Can we apply Lean

Manufacturing to any size

company?

Coralie BAILLY

LEAN MANUFACTURING APPLICATIONS

EXECUTIVE SUMMARY

SUCCESS STORY

TOOLS AND APPLICATION

CASE OF BIG COMPANIES

CASE OF SMALL COMPANIES

CONCLUSION

BIBLIOGRAPHY

CONTENT

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Developed in the automotive industry by Toyota after the Second World War, the

Lean approach aims process optimization by reducing sources of inefficiencies and

waste. It is applicable in all industry sectors (including pharmaceutical or food) and

all activities (production, service organizations, support functions).

Today's successful companies are flexible, efficient and responsive to change. They

produce only what their customers need, precisely when they need it, with zero

defects. They have efficient processes, and a safe working environment for

employees who are engaged and committed to results.

Lean has proven its worth in big companies, but it is a very interesting tool for start-

ups and small companies.

EXECUTIVE SUMMARY

Lean approach is rapidly increasing worldwide, as a possible anti-crisis

solution. Lean manufacturing tends to be associated with large-scale, mass-

production manufacturing. But can smaller businesses benefit from such

process-improvement programs as well?

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How a company in difficulty became successful thanks to Lean Manufacturing.

This large division of a vertically integrated steel mill had been losing money for several years and the parent company was seriously considering closing it down. In addition, the division had too much cash tied-up in inventory and had lead time and delivery performance problems.

This company decided to contact a consultant in Lean solutions (American corporation “ThroughPut Solutions”)

After ten months, here are the results:

• $16 million (U.S.) cash was generated via inventory reduction

• Lead times were cut by 60%

• Average lot size was cut by 65%

• Average coil mass increased by 9% (yield improvement)

• On-time delivery soared, from 55% to 95%, the best in their industry

• Customer complaints dropped by more than half

• Cost of quality plummeted

• Profitability improved by $5 million per month

SUCCESS STORY

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How did they achieve these results ?

SUCCESS STORY

The number one issue faced when attempting

to convert any large business is its legacy of

historical doctrine. This company’s

measurement and reward systems were

typical, i.e. all geared to maximizing the

efficiency of the individual operating units

(tons per hour), but not necessarily the entire

process.

Overview of the situation

The results were different set of operating

rules at each unit. The easiest way to

accomplish these conflicting objectives is to

keep a huge pile of inventory in front of every

unit so that they can put together an optimal

run schedule. Note that this “optimal”

schedule can, and often does, lose sight of

the customer promise date. Also note that

these queues extend lead times, hide defects,

increase handling damage, add difficulty to

the scheduling process, tie up cash and

space, and cause excessive expediting.

Identification of problems

Inventory reduction goals were pushed

down through the organization. These were

readily understood at the unit level: Kanban

limits (number of coils allowed in front of an

operating unit) were to be reduced an

agreed amount over a specific period of

time. Another key factor in achieving World

Class operating performance is to control

the order book. Strict capacity loading rules

were put in place to assure that we did not

overload the mill.

Action

They began with an education session for

top management. Inventory reduction and

on-time delivery goals were set, and

commitment attained. Brief overview

education/introduction classes were provided

for all employees. Then scheduling rules

were attacked, blitzes were held to resolve

obstacles, internal teams were formed to

propagate the process, kanban controls were

initiated.

Education

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The Lean manufacturing strategy depends on a lot of data, but is applicable everywhere. Here are some of the most efficient tools to apply lean.

This technique helps to identify the top portion of causes that need to be addressed to resolve

the majority of problems. It is common to refer to Pareto as "80/20" rule, under the

assumption that, in all situations, 20% of causes determine 80% of problems.

Pareto Diagram

TOOLS AND APPLICATION

Example :

2 main problems,

on wich it is

effective to

work.

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This method consists in maintaining a clean and organized workspace to promote greater

efficiency, fonctionality and higher level of production.

5S

TOOLS AND APPLICATION

Set in order

Shine

Sort

Sustain

Standardize

• Sort : remove unnecessary items from

the workplace that are not needed for

current production operations.

• Set in order : creating efficient and

effective storage methods to arrange

items so that they are easy to use.

• Shine : clean the work area daily, that

enables workers to notice malfunctions

in equipment such as leaks, vibrations,

breakages, and misalignments.

• Standardize : make the 3 first S easy

to maintain.

• Sustain : making a habit of properly

maintaining correct procedures.

Everyone and all types of business benefit from having a 5S program. Manufacturing and industrial plants come to mind first, as those are the business that can realize the greatest benefits.

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This diagram in “fish bones” shape identifies many possible causes for an effect or problem.

Ishikawa

TOOLS AND APPLICATION

• People: Anyone involved with the

process.

• Process: How the process is

performed and the specific

requirements for doing it, such as

policies, procedures, rules,

regulations and laws.

• Equipment: Any equipment,

computers, tools, required to

accomplish the job.

• Materials: Raw materials, parts,

pens, paper, etc. used to produce the

final product.

