It is not exactly breaking news that, due to the need for driving down costs and increasing efficiency, manufacturers (if not enterprises of all kinds) are increasingly subject to massive pressures. These pressures, however, often invalidate the traditional materials requirements planning (MRP) batch- and push-based production planning and associated economies of scale product costing approaches.
This is Part One of a multi-part note.
For this reason, there has been increased interest in the lean manufacturing support philosophy. To understand this trend, one need look no further than the enterprise resource planning (ERP) systems of the 1990s, which, unfortunately, are cognitive (i.e., sending well-devised "plans of mice and men", which, without feedback from the real-world would "often go astray") rather than reflexive in nature. In addition, there is a host of other well-publicized MRP-related problems, such as complex bills of material (BOMs), inefficient workflows, transactions and activities that add no value, and poor (typically manual) data collection. It is not surprising then that companies struggling to serve their customers using purely traditional planning and costing methodology are often unable to meet the demands for agility and responsiveness that consumers at the end of the supply chain are requesting.
Consequently, for some time now, almost every industry publication, consultant, analyst, and industry pundit has been touting the lean approach as the panacea to whatever troubles manufacturing and distribution across the globe. The early revolutionary efforts of a handful of manufacturers have indeed established that lean works, especially in terms of increasing customer satisfaction levels (i.e., ensuring they get exactly what they want, when they want it), decreasing costs, and improving responsiveness via shorter lead times and improved quality and consistency.
Nevertheless, manufacturers today face additional challenges in the form of increased customer expectations, shortened product cycles, product proliferation, foreign competition, and, occasionally, a declining economy. To make things worse, decreasing product life cycles mean that manufacturing and distribution are increasing in complexity, which, for the manufacturer, translates into a need to better manage customer demands and expectations and respond accordingly.
Hence, while several years ago most prospects inquired tentatively about lean capabilities, now they seem to be increasingly requesting these. An ARC Advisory Group's strategy report from 2004 suggested that "today 36 percent of US manufacturers and 70 percent of UK manufacturers are using lean as their primary improvement methodology", which should show how prominent lean thinking has become. Many of these companies may not yet be involved in full-blown lean manufacturing, but they are at least using some lean tools and principles as their primary improvement methodology.
According to the APICS Dictionary, the philosophy of lean manufacturing is to emphasize the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. This involves identifying and eliminating non-value-adding activities in design, production, supply chain management (SCM), and dealing with the customers. Lean producers employ teams of multi-skilled workers at all levels of the organization, and use highly flexible, increasingly automated machines to produce large volumes of products with potentially enormous variety. The lean philosophy sets out principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes.
What is commonly referred to as lean manufacturing today is an extension of the proverbial Toyota Production System (TPS), which was originated by Taiichi Ohno and first saw use in the 1950s. The conditions that led to its development stemmed from the aftermath of World War II, when Japanese automotive manufacturers faced serious competition from American counterparts. At this time, Japanese manufacturers not only were rebuilding their war torn factories, but also were facing a serious shortage of raw materials. American companies, on the other hand, had an abundance of manufacturing capacity and resources, and dominated the Japanese market by flooding it with low cost products. However, they still had some shortcomings, since they provided little product variety and had rigid, top-down production processes that limited their ability to respond to increasingly changing customer demands.
Toyota Motor Corporation realized the only way it could survive was to provide the Japanese consumer (and the global customer ever after) with the one thing American automotive manufacturers could not provide at that stage—product variety—all while maintaining as high a quality, short a lead time, and low a cost as possible. Toyota, with fierce competition in terms of quality and price, a market opportunity for increased product variety, and limited production resources and raw materials, had to create a radical new method of manufacturing in order to survive.
The result was the aforementioned TPS, which methodically eliminated any waste in the production process and yet stayed focused on satisfying customer demands. It has revolutionized automotive manufacturing with kaizen (the Japanese term for improvement, which in the manufacturing context relates to finding and eliminating waste in machinery, labor, or production methods), poka-yoke (mistake proofing techniques), kanban (pull-signal) replenishment and point-of-use delivery, and assembly line innovations that are the now backbone of virtually all automotive plants around the world.
Today's concept of lean manufacturing grew from TPS, and the name "lean" stems from its driving principle to use less of everything (i.e., less labor, less space, less inventory, less movement, etc.) than traditional manufacturing processes, while producing a greater variety of products. In other words, it is essentially an umbrella philosophy that focuses on creating customer value-adding activities, the systematic identification and elimination of waste, and continuous improvement in manufacturing environments to increase productivity. The primary focus here is on customer value-adding activities, while the elimination of waste (muda in Japanese) and continuous improvement are consequences of this.
