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Introduction to Lean Production Colby Hall
Abstract
“In the relentless pursuit of profitability and competitiveness, more and more companies are
turning to lean manufacturing to reduce or eliminate waste in their production processes. Once
confined to the automotive industry, lean principles are becoming standard operating
procedure in many industries today. The reason is simple: when implemented with a good
performance management system, lean principles have a proven track record of operational
and strategic success, which ultimately translates into increased value to the end customer”
(IFS, White Paper)
In the business world today the average employee or even manager can not understand all of
the acronyms and technical lingo that go along with Lean Production. Thus, it important to try
to explain in layman terms what Lean Production is and why it can benefit any company or
business that implements it into daily operations.
Lean Production’s origins in Japan are very important to understand; understanding the
concept behind a method allows greater proficiency when implementing it. Going though the
step by step process of integrating the system into a company or business, showing why it will
work for any company that wants to reduce waste, and raise the overall quality of their product
is why many companies adopt Lean Production. Companies that correctly implement Lean into
their production systems find that Lean results in a more positive bottom line for the company
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or business, stemming from improved cost saving or efficiencies and better customer
satisfaction from the increase in overall product quality. Ultimately, the purpose of Lean, and of
business, is to improve the bottom line profits.
History
In the mid‐20th Century, while the United States was flourishing under Henry Ford’s mass
production methods to produce World War II machines, the war‐torn country of Japan was
trying to get its economy back on its feet. Before WWII, Lean Manufacturing had already been
tested in Japan by the Toyota Company manufacturing bicycles. After the war, Toyota turned its
attention to the automotive industry in the Japanese postwar economy and brought with them
their fledgling manufacturing principles.
Toyota combined the production methods of Henry Ford and Edward Deming and refined them
to create with what some believe to be the first lean production method. This method was
based on the idea of getting rid of waste at every stage of the manufacturing process. By
embracing this method, Toyota grew into the leaders of today’s global automotive industry.
They have been able to easily pass industry giants like Ford and General Motors by basing
production on quality instead of quantity.
Lean Manufacturing did not actually get its name until the 1990’s when James Womack wrote a
book called “The Machine That Changed the World”. Womack’s book combined production
methods from the United States, Europe, and Japan and named the compilation “Lean
Manufacturing”. Since then, the subject has been studied by many production engineers and
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specialists and continues to be a popular trend for production companies who are trying to save
money by making their particular production methods more efficient.
Why Lean Production?
The Lean Production methods are more than just a popular “flavor of the month” for
production engineers. They are a way for businesses to cut their production costs so to that all
stakeholders benefit. The idea behind Lean is to focus on a business as a whole ‐ from the
product that comes off of the line every day to the CEO of the company. Taking all that under
consideration, one must then decide where to cut costs to make the entire business a more
efficient machine.
When Lean Production was first introduced to the United States, many companies that adopted
the ideology were confused that the Japanese were still ahead of them in the industry even
though they were using the same production method. The most important aspect that is often
overlooked when a company is trying to implement the Lean Production Method is the business
beyond the product produced. Table 1 below shows how Lean can be used outside of the
production systems and in the management systems of a company.
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Table 1. (Management levels in comparison to salary with and without Lean)
With Lean Without Lean Management Level
# of Management
Salary per Level
Management Level
# of Management
Salary per Level
Level 1 1 $50,000 Level 1 1 $50,000
Level 2 8 $400,000 Level 2 4 $200,000
Level 3 64 $3,200,000 Level 3 16 $800,000
Level 4 512 $25,600,000 Level 4 64 $3,200,000
Level 5 4096 $204,800,000 Level 5 256 $12,800,000
Level 6 32768 $1,638,400,000 Level 6 1024 $51,200,000
Total 37449 $1,872,450,000 Total 1365 $68,250,000 Difference $1,804,200,000
Table 1 shows how a company can reduce cost by making its management levels more practical
and efficient. One of the problems that the United States had when it first came into
competition with the Japanese in the global economy was that they could not keep up with the
new product production rate in Japan. The most significant reason was the United States’
inefficient management structure. Table 1 shows that if a company can take its management
core and condense it from every manager having eight people report to them to every manager
having only four people report to them, the company will benefit greatly. This is basically the
same as condensing management so that every manager can handle his and another manager’s
job. It is also based on only six levels of management where all of the managers, including the
top executives, only make $50,000 dollars. This would be a major change in any company,
especially to imagine that half of their management team is gone. However, several companies
have done just this and adopted Lean Production; companies such as Honda, Pella, Caterpillar,
and many other Fortune 500 companies. More than a change in how a company produces a
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product, Lean Production is a change in how a company operates – including the culture and
work ethic of the people.
