Lean manufacturing is a powerful approach to manufacturing that has the potential to transform any manufacturing environment by helping businesses reduce waste, increase focus on customer value, and commit to continuous process improvement.
In this definitive guide, we’ll go over:
While many resources exist that extend the concepts of lean manufacturing to other non-manufacturing environments, this guide focuses on industrial and manufacturing environments that create physical goods.
Ready to get up to speed? Let’s dive in.
Lean manufacturing is a set of principles and tools applied to the development and manufacturing of physical products, with the primary goal of reducing waste wherever it is found. Additional goals of lean manufacturing include creating increased customer value and being dedicated to ongoing process improvement.
Taiichi Ohno and Eiji Toyoda, two engineers at Japanese automaker Toyota, created and implemented the concept of a Just-in-Time (JIT) system, or a lean manufacturing system, over several decades in the mid-20th century. They steered the company toward a relentless pursuit of cost reduction, achieved through greater structure and discipline than manufacturers were accustomed to at that time.
Just-in-Time is encapsulated by making only "what is needed, when it is needed, and in the amount needed” to eliminate errors, set realistic expectations, and fulfill orders as fast as possible. Since then, lean manufacturing and JIT have revolutionized global manufacturing processes.
Lean manufacturing owes much of its existence to Toyota, the company that pioneered the lean approach through its push for continuous improvement (and thus, reduced costs). After an extended period of development and implementation, Toyota started to garner attention due to the outcomes they achieved with this new approach. Eventually, Toyota’s approach became known as the Toyota Production System, or TPS, and manufacturers everywhere sought to imitate it.
While TPS and lean manufacturing focus mainly on physical production, the principles can be applied more broadly with great success. Books like “The Toyota Way” extend these principles beyond the factory floor; into corporate offices and even to service-oriented businesses. Ultimately, the goal of TPS and lean manufacturing is to achieve the highest quality with the lowest cost and lead time. This means getting the goods out the door on time, made fast, and made right the first time.
The principles of lean manufacturing are based on the ideas and goals of TPS, where you're building stability through better manufacturing practices which result in lower costs.
Lean manufacturing can be understood through five general principles, which we’ll outline below. You may find these principles worded in a variety of ways, but the core concepts are generally the same no matter where you look.
There are good reasons for this variation: The Toyota engineers who kicked off the lean movement didn’t exactly do so with the intent of teaching the concepts to others, and lean thinking should — and often does — look different in various industries and types of work (physical production, service, knowledge, and so forth).
The key to identifying and removing waste is knowing what is and isn’t valuable, and to whom. In lean manufacturing, this starts with identifying or defining customer value.
Put most simply, value is what a customer is willing to pay for.
A gourmet burger with edible gold leaf covering the bun is, in general terms, more valuable than a Big Mac. But in the context of lean manufacturing, that very expensive burger is not valuable to McDonald’s because their customers wouldn’t be willing to pay for it.
By the same token, that burger may well have value in Las Vegas, or at a high-end eatery in a major city — again, because those customers are willing to pay for it.
By identifying what’s valuable to customers, businesses can identify and trim non-value costs.
Value stream mapping looks a lot like workflow building, but it has a singular focus on charting the value stream. This is the sequence of steps a company must take to turn a market demand into something valuable that can be delivered to the market.
Once a company identifies what customers value, they can tailor their workflows and production processes around those values.
By mapping the value stream of any product or process, businesses can identify repeatable steps, pain points, handoffs, and instances of all three categories of waste (more on those later on).
A demand-based system, also called a pull-based system or JIT system, is one where products are created only in response to customer demand (that is, once customers demand them). It stands in contrast to traditional manufacturing methods that stockpile large amounts of inventory in anticipation of demand.
While it can seem scary to risk not having what your customers want on hand, the concept makes sense if you think about waste. Any excess in material or product carries costs (logistics, inventory, square footage, cost of materials and labor) as well as risk if the item doesn’t generate demand.
To be clear, there are risks to moving to a pull-based or demand-based system. This methodology relies heavily on the supply chain, for one. The COVID-19 pandemic laid those risks bare, as over reliance on global sourcing of raw materials or parts manufacturing caused many demand-based systems to collapse.
Still, in a lean environment, we can view inventory as waste. The right balance of risk and waste must be determined by each business.
Flow — unimpeded, uninterrupted production with no delays and minimal waste — is the goal of any manufacturing environment. By implementing the other lean principles, businesses have a much greater likelihood of creating flow in their production environments.
Some lean manufacturing tools and tactics associated with this principle include breaking down process steps, reordering or reconfiguring those steps around bottlenecks or inefficiencies, cross-training employees, and workload balancing.
