Lean Manufacturing Guide: How to Set Up a Lean Production System

Lean manufacturing is one of those buzzwords managers like to throw around, without being aware of what it actually entails. Something about eliminating waste in a manufacturing process? That must be it.

As the market pressure grows, more and more manufacturers are interested in establishing lean production systems. However, getting your production facility in top shape is not something that can be done overnight.

Join us as we discuss lean manufacturing principles, tools, techniques, and concepts you can use to become a world-class manufacturer. 

Before that, a quick introduction to lean manufacturing and its benefits.  

What is lean manufacturing?

Lean manufacturing is a philosophy of production that originated in the Toyota Motor Company and was originally known as the Toyota Production System. Toyota wished to differentiate itself from its large competitors in the US by removing anything from its production process that did not add value to the finished product and the customer. This way, the company would generate maximum value for the customer while minimizing costs and overheads.

The process was so successful that Toyota was able to produce cars at twice the rate of Ford, at a higher quality, while holding half the stock. The Toyota Production System was released as Lean Manufacturing by MITs James Womack, who traveled to Japan and studied how Toyota worked before writing two books that launched the lean movement globally.

Building the foundation: 5 lean manufacturing principles

The purpose of lean is to understand what a customer values, and then do more with less to deliver that value – while constantly seeking improvement. Stripped down to its fundamentals, lean manufacturing is based on five core principles.

1) Define value

All customers value different characteristics in a product or service. Lean thinking emphasizes the need to understand what the customer perceives as valuable, as well as the price they are prepared to pay for that. The manufacturer then seeks to deliver that value at an optimal price, while eliminating waste and unnecessary costs to ensure maximum profit margins.

2) Map the value stream

The manufacturing of a physical component is one small part of a wide and complex web of manufacturing activities. The value mapping process considers the entire business lifecycle supporting the manufacturing process, from raw material inputs to administration and waste disposal. 

When mapping the value stream, all stages of the production cycle are examined to determine whether they add value to the process. If not, they must be removed.

3) Create flow

If we assume that the value mapping process has removed all unnecessary activities, then each step in the manufacturing process is vital and adds value to the finished product. 

In creating a continuous flow, a business ensures that each step occurs when it should and for the correct duration. All delays, queuing, mistakes or equipment downtime are removed, ensuring an uninterrupted flow through the production process.

4) Establish a pull system

A push manufacturing system produces a certain quantity of products for storage. Storage quantities are calculated based on historical demand and production efficiency. 

Lean manufacturing works on a pull system. The aim is to limit inventory and produce goods that the customer wishes to buy by synchronizing raw material inputs on a just-in-time basis, and producing products for a known demand. Such a system demands good supplier and customer relationships and communication, combined with efficient processes and flexible work teams.  

5) Seek perfection through continuous improvement

Kaizen is the Sino-Japanese word for improvement, and in lean production, it emphasizes maintaining and improving current processes through small, incremental change. Kaizen is both a philosophy and a functional discipline. 

The philosophy component encourages the employees’ engaged and active participation and commitment to improving the workplace. The functional application involves focusing on an area in the manufacturing process and running a four-phase cycle to implement process improvement.

Creating lean production requires the elimination of wastes of lean manufacturing

There are three characteristics that we can apply to an organization, process, or task in lean manufacturing:

1. They either provide a customer value-add,
2. They provide a business value-add,
3. Or they are wasteful.

If there is no value to something, it has no right to exist within the business. Here are eight common types of waste.

1) Unnecessary transportation

Transportation does not refer solely to inbound and outbound logistics but also the movement of materials and people within a particular process. Waste in transportation results in extra time that doesn’t add value to production. It can increase incidents of handling damage, create delays in the production flow, cause communication breakdowns, and leads to inefficient material rehandling. 

One way to remove unnecessary transportation is to map raw materials and parts transportation through your facility. Flow should be product-oriented, grouped according to flow, and minimize overall travel distance. It should also seek to reduce the need for people to be engaged in non-value-adding tasks. 

2) Overproduction

Overproducing may give the feeling of comfort that a safety buffer brings, but producing too much product too early uses valuable resources. Money is tied up in work-in-progress (WIP) and stored inventory, while overheads expand from increased storage needs.

Lean manufacturing requires producing solely what a customer demands and using a one-piece flow system, where work can only move forward to the next workstation when it is clear and ready to receive it. 

3) The unnecessary motion of people, equipment, or machinery

Unnecessary motion can cause three problems for a business: 

1. safety issues
2. quality concerns
3. lowered productivity

Repetitive movements and poor ergonomics impact employee health, causing time lost from work and potential costs to the employer. Physically compromised employees are more likely to mishandle product during its transport. At the same time, productivity slows from wasted exertion, exacerbating safety and quality issues on the production floor.