Implementing Lean Production
• Step 1 ‐ Commit to Lean Ideology: Many managers that try applying the Lean process to
their particular production system think that after implementation, Lean will then run itself.
This is the first step towards failure. In order for Lean to work for any business or company,
all stakeholders in the company must be on board with the idea of adopting a whole new
method to run the company. Full buy‐in is important because even though the stakeholders
may not realize it when the company first starts out, Lean will affect every aspect of the
company. That is why it is important that everyone from the CEO to the night janitor is on‐
board with the implementation of Lean. Lean Manufacturing is a “Tool Box” of things that a
company can do in order to reduce the waste in its production process. But the tools are
only as good as the people implementing them.
Under the step of committing to Lean is the realization that not all of the processes or
methods in the “Tool Box” of Lean are cut out for every business or company. With Lean, a
company may try to implement certain processes that may not work for certain areas of
that company. Lean is customizable for every business ‐ some processes out of the “Tool
Box” will work and others might not. In the long run, the Lean process will work for any
company that commits and implements it correctly.
• Step 2 ‐ Process Flow Chart: The first major step in the Lean Process is to map out the
current production process. This “map” is to be a simple drawing of the process from the
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raw material that enters the factory to the end result loaded on the shipping truck. Every
aspect of what goes into manufacturing the company’s product should be accounted for in
this map.
Below in Figure 1 is an example of a Process Flow Chart for the production of Ethanol. As
illustrated, the process for manufacturing the product is just a simplified display of all that
goes into producing the final product.
Figure 1.
(http://www.flo‐gage.com/Buttons/EthanolProduction.jpg)
• Step 3 ‐ Measure: After the Process Flow Map is drawn out, each individual process needs
to be timed and what resources go into every process in the Process Flow Map must be
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calculated. Determining how long it takes for all the processes to complete will give
managers a better understanding of where expenses can be cut later in the Lean Process.
Also during the measurement phase of the process, how many defects there are, where
they occur during the process, and how far off current quality standards are should be
determined. The most important goal is to collect all the statistical data for use in the next
step of the Lean Process. The data will show what systems should be put in place in the
production process later in the implementation process. It is important that all data is
accurate with the comparison standards the company had previously set for the product.
• Step 4 ‐ Analyze: In this step of Lean, the data that was collected in the previous step is
reviewed to uncover what improvements need to be made to improve the company to the
standards that its company sets. The Process Flow Map is very important in this step to
ensure that the work load is balanced across the factory floor.
The “Pull System” is very important in this area of the process. The Pull System is a process
where every product on the factory floor is always being handled and worked on, in regards
with supply and demand within the factory. In other words, because no product is on the
floor when it is not needed, there is no unnecessary extra production, and through this the
company reduces its waste used during production. Waste Reduction is another integral
idea behind Lean Production and has been proven time and time again to be a big money
saver to any company.
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Figure 2, from Thomas Pyzdek’s book, entitled “Six Sigma and Beyond”, shows the different
waste‐reducing systems that can be implemented using Lean Production and how they all
relate to each other.
Figure 2.
• Step 5 ‐ Improve: After the processes have been implemented, all further changes that the
company thinks will help should be considered. Methodologies such as Total Employee
Involvement, Kanban control system, Elimination of Defects, and Feedback are important.
Processes such as these can enhance both companies implementing Lean or those
companies that have already been using Lean, either to the standards they had originally
wished to reach or to a level not before attainable. It is imperative that management
understands that Lean tools are never ending and the more a company continues to
implement them and control them, the more Lean will save the company. There will always
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be resources that can be turned to which will further help improve the efficiency of the
company.
• Step 6 ‐ Control: In this step, a final evaluation of how the company has improved after
implementing Lean should be shown. A rerun of the entire statistical test originally run in
the analysis phase is compared to the original data. This comparison can show how much of
an improvement the process has made. Total benefits and cost saving information can be
generated from the data.
Also during this step, the factory overview of the production process after implementing
Lean should be revisited to show how much more efficient the factory is now, in illustration
form. This is important for employees and management to show quickly and visually the
overall improvement that has been achieved.
