Lean Manufacturing
Staff Report

Lean manufacturing may sound like a trendy buzzword, but its concepts have been implemented globally for almost 60 years. Major U.S. companies have been teaching and implementing lean for 20 years.

What are lean concepts and how do they work? What is the goal of lean? What are its tools? Why are so many major companies around the world sold on lean? Simply stated, lean works. And with proper training any company can implement lean successfully.

The following material is the first in a series of information about lean manufacturing provided by Tompkins Inc., a total operations consulting firm based in Raleigh, N.C.

Although lean will deliver significant results quickly, lean is not a quick-fix program. Lean is a team-based continuous process designed for the long-term maximization of company resources. Companies expecting to use lean for a few years and then to move on to another process or program will lose the confidence of managers, supervisors, and operators. Lean demands total commitment for the long haul. A departure from lean after implementation is worse than not implementing lean in the first place. After selling it to the workforce, dropping lean would show manage-ment’s lack of commitment to team-based continuous improvement. Lean is a bottom-up and top-down process, and its success depends on cooperation and commitment across all levels.

Although lean is a current business trend, it is not new. In fact, a major Japanese automobile manufacturer developed lean in the 1940s. It quickly spread to other companies and industries within Japan, and finally the United States and West. Now, service, sales, governments, and other non-manufacturing sectors are jumping onto the lean bandwagon.

The lean concept refers to a collection of tools used to promote long-term profitability, growth, and in doing more with less. This seemingly impossible task is achievable. In the past, increasing production efficiency required employees to work harder or longer, and machines to run faster. These methods work temporarily, but ultimately cause great problems. Accident rates increase, unions claim labor abuse, and over-taxed equipment breaks down. So, how do you increase efficiency without working harder or longer? The simple answer is by eliminating waste.

Waste normally represents between 55 and 95 percent of the manufacturing process. All manufacturing processes are either value-added or non-value-added. Value-added processes mold, transform, or otherwise change raw materials into a finished product. Non-value-added activities include transporting material, conducting inspections, bar coding, and others. Implementing lean manufacturing involves streamlining the non-value-added processes as much as possible, because it represents as much as 75 percent of the total manufacturing process. The need for Lean may be more easily understood by looking at financial models. Until 30 years ago, monopolies existed and large companies took their existing costs, added a profit, and the result was the sales price.

This formula was especially fitting for new products. When VCRs were first introduced, they cost more than $1000 per machine. The same was true of cordless telephones, personal computers, and laptops. If consumers wanted the product, they were forced to pay the company’s set price. In today’s market, competition is more intense and consumers are more sophisticated. They demand more products, more features, better quality, higher availability, and competitive prices. Competition is also stronger due to the multiple numbers of companies producing each product.

Current cost models assume the consumer sets the sales price. Anti-trust laws have rendered most monopolies obsolete. The manufacturer or service provider now determines its profit by subtracting cost from the sales price. As a result, the only strategy for increasing profitability in today’s market is to reduce product cost by eliminating waste. Under the definition of lean, manufacturers must meet consumer demand while applying fewer resources. (Improved customer satisfaction is also a critical element of this equation.) The old cliché of working smarter, not harder, applies now more than ever.

Baselining and benchmarking

The first step in any improvement process is to document the company’s current performance. You must know where you are now in order to determine where you are going, and how you are going to get there.

With the assistance of management and the financial group, the metrics to be tracked and measured must be established up front. Next, measurements for a minimum of 12 months should be collected in order to understand how the metrics are trending over time, and where they are when the lean process begins. Complete buy-in is essential now before any lean efforts begin. If buy-in is not attained from the location manager and the financial group, questions will arise later as to what savings were actually realized. Also, a clear understanding of how the savings will be calculated and valued at the end of the project must be established. Only in this way may effective measurement take place during and after each lean project.

Implementing lean is the easy part. Establishing a baseline and measuring financial results is not. It is, however, a critical first step in determining lean’s success. Many successful improvement efforts are never properly recognized because no verifiable starting point is established. Scrambling to find the numbers as they are needed, instead of before, decreases credibility with the location manager, corporate management, and the financial group.

It is also important to understand performance levels achieved by other departments in the same facility, other facilities in the same company, other companies in the same industry, and other industries. It is wise to know where you have been and where you are. Knowing where others have been and where others are will help the organization understand how it is doing in relative terms. This is called benchmarking.

Lean tools

Eliminating wasted time, wasted effort, wasted materials, and wasted resources may increase throughput or productivity by a minimum of 30 percent. Improvements of 50 to 100 percent are not uncommon. For example, a process that runs 20 minutes per hour, or 33 percent of the time on average (based on total available time), is down 40 minutes per hour, or 67 percent of the total available time. If, through team-based improvement efforts, the organization successfully eliminates 20 minutes of the 40 waste minutes, the result would be outstanding. The total cycle would now require 40 minutes of which 20 minutes are value-added. The value-added 20 minutes represents 20/40 or 50 percent value-added time. To recap, neither speed up the process, nor require extra effort in the value-added part of the process in order to achieve improvement. Simply focus on non-value-added activities that are preventing the process from being optimized, and attack them.