Motion and movement must be natural, comfortable, and adjustable to the operator. Mapping the tasks necessary for each process, and observing people in the workplace, is a good way to identify unnecessary bending, stretching, lifting, or walking. Talk to the operators and gain their input on efficiencies they feel may improve their working environment.

4) Excess inventory

When a manufacturing facility carries excess inventory, the culprits are often poor planning and tracking, inefficient changeover times, production processes out of balance, or inaccurate forecasting systems. 

Carrying excess inventory impacts cash flow, tying up a valuable resource that a business could put to better use elsewhere. It also increases the chance of damage, theft, and non-recognition of defects in a large batch. It also requires a management system, the resources for which could be of better use elsewhere.

A business avoids excess inventory – and consequently also unneeded inventory management –  by using just-in-time delivery of raw materials, streamlining production flows to minimize WIP, and producing to meet customer demand.

5) Waiting (idle time)

Idle time becomes a problem when production events are poorly synchronized. Examples include operators waiting for equipment or tools, bottlenecks in production reducing throughput, or equipment being subject to unplanned downtime. Understanding the root cause of these issues is critical to eliminating waste.

Analyze idle time events to reach their cause, looking for poor equipment maintenance, lack of tooling or equipment, or inconsistent work processes.

6) Overprocessing

Over-processing refers to tasks, processes, or communication that is redundant and offers no increase in value to the product. Examples include unnecessary levels of approval or review, too much information being given or sought, poorly described specifications, or excessive quality steps.

Mapping the steps in a process will highlight those that appear onerous, unnecessary, repetitive, or unclear. Unless they actively add value to the business or the customer, they must be considered as waste – and the process reconfigured for their removal.

7) Defects

A defect occurs when a product fails to meet specifications, requiring it to be scrapped, reworked, or repaired. Lean manufacturing targets zero defects, as they introduce financial cost and customer displeasure.

When a defect is encountered, carry out a root cause analysis to isolate the reasons. While excessive variation in production processes are often to blame, lack of training, unnecessary handling, inadequate tools and equipment, or high inventory levels may all contribute to the problem. 

8) Unutilized talent

Labor costs form a substantial component of a manufacturing business. Underutilization may take several forms;

• Preventing knowledge sharing by siloing teams 
• Having employees perform unnecessary or low-value tasks when they might be better used
• Not considering employees’ feedback and unique perspectives  

Regular talent mapping within a business, and frequent engagement with employees to gauge their insight and job satisfaction, helps you identify areas of underutilization. Supervisors should always be alert to improvements that can better harness the capacity and capability of their teams.

Lean manufacturing tools, techniques, and concepts you can use to create a leaner production process

Newcomers to the lean manufacturing philosophy can be overwhelmed by the number of lean manufacturing techniques and concepts at their disposal. However, think of them as tools in a toolbox, from which you select the one most appropriate to your business and situation. 

Remember that implementing the principles of lean manufacturing is a continuous iterative process, and you’ll find many of the tools below useful at different stages of your journey.

Value stream mapping

Value stream mapping is a means of graphically depicting every step in a process, using standard symbols to create flow charts. The graphical procedure highlights when one or several of the eight wastes appear in a process.

Source: GoLeanSixSigma

It is a team-based procedure requiring a clearly defined problem, the process to be analyzed, and sufficient process data and times. Once mapped, the team can design and implement a new map that addresses the inefficiencies.

SMED (Single-Minute Exchange Of Die)

SMED aims to achieve equipment changeovers in under ten minutes, hence the single-minute name. A SMED implementation could be appropriate if Overall Equipment Efficiency (OEE) is impacted by changeover times. 

It involves breaking down each step of the changeover process into elements. External elements are those that operators can do while the equipment is running, and internal elements are those steps that require the equipment to stop. The elements are then analyzed to transfer as many internal elements to external ones. Then the process is streamlined to overlap tasks to reduce times further.

SMED workflow. Source: Lean Partner Project Gesellschaft

The Japanese industrial engineer Shigeo Shingo, who developed the process, used SMED to help companies reduce their changeover times by 94% on average.

5S

5S is a workplace organization method with a goal of creating clean, uncluttered, and safe workplaces. The initiative prevents accidents, lost or misplaced items, supports the easy location of tools and equipment, and drives a mentality of continuous improvement.

What is 5S? Source: Flevy

5S helps prevent work delays or unplanned downtime and is designed to improve productivity.

Poka-yoke

Poka-yoke is a Japanese term meaning ‘preventing inadvertent errors.’ The philosophy accepts that humans make mistakes, but allowing those mistakes to reach the customer is an unacceptable defect. Poka-yoke emphasizes highlighting errors as they occur, rather than inspecting for them later with the defective product requiring rework or scrapping.

Poka-yoke technique. Source: Medium

The system uses three forms of control: 

1. Visual aids allow someone to visualize the correct way to work
2. Visual management signals a deviation, thus directing behavior
3. Failsafes force a behavior, offering no other alternative. 

