In a recently released report, McKinsey & Company attributes almost 50% of all US productivity growth since 2000 to manufacturers. The manufacturing industry also experienced a lower amount of job loss during the recession than any other industry. These statistics are likely reflective of the fact that manufacturing companies are increasingly developing lean manufacturing processes to develop more agile, efficient operations.
What does lean manufacturing really mean?
A quick Google search reveals that lean management, also known as lean production or lean thinking, is a production practice for maintaining product value while doing less work.
Beyond the literal definition, lean manufacturing is really a company culture or philosophy centered around finding ways to:
- Reduce waste and overhead costs
- Improve worker efficiency
- Manage inventory
Waste & Overhead Cost Reduction
Lean production requires that companies go beyond yearly budgeting and planning to reduce waste and unnecessary spending. Companies must seek to eliminate waste at every level of the production process, which includes company participation of all employees.
Auto giant Toyota operates one of the most widely known lean production systems worldwide. As described in the Harvard Business Review, the Toyota system is one where “every activity, connection, and production path…must have built-in tests that signal problems immediately.”
From plant workers to process managers, manufacturers must seek out waste in the form of errors, defects and especially unnecessary production steps. Companies must open communication lines between upper management and those on the production floor in each facility or location.
Massachusetts based plastics manufacturer Mayfield Plastics cites quality control as a key component in their business strategy post-recession. Led by a manager with 25 years of experience in automotive quality control, Mayfield Plastic’s quality control approach includes plant workers, supervisors and even their customer service team. Mayfield Plastics’ waste reduction efforts have led to an increase in profits and a significant boost in customer satisfaction despite our struggling economy.
Specialized, Efficient Manufacturing
Another method of implementing lean manufacturing is dividing workers into specialized work cells, or groups. Workers in small, specialized groups perform their tasks more efficiently when they concentrate their efforts in a specific area and avoid wasting production time. If an employee’s efforts are concentrated in just one area, they become more likely to notice mistakes and discover improved techniques.
An essential method of implementing lean manufacturing process involves controlling inventory and reducing excess production. Many manufacturers produce products in large runs, even when the demand for that products is low. Products are stored or kept in inventory until the goods are sold, often leading to overspending on storage. When production runs are too large, manufacturers run the risk of filling inventory with products that might become outdated.
Lean techniques involve implementing a system for monitoring inventory and producing goods in smaller runs rather than keeping excess inventory in storage. The savings from reduced storage costs and elimination of waste generally outweigh time and costs of equipment setup changes, resulting in overall savings for manufacturers.
Implementing lean manufacturing techniques substantially lowers overhead costs and engages employees to think critically about process improvement.
In the fourth installment of the “5 Keys to Survival After the Recession” we’ll analyze the importance of consistency in manufacturing systems. Sign up today to receive updates from the UniTherm blog.