Setup time reduction

Manufacturing lead-time reduction is a primary focus in today’s competitive environment. Many elements comprise manufacturing lead-time, such as material preparation, movement, and setup time. Setup time is directly related to production lot sizes. As setup times are reduced, lot sizes may also be reduced. Reducing lot sizes decreases total manufacturing lead-time geometrically, particularly when the process involves multiple operations.

The goal is not to reduce the number of setups (this will be explained later), but to reduce the required setup time that results in machine downtime for each occurrence of the setup. Simply reduce the amount of time tied to setting up the process or machine when it is not running production. This is referred to as internal setup time. Setup time that takes place when a process or machine is running is referred to as external setup time. The premise is that in many processes, the machinery is producing, not the operator. At the very least, the operator is not 100 percent utilized or occupied. As a result, the operator may, depending on the process and the machinery, perform some setup tasks during the time that the process or machine is running. This may not always be the case. Totally manual operations require that the operator be present at the station, or no production may take place. Typical tasks include obtaining tools, parts, and materials.

Some of the original internal tasks may actually be eliminated as in the case of multiple adjustments or zeroing in on a setting. Setting marks, or poka-yokes, ensure at least a starting point for settings, if not the final setting. A poka-yoke is an error-proofing device, such as the connectors used on personal computers. The poka-yoke will not allow the connection of the cable in the wrong configuration. Likewise, a poka-yoke will not allow the operator to insert the die incorrectly. Each of these little bites allows us to eat an elephant. The elephant is a large block of wasted time. Most internal setup times may be reduced between 30 and 70 percent per discrete project, depending on the operation. The key to setup time reduction projects is to revisit the setup operation periodically to audit the results from the previous project, and to reduce the setup time again and again.

For example, suppose a setup operation is observed and the following data is collected on a ten-machine department producing plastic assemblies at the rate of five units per minute or 300 units per hour. The machines are located close to one another, but quite a distance away from where the material or dies are stored. One operator runs one machine. Each operator/machine currently produces three large equally sized lots per day. As a result, the operators perform one setup at the start of the shift and two other setups during the remainder of the shift. Each operator performs the entire setup operation by himself with no assistance from other operators or maintenance personnel.

All of the times shown in the above table are initially internal to the setup. This means that these activities are performed while the machine is not running. Specifically, the internal setup time includes all the activities that take place from the time the last part from the previous lot is produced until the time the first good piece from the next lot is produced. If any of the items were external to the setup, they would take place before or after the machine was stopped for the setup. The objective for a setup time reduction project is to eliminate or reduce all internal setup activities and to minimize the external activities. The improvement team documented the project and made several observations.

Some activities such as remove drain cannot possibly be performed while the machine is running. Other activities may possibly be performed while the machine is running, but not safely. Many internal activities may be performed while the machine is running; either before or after the setup takes place.

Depending on contamination issues, cleaning around the machine may or may not take place while the machine is running. For this example it is assumed that the clean around machine activity, such as removing parts from the floor, may take place while the machine is running before the setup.

Delay filling out the paperwork for the previous lot until after the machine has been restarted on the next production lot. Obviously all of the paperwork may not be filled out before the machine is stopped, because a final production count may not be taken, until then.

Currently tools are shared among many operators and must be located. Install five tool shadow boards to be shared among the 10 machines in the department. In the rare case that both operators need the same tool at the same time, they will walk to the next tool board.

Previously, the dies were stored on a shelf in the opposite corner of the department. One trip internal to the setup returned the die from the previous lot to the shelf and obtained the die for the next lot. Relocating the shelf to a more central location to the 10 machines will reduce the distance traveled. The trips to return the die from the previous lot and the trip to obtain the die for the next lot will be split up. Obtaining the die for the next production lot will be performed before the setup, and returning the die from the previous production lot will be done after production. Removing the die from the previous lot, cleaning inside the machine, and installing the new die must take place internal to the setup. The machine will obviously not run correctly during these three activities, but their associated times may be reduced.

During die removal and installation, a collar is rotated seven times in order to secure the die to the machine. Change the threading to allow for only one turn and the time for removing and installing the dies will be reduced.

Obtaining the die for the next lot and preheating it, may certainly be performed while the machine is running before the setup, so these two activities will be moved external to the setup, and the machine will not be stopped while they take place.

Adjustments still must be made internal to the setup, but this time will be reduced dramatically with setup marks and documented settings by product.

Feeding the material must take place internal to the setup, but locating and obtaining it may be performed before the setup begins.

