Ask Andi: What can you tell me about lean manufacturing. I run a small manufacturing company, with a dozen employees. I’d like to be as efficient as possible. How can I apply lean manufacturing to what we do?
Thoughts of the Day: Lean manufacturing focuses on the entire business. It’s good to be as efficient as possible, in order to lower the cost of goods sold and increase gross profit. The principal behind lean manufacturing is to reduce waste to zero. One area of difficulty for many small business owners is dealing with personnel. Operating in a lean environment will likely require additional sales to fully realize the profits that can stem from the changes you’ll be making.
Manufacturing in a lean environment
Lean Six Sigma has helped 3M reinvigorate its highly successful pollution prevention program. Training more than 55,000 salaried employees since 2001. And involving them in improvement projects that often have environmental benefits
At its heart, lean manufacturing is all about reducing waste and errors in order to improve operating quality and efficiency. To be successful requires the cooperation and commitment of everyone. From sales and marketing to the shop floor to senior management. Lean takes pride in a job well done.
There are good reasons for pursuing lean manufacturing. Reduced costs mean more funds available for wages & benefits and investments in infrastructure. Increased accuracy makes a company more competitive. And customers get exactly what they wanted. Pride in a job well done becomes a reward and a motivation for employees.
Placing accurate orders, managing labor and materials, and putting the emphasis on quality all contribute to improvements in the cost of manufacturing. To get lean, you want to organize processes, personnel, material, and equipment so that waste is near zero. It’s not about working faster, it’s about working smarter and more accurately.
Remember to work on inventory and your supply. If materials are not up to standard or don’t arrive on time, that gets in the way of efficient production. You may have to pay a little more for a higher quality of supply in order to reduce waste and disruption. An increase of some inventory may ensure materials are available when needed.
Lean manufacturing will be a culture shift for everyone. If employees do not embrace lean principles, it will be impossible to implement the changes. Changes, in general, make people feel insecure. Learning new practices can be difficult for some people. Employees often presume that lean practices will lead to a reduction in work hours.
Continuous improvement is a cornerstone
Emphasis on efficiency and quality may cause employees to question their job security. Especially if they think they can’t keep up. Think about your current work environment. Have you ever thought that employees slow down when they don’t have enough work, in order to make the workload last for a full day of pay? In lean the goal shifts from making work last, to getting through the workload as efficiently and accurately as possible.
Meanwhile, keeping employees secure in their jobs means increasing throughput through sales. Expand employee utility through education. What do employees need to learn to get better at what they do? Train employees. Have machinery and inventory suppliers participate. Train how best to use what they supply. Encourage employees to master new skills in order to increase flexibility throughout the shop.
Lean, without growth in sales, is unlikely to be a permanent solution to improving operating profit.
Some of the largest non-variable costs of a manufacturing facility are the plant and equipment. Plus related costs like heat and electricity. Amortizing those costs over a bigger base of work is one significant way to improve profits. Unless you plan to move, it’s almost impossible to reduce the factory footprint. Another way out is to increase the work flowing through the shop. This comes from increased sales.
You can only get so far by reducing wasted time, effort, and material. Plan on material and labor costs continuing to increase as time goes on. No matter how efficient you get. You need more and more customers willing to pay for the value your shop can provide. Stay ahead of inflation and take advantage of the quality improvements. Effect through learning about lean manufacturing.
