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Introduction
Recent trends of cost minimization focus on improving production efficiency and the field of engineering has provided a key function towards this end. As a matter of fact, one particular reason why engineers are hired to supervise and manage production plants or factories is because they have strong analytical and scientific background, which is highly applicable in improving production efficiency and cost minimization. Since the start of the 20th century, engineers have helped production industries develop methods on how to maximize production while minimizing costs using analytical and measurable methods. One particular production management method that engineers needs to know in order to minimize production cost is the Lean Manufacturing System or simply the Lean method. This method is believed to have been developed by Toyota sometime in the 1940s and was initially known as the Toyota Production System (Melton 662). The lean system employs tools and methods that are measurable, which makes this particular system popular among major production companies. Currently, the Lean system is one of the most utilized production management method primarily because of its cost minimization attribute, which in turn maximizes profits.
What is Lean Manufacturing System?
Lean manufacturing system developed out of the need to minimize production cost through the elimination of wastes (Melton 664). But prior to its emergence, there were several cost minimization methods that may have inspired its development. One of the earliest cost minimization methods is the scientific management developed by the American engineer, Frederick Winslow Taylor. Taylor believes that work, most especially production work, can be measured and managed in a scientific manner . While working for a steel production company, Taylor observed that most of the tasks in the production area are repetitive. He also found that he can improve efficiency if he split complicated tasks into simpler tasks . Taylor also conducted empirical experiments by observing the movement of workers and the time it take for them to finish a particular task. Taylor’s scientific management created a process called standardisation, which greatly improved work efficiency and by analyzing how a particular task is done and the time required completing it. Taylor’s process revolutionized production systems by eliminating waste of movement. Like Taylor’s scientific management, the Lean system also encourages continuous improvement through standardization of processes and the elimination of waste of manpower through standardization and continuous improvement. However, unlike in scientific management wherein management alone designs the production process, the Lean systems push the responsibility of improving production efficiency towards the workers themselves. In Lean management, the participation of production employees are encouraged on the rationale that they are the ones who are exposed directly to the processes and so they should be able to identify flaws and prevent it before it materializes.
Types of Production Wastes
Waste is one of the major drivers of production cost. Wastes, if ignored, can adversely impact a company’s productivity and cost minimization efforts. According to lean experts, the most common production wastes that accumulate over time are:
Wasted Movement. Valuable production time is wasted by an employee because of incorrect procedures or because he cannot find a particular tool to use for a task. Waste of movement can result from “poor workflow, poor layout, housekeeping, and inconsistent or undocumented work methods” (Kilpatrick 2).
Delay. Defective equipment can cause delay and waste production time. Time is also wasted because of the delay in the delivery of materials from suppliers.
Defects. Defective products waste time, materials and manpower. It also requires rework and possible repercussions from customer complaints.
Overproduction. Overproduction results to excessive stocks, which in turn places the resources of the producer at risk if these stocks suddenly losses its demand in the market. It also drains the producer’s resources, which could have been utilized to address more pressing matters.
Transportation Wastes. Materials should be delivered directly where they are utilized instead of dropping them in storage points and moving them towards the location where they will be used.
Underutilization of Resources. Human and material resources must be utilized to their full capacity. The underutilization of these resources creates wastes.
Non-value-adding Processes. Rework, inspection, excessive designs and any other processes that do not add value to the finished product is a waste of time and resources.
Major Tenets
The Lean system aims to eliminate all possible production wastes for the purpose of creating an efficient production system. To place Lean systems in perspective, some scholars visualize the Lean system as a house with a roof supported by the pillars and foundation as seen in the image below.
