With increasingly more automation in today’s factories, we think we’re on the verge of achieving a manufacturing process that is as lean as it can be. Yet almost half of respondents to a recent survey by supply chain management software firm E2open ranked “lean supply chain” and “evolving from a ‘push’ to a ‘pull’ demand-driven strategy” as top among the highest-priority supply chain initiatives.

Long ago, efficiency experts were responsible for making more from less and sweating assets. Since then, we have learned that becoming lean involves more than efficiency; it entails coordinating and extracting as much useful information from processing data and customer specifications as possible to create precise value with less effort, less space, less money and less time than the traditional system of mass production.

Bruce Tompkins, principal of Tompkins Associates, offers the following five broad tips for waste reduction in “Lean Thinking for the Supply Chain”:

• Stop defective products at their source;
• Flow processes together or change the physical relationship of components in the process;
• Eliminate excess material handling or costly handling steps;
• Eliminate or reduce pointless process steps; and
• Reduce the time spent waiting for parts, orders, other people or information.

For every process under a manufacturing plant roof, striving to maximize quality and productivity while reducing costs yields a return on investment (ROI) in effort and machine improvements. If a plant manager duplicates this effort and investment throughout the entire plant, the business will most likely increase plant profitability through waste reduction.

It helps to think in terms beyond the site, too.

Although lean thinking typically is applied to manufacturing, lean practice is applicable anywhere that processes need improvement. This includes the entire supply chain. A lean supply chain, according to Tompkins, is one that produces what is needed, only how much is needed, when it is needed, and where it is needed.

Manufacturing
Consuming minimum resources to make what the “customer wants, in the quantity the customer wants when the customer wants it” leads to lean manufacturing. Naturally, this takes some research to pinpoint customer needs accurately. Moreover, and perhaps most often overlooked, lean focus and lean techniques never end because customer demands change often. Lean requires continuous improvement.

Procurement
Procurement offers an opportunity for making gains toward a leaner operation. Visibility is the key to lean procurement, says Tompkins. When suppliers and customers are aware of, and in step with, all that is happening in their operations, then they can work together to meet each other’s needs. A coordinated approach to “creating a future value stream in the procurement process” helps both parties make lean progress. They should create a flow of information while establishing a pull of information and products.

Warehousing
Warehousing waste can be found throughout the storage process of warehousing functions. Most tips for lean warehousing are common knowledge, yet one tip that stands out involves waiting. In a truly lean warehouse, waiting for parts, materials and information does not occur; if it does, it’s minimal. Each step in the warehousing process should be examined critically to see where unnecessary, repetitive and non-value-added activities might be so that they may be eliminated, Tompkins notes.

Lean Does Not Preclude Flexibility
In an example given by IndustryWeek recently, work-flow balancing techniques at or below operational time targets for production lines designed for mixed models helped a manufacturer meet customer demand. Special system set-up techniques had to be mastered and flow techniques were incorporated in the processing “to re-align and optimize production and material replenishment process.”

Sometimes these changes require investment. Pelion Systems, Inc.’s chief technology office, Dave Gleditsch, writes, “It is absolutely essential to ‘connect the dots’ of any investment or activity or technology for lean programs, with corresponding bottom-line financial improvement.”

However, when looking at the lean-delivered bottom-line improvement, not every benefit can be counted accurately in dollars. When discussing eliminating waste to make progress toward lean manufacturing, most of us automatically think of the savings acquired by not paying for something that brings no value. Yet there are other advantages of waste reduction: not having to pay fees for landfilling and waste transport to a disposal site, as well as legal protection for potential litigation, for instance.

“To make the change to a lean environment, you must focus on the factory first. That’s because virtually everything revolves around your factory and its response time – your people, your engineering, your IT systems, your customers and your suppliers all depend on the speed and response of your factory,” notes SAP (via IndustryWeek).

If lean has anything to teach us, it is that we should be looking for opportunities to streamline our core processes to create precise customer value with less human effort, less space, less capital and less time than the traditional system of mass production. Those who practice lean have found the effort pays off handsomely.

Resources

Lean Thinking for the Supply Chain
by Bruce Tompkins
Supply Chain Edge, 2007

Top Supply Chain Initiatives Validated by Recent Survey
E2open, March 20, 2007

Transforming Your Business to Lean: Lessons Learned
by Dave Gleditsch
IndustryWeek, Jan. 18, 2007

Taking the Real Quantum Leap in Speed to Market
SAP (via IndustryWeek)