Lean Production

Lean production business definition

Lean production is a way of organizing work that focuses on getting the job done as efficiently as possible, without wasting time or resources. It was first used in manufacturing by Toyota and has since been adopted by businesses across many different industries. By using lean production methods, companies can reduce waste, increase productivity, and deliver higher-quality products or services to their customers.

Principles of lean production

The 5 principles of lean production were designed by James Womack and Daniel Jones: value, value stream, flow, pull, and perfection.

Figure 1. Lean Production Principles, StudySmarter

Value

The first principle of lean production is value. 'Value' here refers to the benefits that the customers get from the products. Lean methodology suggests that the production system should be such that it adds value to the customers. Value is customer-focused and not company focused.

Value stream

The next principle of lean production is the value stream. Value stream means defining the process of how to manufacture the product in a way that can add value to the customers. Value streams call for a flowchart to be created for each process that may be involved in the production process. Also, If any process is not required or does not add value, it should be discarded.

Flow

The third principle is flow. Flow is the smooth functioning of the value stream process which is defined in the earlier principles. Flow refers to the fact that once all the unnecessary processes have been discarded, the production should run more smoothly without any blocks or delays.

Pull

Pull is the fourth principle of lean production. Once the production flow is in place and there are no bottlenecks in the process, it is possible to deliver the products as demanded. Pull refers to just-in-time production and delivery process. With improved flow, it is possible to give the customer the product when demanded, at the right time and in the right quantity. This results in reduction of stock and inventory costs and adds value to the customers.

Perfection

The last and most important principle is perfection. Lean production suggests that it is important that all members of the organisation are involved in the production process and that all are following the lean production system. As we know the world is ever-changing and demand keeps changing constantly, so it is very important to keep up with the customer's demand and lean production should become an essential part of the production process in the company.

Muda, mura, muri in Toyota Production System

The lean production system emphasises the 3 main elements that need to be considered and eliminated in the process of production

1. Muda - waste elimination
2. Mura - unevenness of the production process
3. Muri - overburden

These elements are discussed below in detail.

Muda - Waste elimination

‘Muda’ refers to all kinds of waste. Lean production methodology states that there are 7 losses in production that can be eliminated to add value to products:

• Defects: Defects can result in heavy losses. It is very important to try and eliminate any defects as early as possible. Lean production suggests that defects can be prevented by checking the production in the first place which can stop them from happening or removed from the final steps of production.
• Waiting: Waiting is another kind of waste that lean production methodology suggests eliminating. Waiting refers to the time spent waiting to start the next process or interruptions in the overall production process. Lean production suggests that constant and continuous production should be maintained to avoid resource waste.
• Overproduction: Producing little more than the demand is all right but overproduction way beyond demand can be risky and result in resource wastage. Hence, lean production suggests eliminating overproduction waste.
• Inventory: Finished goods that have not been sold or the production of unfinished goods that have not been moved to the next production stage can create waste.
• Transport: The cost involved in transportation can lead to waste. Movement of material or finished goods should be planned so as to avoid waste of resources.
• Processing: Unnecessary and unrequested over-processing of products can lead to waste.
• Motion: The movement of elements within the organization must be minimized and the path should be planned out in advance to avoid time waste.

Mura

‘Mura’ means unevenness in the production process. It is any kind of non-uniformity in manufacturing that can lead to Muda, which refers to general product waste. Lean production suggests that all processes should be uniform, which can help in ongoing levelled production, avoiding the accumulation of waste or overproduction.

Mura can be avoided with the Just-in-Time (JIT) production system which suggests producing only when there is demand for the product, in the right quantity and the right place.

In reality, it is very difficult to understand the optimal level of production due to ever-changing demands. But if the production changes in sync with demand, one can avoid Mura.

Muri

Muri refers to the overburden. Overburden can happen for both people and machines. Anything that is used beyond its optimal capacity can give negative results. Similarly, if the machines or humans are overburdened with work, it can lead to inefficiency or failure in overall productivity. Muri can be caused by Mura (unevenness) and also excessive removal of Muda (waste).

Advantages of lean production

There are many advantages to implementing a lean production system. Here are some of the most significant benefits:

• Reduced Waste: One of the primary advantages of lean production is that it helps to identify and eliminate waste in all aspects of the production process. This includes reducing excess inventory, minimizing defects and rework, and streamlining production flow.

• Increased Productivity: Lean production methods are designed to improve productivity by eliminating bottlenecks. This helps to ensure that products or services are delivered to customers as quickly as possible.

• Improved Quality: Lean production techniques prioritize quality by identifying and addressing the root causes of defects and errors. This results in higher quality products or services.

• Enhanced Flexibility: Lean production methods allow companies to be more flexible and responsive to changes in customer demand. By using just-in-time production, companies can quickly adapt to changes in the marketplace, reducing the risk of overproduction or excess inventory.

• Improved Customer Value: Lean production ultimately results in a better overall customer experience, by delivering high-quality products or services more efficiently and at a lower cost.

Disadvantages of lean production

While there are many advantages to implementing a lean production system, there are also some potential disadvantages, such as:

1. High initial Investment: Implementing a lean production system often requires a significant investment in equipment, training, and other resources. This can be a barrier to entry for smaller companies with limited resources.
2. Complexity: The lean production system is a complex methodology that requires careful planning and execution. It can be difficult to implement and manage, especially in larger organizations with multiple departments or facilities.
3. Dependence on Suppliers: Lean production often requires a close partnership with suppliers, who must be able to deliver high-quality materials and components in a timely manner. If a supplier fails to deliver on time or delivers defective materials, it can cause significant disruptions to the production process.
4. Employee Resistance: Enforcing a lean production system can be a significant change for employees, who may be resistant to the new approach or require extensive training to fully understand the new processes and workflows.
5. Narrow focus on cost reduction: Lean production is often associated with cost reduction and efficiency improvements, which can sometimes lead to a narrow focus on these goals at the expense of other important aspects of the business, such as innovation or employee satisfaction.

Lean production advantages and disadvantages

The advantages and disadvantages of lean production can be summarized as follows:

Lean production examples

There are many companies across the world, besides Toyota, that implemented a lean production system. Let's take a look at three famous examples of lean production in action:

• Boeing: The aerospace manufacturer uses lean production to streamline its production processes and reduce waste. For example, by using just-in-time inventory management and implementing error-proofing techniques, Boeing has been able to improve efficiency and reduce costs in its production of commercial aircraft.

• Amazon: The e-commerce giant uses lean production techniques to optimize its supply chain and distribution processes. By using real-time data analysis and just-in-time delivery, Amazon is able to quickly respond to changes in demand and reduce excess inventory.

• Intel: The computer chip manufacturer uses lean production to improve the efficiency and quality of its manufacturing processes. By implementing error-proofing techniques and reducing defects, Intel has been able to improve the reliability and performance of its products, while also reducing costs.

Now, let's take a look at a practical and easy-to-understand example of lean production.