Returning the material from the previous production lot will now be performed after the setup is complete.

After interviewing the inventory control material handler and his supervisor, it was determined that the material handler could stage the material close to the machine. The handler was happy to do this because he said the operators always move the materials to the wrong locations when attempting to locate the correct materials for the next lot. The material handler also said that the operators frequently return partially consumed material containers to the wrong location. This activity would actually save the material handler time over the course of the day, as he would now not be required to go behind the operators and relocate the materials to their proper locations. The material handler is provided with a schedule at the beginning of each shift in order that he may know what materials would need staging.

Feeding the material into the machine could neither be moved external to the setup nor could the time be reduced. After a discussion with the quality control manager, the 30 pieces produced and tested during the setup may be reduced to 10. Statistically, only 10 pieces were required before startup per the control plan. The operators had always produced and tested 30 test pieces as the production supervisors had asked them to many years ago when a major customer was issuing complaints. Some questions were asked during the training meeting and not all of the operators were ready for a change, but the team asked them to try the new procedure for one week at which time another training meeting would be held.

One week later, most of the operators preferred the new procedure to the old one. Some of the operators still resisted the changes, but they agreed to continue with the new procedure. These operators did suggest two changes to the new procedure that were adopted. They also finally accepted the continuous improvement process, even if it was in a small way.

It is important to remember how important selling the job is to the success of a project. Simply knowing the numbers are correct and that the new procedure is do-able is not always enough.

After the setup time reduction project, the times were as follows:

The internal setup time was reduced from 100 minutes to 23 minutes per occurrence. As the setup takes place three times per machine per shift, the total daily savings in machine run time was: 77 minutes per machine setup multiplied by 3 setups per shift multiplied by 10 machines per shift multiplied by 3 shifts per day = 6,930 minutes per day or 115.5 machine hours per day. As the production rate averages five units per minute or three hundred units per hour, the department may now run 34,650 additional units per production day, which allows all of the operators to take every Saturday off. This is the approximate amount of production that was required to be produced every Saturday. The company saved the overtime associated with the operators, the supervisor, and the support departments. The company also was able to ship the last orders of the week at Friday midnight instead of Monday morning, as the shipper will not pick up on Saturday. Average inventories were reduced and customers were more satisfied with earlier shipments. The four-week goal was to run 12 smaller lots on each machine per shift, but the idea had to be sold to the supervisors and operators first. Implementation without communication and buy-in would result in failure.

There existed no reason to risk a backlash of disgruntled employees in order to implement the changes quickly. These changes will result in millions of dollars in savings for the company each year. In addition, the training, cooperation, and good will earned in four weeks will pay off significantly in the long run.

Why would anyone want to promote the idea of additional setups in an operation? By reducing the time per setup, the number of setups may be increased in order to promote a more flexible schedule that incorporates shorter product runs. A make to order scenario would be ideal, both for the company and the customer, but depends on setup times and production rates. The concept of running smaller batches helps to avoid stockouts on smaller volume products. Another benefit is that as the operators perform more setups, they fear them less and become more proficient at performing them.

Safety, chemical reactivity, good manufacturing practices (GMPs), product segregation, product contamination, space limitations, and other constraints may impose constraints on the new sequence of a setup process. For instance the material for the previous lot may not be allowed to be placed in proximity to the material for the next lot due to flammability, reaction, or to prevent accidentally re-feeding the material from the previous lot. Also, many FDA and GMP regulations require that the work area must be completely unstocked and thoroughly cleaned before the new materials and/or dies may be transported to the work area. Product quality is an extremely sensitive area. In our example, quality control approved the reduction in lot sample test pieces during the setup from 30 to 10 pieces. A conservative attitude toward process changes should benefit the project team. A quality issue or customer complaint will easily be blamed on a new procedure, no matter how minor the actual changes. At least initially, it may prove wise not to change any major process or testing procedure as a part of the setup time reduction project. This will disprove any accusations that the new setup procedure caused the quality issue or the customer complaint. Normally setup time reduction projects actually improve product quality slightly, due to improved, and better-documented procedures, as well as improved operator training.

This is normally an intangible benefit, and cannot be credited as a direct result of the project. Another option in this example could be to have multiple operators tackle the setups and/or to use maintenance or other personnel to assist with the setups. These options would be dependent upon how automated the machines are and how available maintenance or other personnel would be to assist with the setup. Ideally, machines that incorporate automation would detect the first defective part produced and would stop themselves, thus not requiring the operator to be present at the machine continuously for fear of producing hundreds of defective parts. The team concept has proven to work quite well in many setup situations.

Kitting is another setup reduction approach that is commonly used. It is most effective when the setup requires multiple internal activities that must be performed independently by more than one person. Otherwise the benefits are marginal. However, safety issues, space limitations, and confusion may result from multiple persons attempting to perform activities in sequence.