This is Part One of a multi-part note.
For this reason, there has been increased interest in the lean manufacturing support philosophy. To understand this trend, one need look no further than the enterprise resource planning (ERP) systems of the 1990s, which, unfortunately, are cognitive (i.e., sending well-devised "plans of mice and men", which, without feedback from the real-world would "often go astray") rather than reflexive in nature. In addition, there is a host of other well-publicized MRP-related problems, such as complex bills of material (BOMs), inefficient workflows, transactions and activities that add no value, and poor (typically manual) data collection. It is not surprising then that companies struggling to serve their customers using purely traditional planning and costing methodology are often unable to meet the demands for agility and responsiveness that consumers at the end of the supply chain are requesting.
Consequently, for some time now, almost every industry publication, consultant, analyst, and industry pundit has been touting the lean approach as the panacea to whatever troubles manufacturing and distribution across the globe. The early revolutionary efforts of a handful of manufacturers have indeed established that lean works, especially in terms of increasing customer satisfaction levels (i.e., ensuring they get exactly what they want, when they want it), decreasing costs, and improving responsiveness via shorter lead times and improved quality and consistency.
Nevertheless, manufacturers today face additional challenges in the form of increased customer expectations, shortened product cycles, product proliferation, foreign competition, and, occasionally, a declining economy. To make things worse, decreasing product life cycles mean that manufacturing and distribution are increasing in complexity, which, for the manufacturer, translates into a need to better manage customer demands and expectations and respond accordingly.
Hence, while several years ago most prospects inquired tentatively about lean capabilities, now they seem to be increasingly requesting these. An ARC Advisory Group's strategy report from 2004 suggested that "today 36 percent of US manufacturers and 70 percent of UK manufacturers are using lean as their primary improvement methodology", which should show how prominent lean thinking has become. Many of these companies may not yet be involved in full-blown lean manufacturing, but they are at least using some lean tools and principles as their primary improvement methodology.
According to the APICS Dictionary, the philosophy of lean manufacturing is to emphasize the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. This involves identifying and eliminating non-value-adding activities in design, production, supply chain management (SCM), and dealing with the customers. Lean producers employ teams of multi-skilled workers at all levels of the organization, and use highly flexible, increasingly automated machines to produce large volumes of products with potentially enormous variety. The lean philosophy sets out principles and practices to reduce cost through the relentless removal of waste and through the simplification of all manufacturing and support processes.
What is commonly referred to as lean manufacturing today is an extension of the proverbial Toyota Production System (TPS), which was originated by Taiichi Ohno and first saw use in the 1950s. The conditions that led to its development stemmed from the aftermath of World War II, when Japanese automotive manufacturers faced serious competition from American counterparts. At this time, Japanese manufacturers not only were rebuilding their war torn factories, but also were facing a serious shortage of raw materials. American companies, on the other hand, had an abundance of manufacturing capacity and resources, and dominated the Japanese market by flooding it with low cost products. However, they still had some shortcomings, since they provided little product variety and had rigid, top-down production processes that limited their ability to respond to increasingly changing customer demands.
Toyota Motor Corporation realized the only way it could survive was to provide the Japanese consumer (and the global customer ever after) with the one thing American automotive manufacturers could not provide at that stage—product variety—all while maintaining as high a quality, short a lead time, and low a cost as possible. Toyota, with fierce competition in terms of quality and price, a market opportunity for increased product variety, and limited production resources and raw materials, had to create a radical new method of manufacturing in order to survive.
The result was the aforementioned TPS, which methodically eliminated any waste in the production process and yet stayed focused on satisfying customer demands. It has revolutionized automotive manufacturing with kaizen (the Japanese term for improvement, which in the manufacturing context relates to finding and eliminating waste in machinery, labor, or production methods), poka-yoke (mistake proofing techniques), kanban (pull-signal) replenishment and point-of-use delivery, and assembly line innovations that are the now backbone of virtually all automotive plants around the world.
Today's concept of lean manufacturing grew from TPS, and the name "lean" stems from its driving principle to use less of everything (i.e., less labor, less space, less inventory, less movement, etc.) than traditional manufacturing processes, while producing a greater variety of products. In other words, it is essentially an umbrella philosophy that focuses on creating customer value-adding activities, the systematic identification and elimination of waste, and continuous improvement in manufacturing environments to increase productivity. The primary focus here is on customer value-adding activities, while the elimination of waste (muda in Japanese) and continuous improvement are consequences of this.
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