Often referred to as kaizen (the Japanese term for “improvement” or” continuous improvement”), the fifth lean manufacturing principle is far-reaching in its scope. Stated simply, the principle of continuous improvement means that you’ve never truly and fully eliminated all waste. All processes in a business environment should be continuously monitored and measured with the goal of finding additional ways to improve.
Of course, committing to a continuous improvement model requires knowing what to measure and where improvements are likely to be found. For more on identifying the right key performance indicators in a manufacturing environment, read Manufacturing KPIs: What Makes a Good Metric?
The 3 Types of Waste in the Lean Manufacturing Process
All five of these principles support the core goals of a lean manufacturing system, the most significant of which is reducing waste.
The concept of waste is a broad one, and TPS breaks it down into three main categories: mura, muri, and muda.
Mura, a Japanese term that means “inconsistency” or “imbalance,” is the first broad category. It tends to refer to processes and systems that are uneven (either internally or when compared to other processes and systems), throwing the entire manufacturing workflow off balance. Lean manufacturing seeks to design out those inconsistencies.
Generally, three types of waste fall under mura:
Idle time, time spent waiting on machines that are offline, and workers’ time spent operating at less than optimal levels all tend to happen because of inconsistencies.
Now, you’ll never get to zero in any of these categories because perfection remains out of reach: People make mistakes and get tired, and machines break.
But you can certainly turn your attention to reducing waste from inconsistency. Dig down into the reasons why your defective rate isn’t lower. Go back to the value stream map and look for redundant processes or ways to reorganize workflows so there’s less wasted worker time. Wherever you see bottlenecks or uneven distribution of workload, you have the potential to design out mura.
Muri refers to “overburden,” “unreasonableness,” or even “impossibility.” It’s when people or systems are overloaded with more than they can reasonably be expected to do or produce.
Muri can occur in relation to either of the other two, or even independently. Unevenness tends to look like underutilization in one area and overburdening of another. And, counterintuitively, too much reduction of muda can result in overallocation that drifts into muri.
Like mura (inconsistency), lean manufacturing seeks to design out muri (overburden).
Examples of muri include:
Clearing out this form of waste looks like right-sizing operations, adding staff to meet demand, and designing out the inconsistencies that lead to overburden.
Muda is waste itself, and can also mean “uselessness” or “futility.” It can describe any work that doesn’t add value for the customer and that isn’t required by external forces, like inspection and safety testing.
All types of waste defined in TPS can be muda:
Processes for removing muda vary as widely as the types and causes of the waste. Typically, reining in mura (inconsistency) and muri (overburden) will eliminate significant instances of waste.
We’ve established what lean manufacturing principles look like and where they came from. Now, let’s examine how the core principles of lean manufacturing can improve your business processes and customer satisfaction.
The most obvious benefit of applying lean manufacturing principles to your production line or work environment is waste reduction. No other system has done as much to help businesses consistently and effectively identify and work toward the elimination of waste.
This is most apparent in high-volume manufacturing (think assembly lines), but even high-mix low-volume manufacturers can benefit from reduced waste by adopting lean principles and lean production strategies.
Nearly every business process inherently has waste. Identifying the parts of your process that don’t add any value for the customer and removing those elements is the chief way to reduce costs.
Lean manufacturing principles tend to improve overall manufacturing quality as well. Inefficient production and overburdened producers both lead toward lower quality, so by addressing those issues, you’ll likely see an improved end product.
Related concepts like Six Sigma can further improve quality assurance in lean manufacturing, and certain lean tools and concepts like poka-yoke (which means “mistake proofing”) and jidoka (which means “intelligent automation”) will do the same.
When you eliminate waste, you eliminate lost time on multiple fronts. The manufacturing process itself goes more quickly when it’s streamlined, and there are plenty of other hidden time savings.
Any amount of imbalance automatically creates wasted time for the underutilized worker or machine, whether in seconds or hours. Balancing out that workload allows you to accomplish more in the same period of time.
Similarly, overburden leads to lost time due to costly mistakes and shutdowns due to equipment failures. By bringing workload into a manageable range, you’ll lower the time lost due to overburden and related mistakes.
Beyond imbalance and overburden, every form of waste has an associated time cost:
Ultimately, saving time and reducing waste has the same end result: lowering costs for your business. Through the relentless pursuit of shaving off waste (even in seemingly insignificant amounts), you’ll achieve progress toward lowering costs. Those small amounts add up in aggregate and over time, leading to higher profitability and output without raising prices.
Consider each of these ways that lean principles can lower manufacturing costs:
If you’ve not previously considered a move toward lean manufacturing principles, doing so now has the potential to transform your factory operations. But no matter how lean you get, you’ll need the right tech tools if you want to optimize your processes to match.
Amper’s factory operating system and machine monitoring tools offer you detailed insights about your real-time processes and operations—without the need for complex IT integrations.