• Measurements: Data generated

from the process that are used to

evaluate its quality.

• Environment: The conditions, such

as location, time, temperature, and

culture in which the process operates.

Measurements

Common uses of the Ishikawa diagram are product design and quality defect prevention.

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Big companies that have implemented Lean manufacturing have improved :

• Quality performance, fewer defects and rework (in house and at customer)

• Fewer Machine and Process Breakdowns

• Lower levels of Inventory

• Greater levels of Stock Turnover

• Less Space Required

• Higher efficiencies, more output per man hour

• Improved delivery performance

• Faster Development

• Greater Customer Satisfaction

• Improved employee morale and involvement

• Improved Supplier Relations

• HIGHER PROFITS and INCREASED BUSINESS !

Among these companies, we find he vast majority of automotive companies (Toyota, General motors,

Chrysler, BMW, Ford, Bosch-Rexroth…) and aerospace companies (Boeing, Airbus) .

Giant companies in various fields are using Lean: Merck (pharmaceuticals), Exxon Mobil (Oil and Gas),

General Electric, Nike, Mc Donalds, Coca Cola, and many other.

CASE OF BIG COMPANIES

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Most manufacturers are smaller enterprises. Nearly three-quarters of manufacturing firms

have fewer than 20 employees, according to data from the U.S. Census bureau.

Such businesses often tend toward contract work and lower-volume production. To remain competitive,

the business has to be flexible and resilient, prepared to retool efficiently and move quickly from one

job to the next. This flexibility is an advantage, but it should not be synonymous with desorganization.

Lean brings both.

CASE OF SMALL COMPANIES

Benefits of Lean manufacturing in small companies

• Manage a few people helps a better communication and

involvement. The education about the Lean approach

will be faster than in a big company and there is less

resistance to change.

• It is easy to apply 5S in small companies, and the results

are much more fast and impressive.

• Lean approach can be adapted to what you want to do of

the company and to the culture.

• Focusing on creating continuous flow production, in

which items are processed and moved immediately to the

next step, results in very short lead times, rapid

identification of problems, quick communication between

steps, increased productivity, higher output and

conservation of resources.

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The purchase of the first

models can be done without

fear while in the case of "No

Lean", these products are

experiencing significant

problems with reliability,

performance or functionality.

Immediately be reliable

A key to good health and performance in industry often is its ability to initiate regular and timely

good new products or new versions of good product. But what criteria or characteristics do the

company need for this ?

The time between the first

series and stabilized

production is still short, they

do not exhibit incompatibility

with the existing production

resources and they are

excellent at once.

Easy manufacturing

Launches are on schedule,

without development cost

overruns and without loss of

functionality compared to

those expected by the client.

Demonstrate the expected quality and functionality

CASE OF SMALL COMPANIES

A new approach: the Lean Startup

Lean startup is a method for developing businesses and products

proposed in 2011 by Eric Ries. Based on his previous experience

working in several U.S. startups, he claims that startups can shorten

their product development cycles by adopting a combination of

business-hypothesis-driven experimentation and iterative product

releases. If startups invest their time into iteratively building products

or services to meet the needs of early customers, they can reduce the

market risks and sidestep the need for large amounts of initial project

funding and expensive product launches and failures. This approach

starts to be adapted for big companies…

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CONCLUSION

Lean is not only a specific tool for large production but can be applied in every

company, whatever its size.

W.Edwards Deming once said: “It is not necessary to change, survival is not

mandatory!” Companies can stay as they are and hope that no one out there makes

better cheaper products that better meet customers needs.

However we are now in a global market, and if you have a business, small or large,

someone out there is looking at your share of the market and working out how to

win it from you. All competitors will improve, they will evolve, they may even

revolutionize your industry, you need to be there first or you will lose your business.

It is not enough to just make improvements when a crisis hits, you need to have a

program of continual business improvement to ensure that your business will thrive,

not just struggle to survive.

Implementing Lean Manufacturing and Lean Tools are a proven method to improve

business, satisfy clients and beat the competition.

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Coralie Bailly cbailly9@gmail.com

http://www.linkedin.com/in/coraliebailly

• “The goal : The Goal, A process of ongoing improvement ”- Eliyahu M. GOLDRATT & Jeff COX, 2004

• “Lean, an anti-crisis solution ?” – Techniques de l’ingénieur, 2010

• “The secret to lean innovation in make learning a priority”– Harvard Business Review, 01/23/2014

• Pareto Chart - http://asq.org/learn-about-quality/cause-analysis-tools/overview/pareto.html

• Lean thinking and methods - http://www.epa.gov/lean/environment/methods/fives.htm

• “The lean enterprise experiment canvas” – Lean Analytics, 04/22/2014

• “Does lean manufacturing work for small run job shops” – Thomasnet.com-Industry News, 10/30/2013

• “Lean manufacturing can save American manufacturing” - http://www.reliableplant.com/Read/137/lean-

manufacturing-american

• “How GE Applies Lean Startup Practices” – HarvardBusiness Review, 04/23/2014

BIBLIOGRAPHY

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