By applying the principles of lean production, an increase in the efficiency of a business can be achieved. The implementation of lean processes is beneficial for the final result, as higher efficiency leads to greater levels of profitability.
It also creates a positive customer experience, which improves overall satisfaction and strengthens the brand reputation of the product. So what are the basic principles of lean manufacturing and how can you apply them to your own production systems?
A few words about Lean Production
The concept of lean manufacturing was popularized by Toyota in the 1980s. Its culture of continuous improvement and constant efforts to eliminate waste have made it one of the most efficient companies in the world. Many corporate leaders and business analysts have attempted to study and replicate Toyota’s specific production systems, including the founders of the Lean Enterprise Institute, James Womack and Dan Jones.
In the mid-1990s, Womack and Jones published “Lean Thinking: Banish Waste and Create Wealth in Your Corporation.” This book is considered the definitive guide to running a lean manufacturing operation and lays out five core principles that define the process. These are designed to maximize customer value while eliminating waste along the way. They are now known as the principles of lean manufacturing and have transformed the world of assembly lines and manufacturing plants.
What are the 5 principles of Lean Production?
The five principles of lean manufacturing are value, value stream, continuous flow, traction, and perfection. They guide organizations on how to achieve the greatest possible value for their customers while maximizing efficiency.
Lean implementation helps manufacturers continuously improve the product they offer and the way they offer it. It is useful at every stage of the production process, from research and development to packaging and delivery. By taking this approach, improvement of a specific product or an entire assembly line can be achieved. It is flexible enough to be implemented on both a small and large scale. This means that it can benefit a wide range of organizations. Let’s look at the principles of lean production in more detail.
Value
The first principle starts with identifying Customer Value. It involves isolating what exactly the customer finds valuable about the product or service you are providing from their perspective. If you don’t provide enough value to the customer, then they simply won’t buy from you and your sales will suffer.
Companies set a standard price by determining value. This top-down approach allows pricing based on the total value that has been defined and what it costs the customer. It is important to get it right because it plays a significant role in the choice that buyers will ultimately make. It is a very different model from the bottom-up method. In this method, the cost is calculated and then a fixed percentage is set as a profit margin. Value-based pricing is often more profitable, if and as long as it continues to be acceptable to the end customer.
It’s worth noting that what a company believes is valuable and what is actually valuable to the customer may be different things. This is why it’s important to do your research and ask customers instead of guessing. Understanding their pain points, requirements, and expectations will ensure that you accurately define value. This step is the most fundamental of the lean principles, as it forms the basis for the rest.
Value Streams
The Value Stream is related to the complete life cycle of a product or service, from creation to disposal and every stage in between. It includes the entire supply chain. The basic materials, production processes, features and transportation, until we reach the final product. The identification of waste and suggestions for improvements usually take place at the value stream mapping stage
To create the smoothest possible process, a basic lean idea is to eliminate waste. To identify and evaluate where there is potential to remove unnecessary steps or improve the workflow, it is important to create value stream maps. Some of these will be necessary because they will add value, and others will be unavoidable due to technological limitations. However, there will also be types of waste that fall into a third category. For this category, there is the possibility of eliminating these steps, with the aim of achieving an improvement in overall performance.
Continuous Flow
Continuous Flow is about the smooth operation and movement of the value stream. It is one of the most abstract of all the principles, but it is worth taking the time to understand. When something blocks or stops the flow of value, it creates waste. This can be expressed in the form of lost time, additional movement, or additional storage costs. Delays lead to disruptions in customer value and reduced performance outcomes, which defy the principles of lean.
For the flow to be smooth, there needs to be a shift from organized and siloed thinking to production development. When this happens, companies are able to launch products faster, moving them from idea to manufacturing in a significantly shorter time frame. They will be able to deliver products and services faster, improving the turnaround time, or the time it takes to complete each order. This improves efficiency and makes large companies more agile, so they can take advantage of opportunities that arise.
Traction
The traditional Western approach to manufacturing involves producing products based on forecasts. Sales teams are asked to estimate the quantity of each product they will be able to sell in advance. Raw materials are ordered and manufacturing schedules are created based on these forecasts so that future orders can be fulfilled. But when sales exceed forecasts, it can be difficult for production to keep up. Conversely, when demand is not matched by supply, profitability suffers.
A pull system avoids this problem entirely. It helps maintain flow and ensures that nothing is made before the order is placed. This means making each product, on order, based on the quantity demanded by customers. It is one of the basic principles of manufacturing that ensures that supply does not exceed demand. This approach reduces waste and is an essential element of lean operations.
However, successfully implementing a pull system is not always easy. To deliver products quickly, a flexible and fairly fast manufacturing process is essential. Lean leadership and strong internal communication are also required to ensure that each area of the supply chain knows what is ahead and what is coming from behind. Fortunately, the three previous principles will have helped eliminate waste and focus efforts on what is truly valuable. In this way, companies are in the best possible position to implement pull successfully.
Perfection
The pursuit of perfection is one of the lean manufacturing principles that sometimes surprises people. After completing the previous four stages and implementing a pull system, lean companies are not satisfied. The search for new ways to improve and the creation of steps to facilitate further innovation is continuous. Creating more and more value and eliminating more and more waste is the result of companies continuously improving. This results in a continuous upward trajectory of efficiency, profitability and customer satisfaction.
Implementing lean principles, such as value stream maps and pull systems, is a powerful approach. It creates a distinct competitive advantage while delivering lower cost operations and increased profits. Using lean tools can give you a huge business advantage and set you up for long-term success in the future.