The process requires understanding why the error occurs using various lean techniques, before agreeing and implementing the appropriate poka-yoke.

Total productive maintenance

Total productive maintenance (TPM) is a set of techniques used to ensure all equipment in the production process can always perform their allocated tasks, ensuring maximum production efficiency.

Of the eight techniques (pillars), one includes using operators to carry out routine maintenance, inspection, and lubrication, freeing maintenance personnel for specialized tasks while increasing operator equipment ownership and knowledge. It is the first pillar and it is called Autonomous maintenance.  

Visual management using Kamishibai or Kanban boards

Kamishibai and Kanban are two different visual control methods that support workflow visualization, quality control, and efficiency.

Kanban means a visual signal, and Toyota developed it for part scheduling, with workers filling out a signal card when parts were nearing exhaustion. The goal was to order parts only when and as required, eliminating wasted time, space, and money. Kanban has since been appropriated into a broader methodology – to manage workflows, using cards to represent work items, and columns on a board to represent work stages.

Kamishibai is a similar visual control board used to perform audits, showing if they were due or done and whether the auditor identified abnormal conditions. The kamishibai board was part of the management’s standardized work processes, getting them out of their offices and on the shop floor. The goal was to fix abnormalities as soon as they were identified.

PDCA problem-solving cycle

PDCA is an acronym meaning Plan-Do-Check-Act, and it describes a four-step method for carrying out change. The PDCA cycle is designed to improve processes, products, or services on a continuous basis.

PDCA cycle. Source: Creative Safety Supply

The Gemba walk

The Gemba walk uses a Japanese term meaning ‘the real place,’ which refers to where the real work is happening. In a manufacturing operation, it’s the production line. The Japanese designed the concept to get executives out of their offices and engage with the workers to build relationships and understand what problems they might be experiencing in meeting production needs.

The Gemba walk has three elements:

1. Go and see. It is used to get all managers to regularly integrate with workers to try and solve waste. 
2. Ask why. It emphasizes the need to listen and learn, finding points in the value stream where problems could be solved.
3. Respect people. Respecting people reinforced that this is not a boss walk, looking to point fingers and blame people, but listening, learning, and working with the staff to resolve problems and inefficiencies.

Andon

Toyota developed Andon as a system of lights to alert operators and management of a problem. 

Like traffic light signals, there were no issues if the light was green, with production proceeding smoothly. If the operator activated the yellow light, a minor issue had been detected that didn’t require the whole line to be stopped but would become a larger issue if not addressed. Red alerts everyone that a production problem or defect has been found, stopping the line.

Andon system in practice. Source: Workerbase

The system requires other operators, team leaders, or managers to go to the workstation and address the problem immediately. The aim is to reactivate the production line promptly. Pull cords or buttons can manually activate the system or be automatically generated by logic controllers, streamlining the LOTO process.

JIT production

Just-in-time (JIT) production was the forerunner of lean production before the philosophy expanded to the larger lean movement we know today. JIT is now a subset of lean, and it emphasizes services, goods, and materials being delivered to their point of use in the exact quantity, and at the precise time they are required. 

This philosophy extends to all points in the production chain, from raw materials delivered by external suppliers, internal steps in the production flow delivered to the next production stage, and final delivery to the customer.

It has become an internal and external supply chain initiative, requiring good relationships with suppliers and customers, a stable work schedule, frequent small purchases, and commitment from all stakeholders in the process.

Jidoka

Jidoka uses automation to detect an abnormal manufacturing process, immediately stopping production. The technique emerged from the Japanese textile industry, where a textile loom was invented that stopped the loom when the shuttle thread broke. Previously, when the thread broke, the loom would continue manufacturing defective fabric, requiring one operator to watch each loom. 

The automated system considerably reduces scrap rates while allowing one operator to watch multiple machines.

Heijunka

Heijunka is a form of production leveling, allowing manufacturers to meet demand while avoiding batch processing – which results in peaks and troughs of manufacture. Leveling is done by type of item or quantity of items and uses a visual system called a heijunka box to schedule the work to be completed through the week, to meet average customer demand. 

The process is suggested as an advanced technique, useful for those manufacturers who have lean enterprise principles already well integrated into their plant.

Redesigning working cells

Redesigning work cells is applying a cellular manufacturing concept to production based on task specialization and repetition. It creates a work family that can share similar resources and work tasks.

Example of cell redesign: U-shaped cell layout. Source: Lean Six Sigma Definition

The redesigned process streamlines operations and balances workloads.

Kitting

Kitting is the process of having a supplier assemble all the parts and materials needed for a particular task into a single kit and giving the kit a single stock-keeping unit (SKU) code. Kitting ensures all the parts needed to complete a manufacturing task are present at the point of production, with all quality checks and quantities verified. 

