LEAN

Lean manufacturing is a management philosophy focusing on reduction of the 7 wastes (Over-production, Waiting time, Transportation, Processing, Inventory, Motion and Scrap) in manufactured products. By eliminating waste (muda), quality is improved, production time is reduced and cost is reduced. Lean "tools" include constant process analysis (kaizen), "pull" production (by means of kanban) and mistake-proofing (poka yoke).

One crucial insight is that most costs are assigned when a product is designed. Often an engineer will specify familiar, safe materials and processes rather than inexpensive, efficient ones. This reduces project risk, that is, the cost to the engineer, while increasing financial risks, and decreasing profits. Good organizations develop and review checklists to review product designs.

The key lean manufacturing principles:
 * Perfect first-time quality - quest for zero defects, revealing & solving problems at the source
 * Waste minimization – eliminating all activities that do not add value & safety nets, maximize use of scarce resources (capital, people and land)
 * Continuous improvement – reducing costs, improving quality, increasing productivity and information sharing
 * Pull processing: products are pulled from the consumer end, not pushed from the production end
 * Flexibility – producing different mixes or greater diversity of products quickly, without sacrificing efficiency at lower volumes of production
 * Building and maintaining a long term relationship with suppliers through collaborative risk sharing, cost sharing and information sharing arrangements.

Lean is basically all about getting the right things, to the right place, at the right time, in the right quantity while minimizing waste and being flexible and open to change.

History
The basic principles of lean manufacturing date back to at least Benjamin Franklin. Poor Richard's Almanack says of wasted time (a basic principle of the Theory of Constraints), "He that idly loses 5s. [shillings] worth of time, loses 5s., and might as prudently throw 5s. into the river. He that loses 5s. not only loses that sum, but all the other advantages that might be made by turning it in dealing, which, by the time a young man becomes old, amounts to a comfortable bag of money." He added that avoiding unnecessary costs could be more profitable than increasing sales: "A penny saved is two pence clear. A pin a-day is a groat a-year. Save and have."

Franklin's The Way to Wealth says the following about carrying unnecessary inventory, a concept that appeared two centuries later in Eliyahu Goldratt's The Goal. "You call them goods; but, if you do not take care, they will prove evils to some of you. You expect they will be sold cheap, and, perhaps, they may [be bought] for less than they cost; but, if you have no occasion for them, they must be dear to you. Remember what Poor Richard says, 'Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.' And again, 'At a great penny worth pause a while:' He means, that perhaps the cheapest is apparent only, and not real; or the bargain, by straightening thee in the business [reducing your available cash, i.e. straightening your circumstances], may do thee more harm than good. For in another place he says, 'Many have been ruined by buying good penny worths'." Henry Ford cited Franklin as a major influence on his own business practices, which included Just-in-time manufacturing.

The concept of waste being built into jobs and then taken for granted was noticed by motion efficiency expert Frank Gilbreth, who saw that masons bent over to pick up bricks from the ground. The bricklayer was therefore lowering and raising his entire upper body to get a 5 pound (2.3 kg) brick but this inefficiency had been built into the job through long practice. Introduction of a non-stooping scaffold, which delivered the bricks at waist level, allowed masons to work about three times as quickly, and with less effort.

Frederick Winslow Taylor, the father of scientific management, introduced what are now called standardization and best practice deployment: "And whenever a workman proposes an improvement, it should be the policy of the management to make a careful analysis of the new method, and if necessary conduct a series of experiments to determine accurately the relative merit of the new suggestion and of the old standard. And whenever the new method is found to be markedly superior to the old, it should be adopted as the standard for the whole establishment" (Principles of Scientific Management, 1911).

Taylor also warned explicitly against cutting piece rates (or, by implication, cutting wages or discharging workers) when efficiency improvements reduce the need for raw labor: "…after a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely entirely to lose sight of his employer's side of the case and become imbued with a grim determination to have no more cuts if soldiering [marking time, just doing what he is told] can prevent it." This is now a foundation of lean manufacturing, because it is obvious that workers will not drive improvements they think will put them out of work. Shigeo Shingo, the best-known exponent of single-minute exchange of die (SMED) and error-proofing or poka-yoke, cites Principles of Scientific Management as his inspiration (Andrew Dillon, translator, 1987. The Sayings of Shigeo Shingo: Key Strategies for Plant Improvement).

