Lean Manufacturing: Basics and Outcome

The concept of Lean Manufacturing is based on the ideas of Toyota car manufacturing system.

The key principles of lean manufacturing are reduction of all costs, optimization of production; involving employees in the process of enhancing enterprise efficiency.

Virtually, implementation of lean manufacturing can boost labor productivity by up to 400% during the first year. Using even one of its principles can increase the efficiency of the enterprise by 30-50%.

How to start lean implementation?

First of all, it is necessary to analyze the current situation in the enterprise and prepare tools for further monitoring. For example, to implement a system for personnel and equipment– for monitoring all employee actions and transport movements, estimate the time costs for various operations and identify weak points. Such an analysis helps to define:

• Inefficient work site arrangement, for example, the need to constantly move between different equipment or cabinets for storing tools.
  After implementing RealTrac monitoring system at enterprise, it was identified that about 15% of the working time employees spend to reach the general cabinet for the right tool and return to the site. Based on these results, it was decided to allocate its own place for the tool to each employee - this led to increase of labor productivity by 15%.
• Unreasonable movement of products or materials, for example, inefficient layout of shops and plots.
  Using RealTrac system in monitoring performance of loaders and movement of the production parts, it was revealed that each element enters the welding station twice. Between the two processes at the welding site the part was sent to surface treatment site, and there was a downtime at all stages due to waiting for a suitable loader. During this improvement, the welding station was located close to the machining site - this allowed saving more than 400 minutes per month.
• Unused product properties, for example, expensive product packaging, additional functions, excessively complex design
  Based on market research findings, a bus manufacturing company found out that consumers do not pay much attention to the quality of the painting. And based on these results, the process of staining invisible surfaces was significantly simplified, which allowed to reduce monthly costs by several hundred thousand rubles.
• Downtime of manufacturing equipment or personnel, due to waiting for orders on completion of the previous operation, equipment breakdown etc.
  RealTrac monitoring system allows to monitor the downtime of equipment or personnel. Therefore, in the abovementioned automotive manufacture, such downtimes were because of frequent machine outages. The problem was corrected by maintaining a service station in the shop - as a result, the downtime of personnel and equipment was reduced by 26 man-hours per month.
• Overproduction – when output exceeds consumer demand.
  Based on market research findings, the enterprise decided to temporarily halt output of products that are in excess. Turning the focus towards release of seasonal goods, which are in high demand right now, the company's profit increased by tens of millions of rubles by the end of the quarter.
• Extra supplies of materials and raw materials.
  Considering the cost of additionally rented storage space, and the fact that long-term storage in the warehouse affects the properties of materials, the company decided to supply parts daily in the amount determined by the production plan. This allowed to reduce the expenses related to the storage and transportation of components to the work site.
• The cause of defects in work that leads to production of defective goods.
  Due to high percentage of defective products in the company, the management had to monitor the work of the whole production using the RealTrac product Internet of things. Since the system was continuously collecting all the data from the equipment, in case of detected malfunctions, the production process would stop and the system would send a notification. Gradually, the work of the equipment was completely debugged, and the number of defective products was reduced by more than 80%.

Performance gain without increase of production capacity.

Step 1.  Creating a visual diagram of the product. It is necessary to display: each stage of information and materials flows, the duration of the stages, the time that is required for the transition between them. At this stage some changes can be done to optimize the process.

Step 2. Identifying the pinch points. This can be inefficient use of personnel and equipment, nonoptimal equipment placement, standard manufacturing errors, unused units in production areas.

Step 3. Visualizing the business processes.  At this stage, you can mark the boundaries of objects on the floor, highlight the most dangerous equipment, specify the storage locations for the tools, set up stands describing the algorithms of all technological operations, showing pictures of defective products and other instructions.

Step 4. Simulating the processes, we are taking into account the reduction of costs during transport, relocation and waiting. At this stage, you can test different algorithms to compare the performance in practice, evaluate the efficiency of various ways to optimize production.

Passing through these stages allowed the candy manufacturing company to:

• reduce the number of employees in the production line from 15 to 11 people

• increase production from 6000 to 9000 sets of confectionery products

• increase enterprise productivity by 35-37% without launching additional lines

Using the same algorithm, a large distribution center has improved its warehouse areas. Within a framework of lean manufacturing implementation, the indexes of trestle numbers were installed in the warehouse of the company and also traffic patterns were posted on the territory.

Additionally, storage areas were redeveloped. As a result, drivers spent less time on the territory of the center, and thanks to redevelopment, it was possible to reduce the warehouse area by more than 30%.

Lean innovations. How does it work in practice?

One of the largest logistics centers in Russia has gone all the way to implementing the concept of lean manufacturing. The key goal was to accelerate order batching, to reduce the risks of re-sorting and non-provisioning.

The management of the enterprise has implemented the above-described algorithm, and also carefully studied improving proposals of the employees and the results of customer surveys.

As a result, the following solutions were applied:

• Pick-to-Light technology. During the order picking process a light signal lights up above the cell with the desired products. The operator presses the button to switch the light off, confirming that the goods are packed.

• Distribution of goods by zone. Depending on the popularity of the goods, it falls into one of three zones, a fast one - 20% of the goods, which need to complete 80% of orders, a total of 30% of goods that need to be put in every tenth order, less commonly used - with less popular goods.

• The principle of "close at hand." The top-selling goods are located at arm's length, and even to take products from the top cell, it is enough to use a footstep.

• Visualization. In the order-picking zone the floor is marked and there are other additional signs, all intuitively understandable even for beginners. Most of the nameplates can be moved to another zone if necessary, to redistribute flows or personnel.

• Workflow for packing waste. All used packaging (corrugated card) is automatically delivered to the pressing area. This reduces the time spent by personnel on its packaging and reduces the level of air pollution. Pressed cardboard is sold to partners for further processing, and this also brings some extra income.

• Weight control. The orders are weighed and the result is compared with the predicted rate, which is defined as the sum of the weight of each position. If the weight does not match, the order is sent for an additional check.

• Special floor covering. As the employees of the warehouse are the whole day on their feet, there is a special orthopedic floor covering to reduce the burden on legs and spine and also to prevent the risk of injury due to the anti-slip surface.

• Clear data on labor productivity. The speed of order-picking of each line is displayed on the monitor in real time. This creates a competitive effect and makes the KPI system more transparent for employees.  Furthermore, the management can assess the performance of each collector and identify weak points in the line.

• Involving employees in the optimization process. The employees are encouraged to put forward ideas on how to constantly improve the performance; they are rewarded even for the ideas that will not be implemented.

 Due to implementation of the above-listed solutions the logistics center has reduced personnel rotation. The ergonomics and operational safety have been enhanced; the number of complaints from customers related to incorrect ordering has been reduced. Within six months after the lean manufacturing implementation, the productivity in order-picking sites increased by 20%.

 This and many other examples confirm: Lean Manufacturing really enhances the efficiency of the enterprise. Ultimately, it is important to involve employees and high technologies, analyze every business process in the company, take care of customers and contractors and be ready for large-scale positive changes.