The benefits of kitting are a more efficient use of production personnel, reduced warehouse requirements, and better inventory control.

Takt time

Takt time is described as the heartbeat of your manufacturing process. It is the speed you need to manufacture a product to meet customer demand. Manufacturing too fast is wasteful in that it increases inventory. Too slow, and you’ll fail to meet customer demand and risk losing business. 

This is where you can use the aforementioned lean manufacturing tools such as 5S, heijunka, and value stream mapping to align manufacturing processes with your calculated takt time.

Rank order clustering (production flow analysis)

Rank order clustering optimizes the manufacturing process by classifying machines and parts into logical groupings or families. The intent is to level the workload across manufacturing cells while optimizing manufacturing flows, removing bottlenecks, reducing work in progress, and material handling. 

Multi-process handling

Multi-process handling is the practice of assigning operators to more than one machine in a product-flow layout. Operators trained on the operation of multiple machines can walk a product through a sequence of operations in a cell.

Control charts to check workflow

Control charts monitor the manufacturing processes used to turn raw materials into high-quality products. Any deviation from the standard manufacturing processes leads to excessive scrap rates, longer lead times, or machine malfunction.

Control chart example. Source: ClearPoint Strategy

The control charts allow process stability and control to be monitored while assisting with analysis.

Using RCA to detect issues

Root cause analysis (RCA) is a process used to identify a factor that has caused a non-conformance or defect. That factor, or root cause, is the fundamental reason for triggering a set of cause-and-effect reactions that leads to non-conformance (i.e. equipment failure).

Once the root cause is identified, solutions can be designed and implemented to prevent a repetition of the defect. 

Work standardization

Work standardization is described as the core of lean manufacturing. Standard operating charts and standardized worksheets are more efficient than having a supervisor train new workers from their experience, and they establish the one method for all workers to use.

When a change to a process is introduced by the PDCA cycle previously discussed, the standard operating procedures and worksheets must be updated, and all workers must adhere to the new way of working.

Kaizen (continuous improvement)

Kaizen comes from the Japanese language and means ‘change for the better.’ As a philosophy, Kaizen is a strategy where everyone in a manufacturing company works together to introduce regular, incremental improvements to the manufacturing process. It also represents an action plan for improving specific focus areas within a company at an operational level.

How to set up a lean production system?

Implementing a lean manufacturing system does not require immediate wholesale change. If you understand that lean is more a way of thinking than a set of tools and techniques, you can begin by implementing lean on a few processes you wish to optimize. 

As you eliminate waste and losses in manufacturing processes, you’ll also be changing the culture in your workplace, from which further changes can take place.

Here are the steps you can take to establish a lean production system: 

1. Deploy your strategy. Choose three to five production processes you consider could benefit from improvement, and develop a set of goals and objectives for each.
2. Map the value stream. Draw the current state of the process and identify the waste in each. Now draw the future state map. Develop an implementation plan to reach the future state.
3. Organize your workplace. Cleaning, removing clutter, and reorganizing the workplace used by each business process will make it easier to locate and manage items. In other words, carry out a 5S program.
4. Review your process flow. Identify areas where there may be bottlenecks or waste in the process flow. Change the design of the process area to facilitate flow into, through, and out of the area.
5. Target process downtime. Carry out an analysis of the issues causing process downtime, whether changeovers, maintenance, waiting time or breakdowns. Work on an iterative process to reduce or eliminate downtime.
6. Implement a pull system. Allow customer demand and process station demand to drive material flow. Implement a kanban system to ensure parts and materials are delivered only when internal or external customers demand them.
7. Level workflows. Move from batch manufacturing to a balanced workload producing an average production quantity that meets customer needs while avoiding peaks and troughs. Consider using a heijunka system.
8. Standardized work processes. Develop best practice processes in conjunction with the work teams. Document and standardize these practices. Train and educate employees.
9. Introduce the concept of continuous improvement. Begin a training and education program with employees to introduce the concept of continuous, small, incremental changes. Introduce lean manufacturing tools and techniques from the lean toolbox and train employees in their use.
10. Partner with suppliers and customers. Begin introducing a lean supply chain concept by working with your suppliers and customers.

As you can see, there are many lean manufacturing concepts and techniques you can apply to eliminate waste and create an efficient and lean production environment. Review available lean production methods and choose the ones that are most appropriate for your niche and your business.

Where to start?

Analyze where your facility is right now, where you want to be, and what is your budget for getting there. There are plenty of tools and techniques on this list that can help you create a more lean production environment without needing to break the bank.

Remember that one of the core concepts of lean manufacturing is incremental improvement. Start with one production process and move from there. Heck, you can even start by introducing lean concepts into your maintenance department.

At the end of the day, it is less important where you start – as long as you do start thinking lean.