There are two ways in which a business can maximize its profits. First is, by increasing its sales and the second is, by cutting down its costs. Costs include all the money that a business spends, right from acquiring the raw materials to delivering the goods to the final consumer. To bring down the costs of a manufacturing unit, there is a methodology which was devised in Japan in the Toyota company, known as "lean manufacturing". This methodology aimed at streamlining the processes and reducing any wasteful expenditure of resources. The following Buzzle article discusses the concept and philosophy of lean manufacturing in detail.
What Does Lean Manufacturing Mean?
Although, the lean manufacturing system was first of all invented in Japan for a manufacturing unit, yet, today, it is applicable to service industries as well. This system is based on the principle of eliminating all kinds of "wastes", which would otherwise add to the costs and lead to more time consumption as well. Here is a list of some of the possible "wastes" that a unit is most likely to encounter.
- Overproduction - Manufacturing more than the required amount of goods
- Motion - Moving machines and people, without any kind of value addition
- Defects - Production of defective goods, leading to wastage of resources in repairing them
- Inventory - Stocking inventory as the production is taking a long time
- Waiting - Workers waiting for anything, right from information to instructions from their seniors to waiting for a machine to complete a task
- Transportation - Unnecessarily moving products from one location to another
- Processing - Charting out a number of unnecessary processes, which can be easily combined
According to this system, once these wastes are identified, they should be eliminated, so that there is a smooth flow of materials, products, people and services, throughout the system. This will help in bringing down the costs of the company considerably.
The Lean Manufacturing Process
The lean manufacturing system basically follows four steps. The first is identification of the various forms of wastes. Secondly, ascertaining the causes behind these wastes. For this, tools such as "Ishikawa diagrams" are used. These diagrams link the causes to their effects. When the causes are found, the third step is to find an appropriate solution for the same. Here, a number of techniques, such as - Just In Time (JIT), Total Quality Management (TQM), 5S, etc. are considered.
'Total Quality Management' refers to managing the entire organization, including the production and supply chain, in such a way that the quality is controlled and the customers achieve maximum satisfaction. It aims for inculcating a quality culture in the organization, which everyone, right from a worker to an executive, follows and adopts. 'Just In Time' is an inventory system which aims at zero wastage by reducing the waiting time for the inventory almost to nil, thereby bringing down the carrying costs in the process.
Under this system, only that much inventory is ordered and stored, which is needed for immediate production. '5 S' refers to five principles which organizations should follow, if they want to remain organized and clutter-free. The five principles are: sort, shine, set in order, standardize and sustain. Likewise, there are many other tools and concepts which are considered and the most applicable ones to a given business are used.
Finally, whatever solution that is chosen, is implemented. Thereafter, whatever practical difficulties which are faced while the solution is being implemented, are accommodated. The principle of "Kaizen" i.e. continuous improvement is followed and as and when required, the whole process of manufacturing is re-looked at and any positive changes in the same, which add value to the customers, are introduced whenever and wherever possible.
While choosing and implementing the lean manufacturing concepts, looking at the "bigger picture" i.e. implementing a solution which has a positive impact on the whole organization, rather than just on the problem at hand, is of utmost importance. This is the key to bring a success in reducing wastage and utilizing the resources of a unit/organization, in the best possible manner.