American industrialists recognized the threat of cheap offshore labor to American workers during the 1910s, and what is now called lean manufacturing was explicitly regarded as a countermeasure. Henry Towne, past President of the American Society of Mechanical Engineers, wrote in the Foreword to Frederick Winslow Taylor's Shop Management (1911), "We are justly proud of the high wage rates which prevail throughout our country, and jealous of any interference with them by the products of the cheaper labor of other countries. To maintain this condition, to strengthen our control of home markets, and, above all, to broaden our opportunities in foreign markets where we must compete with the products of other industrial nations, we should welcome and encourage every influence tending to increase the efficiency of our productive processes."

It was Henry Ford, however, who developed a comprehensive lean manufacturing system. "Ford's success has startled the country, almost the world, financially, industrially, mechanically. It exhibits in higher degree than most persons would have thought possible the seemingly contradictory requirements of true efficiency, which are: constant increase of quality, great increase of pay to the workers, repeated reduction in cost to the consumer. And with these appears, as at once cause and effect, an absolutely incredible enlargement of output reaching something like one hundred fold in less than ten years, and an enormous profit to the manufacturer" (Charles Buxton Going, preface to Arnold and Faurote, Ford Methods and the Ford Shops (1915)).

Levinson (2002, Henry Ford's Lean Vision: Enduring Principles from the First Ford Motor Plant) contends that Ford's lean enterprise system "was directly responsible for making the United States the wealthiest and most powerful country on earth." There is no doubt that Ford gave the country the forty-hour work week and, even during the First World War, a cartoonist for The Times recognized that "Henry Ford is the most powerful individual enemy the Kaiser has." As for the Second World War, Ford's production chief Charles Sorensen wrote, ""The seeds of [Allied] victory in 1945 were sown in 1908 in the Piquette Avenue plant of Ford Motor Company when we experimented with a moving assembly line" (1956, My Forty Years with Ford).

Ford (1922, My Life and Work) provided a single-paragraph description that encompasses the entire concept of waste. "I believe that the average farmer puts to a really useful purpose only about 5 %. of the energy he expends. … Not only is everything done by hand, but seldom is a thought given to a logical arrangement. A farmer doing his chores will walk up and down a rickety ladder a dozen times. He will carry water for years instead of putting in a few lengths of pipe. His whole idea, when there is extra work to do, is to hire extra men. He thinks of putting money into improvements as an expense. … It is waste motion— waste effort— that makes farm prices high and profits low." Poor arrangement of the workplace-- a major focus of the modern kaizen-- and doing a job inefficiently out of habit-- are major forms of waste even in modern workplaces.

Ford also pointed out how easy it was to overlook material waste. As described by Harry Bennett (1951, Ford: We Never Called Him Henry), "One day when Mr. Ford and I were together he spotted some rust in the slag that ballasted the right of way of the D. T. & I [railroad]. This slag had been dumped there from our own furnaces. 'You know,' Mr. Ford said to me, 'there's iron in that slag. You make the crane crews who put it out there sort it over, and take it back to the plant.'" In other words, Ford saw the rust and realized that the steel plant was not recovering all of the iron.

Design for Manufacture (DFM) also is a Ford concept. Per My Life and Work, "Start with an article that suits and then study to find some way of eliminating the entirely useless parts. This applies to everything— a shoe, a dress, a house, a piece of machinery, a railroad, a steamship, an airplane. As we cut out useless parts and simplify necessary ones, we also cut down the cost of making. ...But also it is to be remembered that all the parts are designed so that they can be most easily made." The same reference describes Just in time manufacturing very explicitly.

However, it was with Taiichi Ohno at Toyota, where the ideas and principles mentioned by Ford finally got in practice. Norman Bodek wrote the following in his foreword to a reprint of Ford's (1926) Today and Tomorrow: "I was first introduced to the concepts of just-in-time (JIT) and the Toyota production system in 1980. Subsequently I had the opportunity to witness its actual application at Toyota on one of our numerous Japanese study missions. There I met Mr. Taiichi Ohno, the system's creator. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford's book."

