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What is Lean Manufacturing?

Instructor: Deborah Schell

Deborah teaches college Accounting and has a master's degree in Educational Technology.

Companies have limited resources with which to work and are always looking for ways to do more with what they have. In this lesson, you will learn about lean manufacturing.

Lean Manufacturing Explained

Companies are always limited by the amount of resources they have whether it is the number of people, or the amount of money or materials needed in the manufacturing process. Lean manufacturing is a process that focuses on eliminating waste to reduce costs in order to generate more profit. Since profit = sales - costs, a company that is successful in reducing its costs should see an increase in its profit. Unlike other methods that aim to reduce waste, the focus of lean manufacturing is to identify processes that do not add value to the customer.

Let's meet Ms. B. Neat who owns the Marvelous Mop Company which manufactures mops and buckets. Two new competitors have entered the cleaning market and Ms. B. Neat is looking for ways to lower her costs to compete and generate more profit for her company. She has heard about lean manufacturing and wants to know if it can help her achieve her objective of earning more profit.

Five Steps of Lean Manufacturing

When examining a process to eliminate waste, there are five steps involved, specifically:

  • Specify value
  • Map the value stream
  • Create flow
  • Create pull
  • Aim for perfection

Let's examine each of these steps in detail to see how they could apply to Ms. Neat's business.

Specify Value

In this step, value is considered from the customer's point of view. If a process does not add value from the customer's perspective, then it represents a waste. It is necessary to determine what is important to the customer. For Ms. Neat's company, let's assume that customers want a good quality mop and bucket at a reasonable price. They don't want a complicated mop that requires an owner's manual to use. Ms. Neat needs to incorporate what is important to her customers in her design and manufacture of her products.

Map the Value Stream

This step involves identifying and mapping the value stream. A value stream includes all actions that occur from design to the manufacture of a product. Both the current and the future state of the value stream are identified and mapped. Mapping both streams allows for the identification of waste which can be eliminated.

If Ms. Neat were to map the current value stream, she would identify that some bucket colors are less popular than others, resulting in some colored plastic being used less frequently in the manufacturing process. The little-used plastic requires storage space and some has to be discarded due to fading. The future could involve fewer color choices and less plastic being stored and spoiling.

Create Flow

Once the value streams have been mapped, potential areas of waste are easy to identify. The goal of this step is to reduce waste to get the product to the customer more smoothly. Let's assume that after Ms. Neat mapped her value streams, she identified that her raw materials aren't always available to be used in the production process when they are needed. In fact, the value stream mapping showed that a delay of up to ten minutes sometimes occurs as plastic is being retrieved from the storage area. By moving the area where the plastic is stored to be closer to the production process, Ms. Neat can reduce the amount of time that is wasted waiting for materials.

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