(Image source: Lean Enterprise Institute)
Based on the image, the Lean Systems is founded on three major concepts: heijunka, standardization and kaizen. ‘Heijunka,’ is a Japanese word for ‘leveling.’ Heijunka pertains to the Lean objective of leveling production in order to eliminate inventory, but still meeting customer demands. The Lean manufacturing system, for instance, operates on a pull system wherein the producer only manufacture goods based only on the current demand (Kilpatrick 2). Standardization, on the other hand, is a concept derived from the scientific management of Taylor. It refers to the most current, best method available for accomplishing a particular task. During Taylor’s scientific management, developing standard work is a task that only managers and supervisors can participate. In Lean though, from the manager up to the production line workers participate in creating new standards. Which is why, ‘Kaizen,’ a Japanese word for ‘continuous improvement,’ is also a major foundation of Lean. Since everyone participates in improving the production process, the processes using the Lean system continuously improve as defects and wastes are constantly identified and eliminated. One way of eliminating wastes is to implement workplace organization or the 5S. The 5S represents housekeeping procedures such as sorting, straightening, shining, standardizing and sustaining. When a production area is organized, delay and wasted movements can be eliminated. Sitting on top of these three fundamental principles of Lean manufacturing system are two pillars of the Lean system; the just-in-time principle and jidoka. Just-in-time is a technique wherein only the needed material for a given time are ordered from suppliers. This practice eliminates inventory while keeping production space at a minimum. Jidoka, on the other hand, is a Japanese word for automation. It refers to the ability of manufacturing machines to detect error and stop automatically when an error is detected. The Lean system relies on such technology or aims to achieve such technology in order to eliminate unnecessary labor such as the need for human inspectors to monitor production work. In order to achieve these principles, the Lean system employs ‘kanbans’ or visual aids that indicate production processes. A light, for instance, would turn on if a defect occurs and a particular process needs to be stopped or perhaps a red paint on the floor is exposed signaling a replenishment of materials.
The Case of Harley Davidson
One of the many proofs that the Lean manufacturing system improves production efficiency and minimizes production costs is the case of Harley Davidson. It should be noted that the American company, Harley Davidson, was one of the pioneering motorcycle companies in the world. The company was founded by William Harley and the brothers Walter and Arthur in 1903. Harley Davidson dominated the sale of motorcycle and became the world’s largest supplier of motorcycle in the 1920s . Harley Davidson’s dominance of the motorcycle market was short lived though as it was challenged by Japanese motorcycle manufacturers in the 1960s. Using Toyota’s lean manufacturing principles, Japanese motorcycle manufacturers such as Honda, Yamaha, Suzuki and Kawasaki aggressively expanded their markets, especially in the United States. The Japanese motorcycle manufacturers exceeded Harley Davidson in terms of mass production and most surprisingly, their products exceeded Harley Davidson in terms of quality as well. Harley Davidson, on the other hand, struggled to keep the company afloat. However, their production systems are plagued with quality issues, making them unable to compete with the Japanese manufacturers. Finally realizing that there must be something wrong with how they do things, Harley Davidson sent its top executives to visit the Honda manufacturing plant and study the processes observed by the rival company. Surprisingly, they found that their processes are very much inferior to the Lean manufacturing processes observed by the company. Harley Davidson’s work area, for instance, is cluttered by different tools and materials while Honda’s work area is clean and orderly. They also noted Honda’s just-in-time practices as well as their use of kanbans to aid in the leveling of production. They also noticed that Honda makes their production line workers accountable for quality and empowers them to participate in the decision making process. Using what they learned from their Honda visit, Harley Davidson executives overhauled their production processes and adopted the Lean manufacturing system. In just a few years, the company was able to bounce back to being profitable again. It was observed that the company productivity increased by 50%, while inventory decreased by 75%. Rework also decreased significantly at 68%.
Conclusion
The elimination of waste, improves cost minimization, which is why engineers who wish to improve their production cost should learn the principles of Lean manufacturing system. One particular attribute of the Lean system that would interest engineers in the field of manufacturing is that the Lean system is a logical and practical approach to improving production efficiency. Its principles and practices can be used to improve cost maximization and improve output. Apparently, if waste is eliminated, then production cost would significantly improve and the savings would convert to profit. The Lean principles of continuous improvement, standardization and work output leveling improve production efficiency to a certain point wherein the manufacturing process reaches perfection. The lean system significantly improves not only cost, but also quality and production time. Many manufacturing companies have already tested the Lean principles and found them to be effective. Harley Davidson, for instance, is just one of the many examples of the cost minimization effectiveness of using Lean principles. For the same reason, lean manufacturing system is considerably one of the most practical yet effective tools in cost minimization.
Works Cited
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Lean Enterprise Institute. JIDOKA. n.d. January 2016 <http://www.lean.org/lexicon/jidoka>.
—. Toyota Production System. n.d. January 2016 <http://www.lean.org/lexicon/toyota-production-system>.
Melton, T. THE BENEFITS OF LEAN MANUFACTURING. June 2005. January 2016 <http://mimesolutions.com/PDFs/WEB%20Trish%20Melton%20Lean%20Manufacturing%20July%202005.pdf>.
Ratnayake, C. "Evolution of Scientific Management Towards Performance Measurement and Managing Systems for Sustainable Performance in Industrial Assets: Philosophical Point of View." Journal of Technology Management & Innovation (2009): 152 - 161.
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