System engineering
At the system engineering level, requirements are reviewed with marketing and customer representatives to eliminate costly requirements. Shared modules may be developed, such as multipurpose power-supplies or shared mechanical components or fasteners. Requirements are assigned to the cheapest discipline. For example, adjustments may be moved into software, and measurements away from a mechanical solution to an electronic solution. Another approach is to choose connection or power-transport methods that are cheap or that used standardized components that become available in a competitive market.

Mechanical engineering
In mechanical engineering, the process usually begins with a team review of the materials and processes. The team will include a cost accountant, manufacturing and design engineers. Quite often, parts can be combined into a single injection-molded plastic or die-cast part reducing both fabrication and assembly costs. Fasteners are eliminated, reduced or commonized. Tolerances (critical dimensions) are never eliminated, widened or adapted to production processes to achieve theoretical 100% yields, this is a very common mistake. Adjustments are eliminated.

The tooling cost and any production machinery costs are estimated, and financial feasibility established with return on investment. Reuse of existing machinery and capabilities is often essential.

In some cases, the crucial insight is to substitute materials that require less time to form. For example, some products can substitute surfaces sputtered with coatings for heat-treated steel and save money because the production bottleneck of the time-consuming heat-treat is eliminated.

Electrical engineering
In electrical engineering, the big process begins with a team-review of the circuit requirements. Requirements are reduced, and inexpensive electrical or software solutions are substituted for mechanical solutions. The circuit is examined to reduce adjustments and expensive parts. In the circuit design, detailed tolerance studies are performed to maximize the number of circuits that work the first time. Mechanical parts and connectors are carefully reviewed to reduce assembly and testing costs. In particular, the printed circuit board is integrated with the mechanical design to eliminate cables between the printed circuit board and the connectors on the case. The printed-circuit board design is carefully scrutinized to use the least-expensive materials possible (such as phenolic paper board), make it solder reliably, and adapt it to automatic assembly.

Software engineering
In software engineering the process begins with a requirement review, to eliminate unnecessary requirements, and substitute mechanical and electrical components with software. Software generally has a lower per-component cost than other disciplines, especially in the large production runs typical of a lean product. The design then attempts to eliminate costly software components, especially those that are purchased.

Books on Lean Production

 * Ohno, Taiichi (1988), Toyota Production System: Beyond Large-Scale Production, Productivity Press, ISBN 0915299143
 * Womack, James P., Jones, Daniel T., and Roos, Daniel (1991), The Machine That Changed the World: The Story of Lean Production, Harper Perennial, ISBN 0060974176
 * Womack, James P. and Jones, Daniel T. (1998), Lean Thinking Free Press, ISBN 0743249275.
 * Emiliani, M.L., with Stec, D., Grasso, L. and Stodder, J. (2003), Better Thinking, Better Results: Using the Power of Lean as a Total Business Solution, The CLBM, LLC Kensington, Conn., ISBN 0972259104
 * Imai, Masaaki (1997), Gemba Kaizen, McGraw-Hill, ISBN 0070314462
 * Rother, Mike and Shook, John (2003), Learning to See, Lean Enterprise Institute, ISBN 0966784308
 * Schonberger, Richard J. (1986), World Class Manufacturing, Free Press, ISBN 0029292700
 * George, Michael L. (2003), Lean Six Sigma For Service, McGraw-Hill, ISBN 0071418210
 * Levinson, William A. (2002), Henry Ford's Lean Vision: Enduring Principles from the First Ford Motor Plant, Productivity Press, ISBN 1563272601
 * Levinson, William A. and Rerick, Raymond (2002), Lean Enterprise: A Synergistic Approach to Minimizing Waste, ASQ Quality Press, ISBN 0873895320
 * Liker, Jeffrey (2003), The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer, First edition, McGraw-Hill, ISBN 0071392319.
 * Ford, Henry and Crowther, Samuel (2003), My Life and Work, Kessinger Press, ISBN 0766127745
 * Ford, Henry and Crowther, Samuel (1988), Today and Tomorrow, Productivity Press, ISBN 0915299364
 * Ford, Henry and Crowther, Samuel (2003), Moving Forward, Kessinger Press, ISBN 0766143392
 * Norwood, Edwin P. (1931), Ford: Men and Methods, Doubleday, Doran, ASIN B000858158