reducing setup time by classifying tasks as internal setup or external setup

  • Kaizen events: Short-term sessions to resolve one specific problem

  • Cellular manufacturing: Mass production method dividing work teams into focused cells

Example of Creating Flow

Bath towels are woven, dyed, cut, sewn, and labeled. These value-adding steps transform the raw material into something the customer wants to buy. Steps that do not add value include moving a batch of cut fabric into a sewing room, inspecting fabric for flaws, setting up sewing machines, and having towels waiting for sewing.

In this example, moving cut pieces through a sewing cell singly rather than in a batch achieves flow. Moving the cell closer to the cutter, and machinists inspecting the fabric while they sew would also contribute to flow. This would result in towels being produced in less time and with less space required for inventory. Additionally, this would eliminate the dedicated inspection role.

4) Establish Pull

Flow should occur at the rate the customer wants the product. If the customer demands 10 pump housings per day, lean thinking dictates that 10 should be cast each day, rather than casting a batch of 300 to make a month’s worth at one time.

However, just establishing a production rate does not prevent inventory from accumulating, as demand may fluctuate with 10 being the average rate. So, to prevent overproduction, lean manufacturers implement pull systems that ensure production takes place just-in-time.

The main tools for establishing a pull system are:

  • Takt time: Customer demand rate, which should be the rate at which parts are produced, rather than cycle time

  • One-piece flow: Often achieved in cellular manufacturing where a single unit is passed through the production process

  • Kanban: A signal used to implement a pull system

Example of Establishing Pull

A pizza parlor manager could review historical demand and prepare the number of pizzas they think will be needed each day. The kitchen will then work “efficiently,” making a batch of pepperoni pizzas before switching over to Hawaiian-style pizzas. When a customer comes in, their order is satisfied from the inventory of pre-baked pizzas.

This has several problems:

  • Pizzas might go cold

  • The parlor risks having the wrong mix of pizzas in inventory

  • The parlor needs space to store finished pizzas

The solution is to send the kitchen a ticket with an order for a specific type of pizza. In response to this pull signal, the line cooks then assemble the pizza, bake it and hand it to the customer. This way there’s no waste, no need for storage space, and no excess inventory.

5) Seek Continuous Improvement

A tenet of lean thinking is that it’s a journey towards an ideal state, and there’s always room to improve. Thus, the fifth principle is continuous improvement. Truly lean manufacturers will tell you that they are always taking out waste and finding ways to improve their processes. The tools used for this effort include:

  • Kaizen: More a mindset than a tool, kaizen is the process of making process improvements by identifying and attacking the various types of waste

  • Gemba walks: Gemba means “the place where work happens,” so this tool is about observing the work firsthand.

  • Plan, Do, Check, Act (PDCA): PDCA refers to the improvement methodology – planning the change, making the change, reviewing the results, and making adjustments based on what you observed.

Example of Seeking Continuous Improvement

A sand casting operation monitors yield from the production process. Pareto analysis reveals that the top problem is sand inclusions in the cast parts. A team studies the problem and identifies the root cause. They then pick a solution, implement it, and monitor how it affects yields. The new waste is reviewed, and team members address the new top problem.

Decrease Waste and Get Lean With Amper

The journey to becoming lean is based on data that drives continuous improvement. How long do changeovers take? Which machine is the bottleneck? Is one shift more productive than the others, and are there any lessons to share between them? In the past, getting these numbers was one of the biggest barriers to enacting lean manufacturing principles. Today, Amper provides the missing piece of the puzzle.

Amper is a factory operating system that tracks and measures what’s happening on your shop floor and provides real-time data that helps you get lean. Contact us to learn more.



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