• Step 7 ‐ Summarizing: This final step compiles the data accumulated throughout the
implementation and pulls it together to show all of the stakeholders in the company what
improvements have been made. It is important again to remember the that Lean Process is
never‐ending and that reviewing with stakeholders what the company has done in just one
cycle of the process helps to gain support next time the company goes though the steps
again. It is important to note how much cost, labor, and waste has been reduced, as those
are key benefits of the Lean Process.
Lean Production and Six Sigma
Lean Production is often accompanied by a production improvement process called Six Sigma.
Both are aimed at reducing cost by improving the overall quality of the product produced, but
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they do it in very different ways. While Lean Production is a tool box, Six Sigma is more of a
step‐by‐step process, based on eliminating defects in production (Six Sigma and Lean
Production). Where Lean is more of a number of different systems that a company can put in
place to improve production methods. Six Sigma relies more on statistical data that shows a
company where they need to be to reach the company’s goals of production, cost savings, and
waste reduction. Lean is aimed at reducing waste in terms of material, people, and movement;
Six Sigma bases most of its waste management upon reducing the amount of defective
products and variation reduction. The Six Sigma ideology is that by reducing defective products,
companies will save on the waste of defective products while improving consumer trust with
their business.
The Future of Lean Production
Many Industrial Engineers are now looking to combine the two ideologies of Lean and Six Sigma
so that companies can maximize the benefits of both in a holistic approach. In “Combining Lean
and Six‐Sigma for Optimal Results”, Elizabeth Cudney writes in depth on how to do just that. To
integrate both processes together is simple if companies understand how both processes work.
The best way to implement the hybrid of both Lean Production and Six Sigma is to bring the
production systems of the companies to Six Sigma quality. The company can achieve these
levels by using Lean to reduce or eliminate waste and then use Six Sigma to monitor the
amount of variation in the production process. If the levels of variation or defective products
reach unacceptable levels for Six Sigma standards, then Lean Production techniques can be
implemented to reach the standards that the company must to operate at.
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Conclusion
Lean Production has great implications for any company that wishes to reduce waste and the
cost of day‐to‐day operations. It can be implemented in any industry or business because of the
vast array of operational components that it effects and the many systems that it contains. In
order to implement Lean Production, a company must have full buy‐in, from CEO to employees
on the production line. Many companies have tried Lean Production with good results; those
who have full buy‐in by management, stockholders, and most importantly, employees. It is also
important to remember that Lean Production is not something that just works on autopilot; it is
something that you have to work at and have to work into a company’s daily routine.
Acknowledgments
I would like to thank Assistant Professor Dr. Elizabeth Cudney for her support through not only
allowing me to interview her, but also for her vast amount of information and research she
provided me on the subject of Lean Production.
References
1. Ross & Associates Environmental Consulting, October 15, 2004, “Finding and
Recommendation on Lean Production and Environmental Management Systems in the
Shipbuilding and Ship Repair Sector”, http://www.epa.gov/lean/leanems_report.pdf
2. IFS, March 2004, “Lean Manufacturing White Paper”,
http://www.ifsworld.com/us/binaries/Lean%20Manufacturing_tcm44‐12592.pdf
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3. Oliver, Nick; Delbridge, Rick; Barton, Harry, June 2002, “Lean Production and
Manufacturing Performance Improvement in Japan, The UK and US 1994‐2001”
http://www.cbr.cam.ac.uk/pdf/WP232.pdf
4. Pyzdek, Thomas, January 2000, “Six Sigma and Lean Production”,
http://www.pyzdek.com/PDF/2000‐01.pdf
5. Cudney, Elizabeth, “Combining Lean and Six‐Sigma for Optimal Results”
6. Poppendieck, Mary, 2002, “Principles of Lean Thinking”,
http://www.poppendieck.com/papers/LeanThinking.pdf
7. Cudney, Elizabeth, “Implementing Lean Manufacturing Techniques to Achieve Six
Sigma”
8. Strategos, “Lean Manufacturing History”,
http://www.strategosinc.com/just_in_time.htm
9. RCM Industries, “Ethanol Process Flow Chart”, http://www.flo‐
gage.com/Buttons/EthanolProduction.jpg
10. Cudney, Beth. Personal Interview. April 14th, 2008.
About the Author
Colby Hall is pursuing his bachelor’s degree in Engineering Management at the Missouri University of Science & Technology (formerly University of Missouri‐Rolla). His emphasis areas include Industrial Engineering and Management of Technology. Hall is currently working as a Summer Intern for Procter & Gamble in St. Louis, Missouri.
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