Lean Production for the Small Company

Mike Elbert

• Publisher: Productivity Press
• Year: 2018
• eBook ISBN: 9781466575851
• Topic: Business
• Subtopic: Operations
• Index: Business

A hands-on guide to adapting Lean principles and the Toyota Production System to high-mix/low-volume environments, Lean Production for the Small Company uses charts, pictures, and easy-to-understand language to describe the methods needed to improve processes and eliminate waste. It walks readers through the correct order of implementation and desc

Chapter 1

Introduction

Who Should Use This Book

As a small business owner, you have many responsibilities and wear many hats on a day-to-day basis. One day you are the chief accountant, while the next day you are the marketing manager and salesman, perhaps the production scheduler, chief engineer, or even the human resources manager, just to name a few. Your time is at a premium and your management staff’s time is also precious. As a business consultant, I have met with small business owners and small factory managers who have a desire to improve their operations. They know that to stay competitive in today’s market, they must eliminate waste and keep costs down. They have an interest in improving their operations; consequently, due to a lack of financial resources, available time, or higher priorities, they have found the availability of consulting services out of their reach. For these reasons, this book has been prepared to aid you and your company in continuous improvement efforts.

Toyota Corporation has made Lean manufacturing a wonderful success, and its concepts have been copied worldwide by major corporations. However, many small companies have been unable to take advantage of these concepts for many reasons. This book was created for small businesses as a tool and workbook to help incorporate Lean manufacturing concepts and its tools into your operations. While I still believe the use of on-site trained consultants is helpful to teach and guide your transformation, it is important that they understand the needs of small business.

Having implemented Lean manufacturing and its predecessor’s principles and concepts into all types and sizes of corporations, I believe this book will provide you with the basic elements for successful implementation.

Guidance: Can I Use This Book if I Am Not a Manufacturer of Metal Parts?

One constant misconception is that Lean manufacturing can only be used by the manufacturing department within your company. This is entirely incorrect. The methodology and tools can be used in any department—from marketing, to sales, administration, field service, shipping, etc. The reason it is called Lean manufacturing is because manufacturing is the easiest and most visible place to start.

Also, many books use the auto industry as examples in their books. However, any industry—medical device, hospitals, medical clinics, retail sales, government, etc.—can use this book, and all of the discussions and examples can be directly applied to their industries. All you have to do is substitute your processes in place of the ones in this book.

This book is for every small company that wants to improve its business and manufacturing processes.

How to Use This Book

I have designed this book to be a hands-on workbook-type tool that you can use as a teaching reference and a source for visual aids and forms. I have not attempted to give you all the fine details of Lean manufacturing because we know that time and resources are limited within the small company, but I have tried to provide you with a basic understanding of Lean and how to use the tools of Lean. You will find this book is structured around specific topics that are all elements of Lean manufacturing and business systems.

I recommend that you and your immediate staff read this book together and discuss how these tools and concepts can be used in or adapted to your organization. As we progress through the book, each topic and chapter build upon the other, so knowing and understanding each one are important before moving on. Be sure to take the time to completely discuss the book with your staff because all of you will be responsible for the final success of your transformation to a Lean organization. Many of the terms used in Lean manufacturing are Japanese in origin and may be unfamiliar to you. I have used standard English-language terms where I could; however, in some cases it is important to learn a new term. When a new term in another language is needed, I explain the term and its origin.

Brief History of Lean Manufacturing

Many people have heard of “Lean manufacturing” and have some understanding of it. You may be aware of the Toyota Corporation as being the father of the modern Lean movement and, without a doubt, they have taken the philosophy, discipline, and tools used to a level no one else has ever done. But, did they create all of this on their own? It is my belief that without significant steps in manufacturing prior to Toyota’s use of these tools, someone else may have achieved the same success.

As a foundation for understanding Lean manufacturing, we must have a fundamental understanding of how we got to where we are today. Let us take a look at what needed to happen to create the roots of Lean manufacturing; see Table 1.1

As you can see from Table 1.1, each advance in manufacturing helped spur the next paradigm-shifting advance. In 1950, after World War II, Mr. Toyoda and Mr. Ohno began to rebuild the Toyota Corporation. This rebuilding effort came as a whole new philosophy of manufacturing in how to strategize and manage corporations. Certainly the Japanese culture played a significant part in the success of their efforts, but their success is built on visiting and learning from some of the greatest manufacturing and process industries in the United States.

As we have moved through each paradigm shift in manufacturing and business, we have achieved additional advantages in the world market; however, each step was met with enthusiasm by early adopters and scorn by naysayers who do not accept change easily. Those of us in the middle who wait to see which way the wind is blowing may be left behind. If we do not openly adopt new and current manufacturing techniques, our businesses may not reach the success level we desire.

From my personal experience watching my father run his small business, I watched as technology passed him by. I remember talking with him and suggesting he get a computer for his office; that was back in 1985. At that time, he could see no need for changing the way his business operated. Although his business was a success and still exists today, he could have made his life so much easier and afforded himself more time to grow his business rather than do paperwork. He was proud of the fact that he had kept his main machine tool running for more than forty years. But imagine if he had updated the equipment, how much more efficient and productive he would have been. However, I understood that having done things the same way for more than forty years, it would have been difficult for him to change.

Table 1.1 The Roots of Lean Manufacturing

Interchangeable parts	Eli Whitney	1850s
Modern machine tools begin to emerge		1860–1875
Drafting and drawing standards are created Standardized tolerance system is developed	Henry Ford	1860–1875
Time study is developed and introduced Work standard methodology created Standardized work instituted	Fredrick Taylor	1890–1910
Time and motion studies Process charts	Frank and Lillian Gilbreth	1890–1910
Assembly line Ford develops his modern management philosophy Vertical integration Flow manufacturing	Henry Ford	1912–1926
Statistical process control Total quality management	Joseph Juran Edward Demming	1942–1948
Just-in-time manufacturing Toyota production system Stockless production Work teams 5S housekeeping Quality circles Empowered employees Value stream management (focused factories)	Eiji Toyoda Taiichi Ohno	1950–1985

Source: Courtesy of Strategos, Inc., www.strategosinc.com; modified by Mike Elbert.

Also, if you have a niche market and are comfortable with your profitability, you will not look for ways to improve your business operations. My father had a niche market in which he was the only player in the immediate geographical area; because he was not willing to be progressive in his approach to business, competition entered the area, which made him less profitable because competitors were taking market share. Although he did things very well and was known for quality work and high integrity, which were some of his core competencies and values, he failed to adjust to current times. He should have asked himself regularly, “In the business in which I want to compete, what should I do on a regular basis to separate and distinguish myself from my competition so that customers want to buy from me?” Why do I tell you this story? It is to show you that you can become stagnant doing the same thing year-to-year; and by not accepting new methods and technologies, you will fall behind your competition.

The Philosophy of Lean Manufacturing and Business Systems

The basic philosophy of Lean manufacturing is to eliminate wasteful steps found in all processes used by a company to provide a product for its customers. The expenditure of any resource that does not create value for the customer is wasteful and should be removed. How is this done? You do this by improving the manufacturing and business processes used in your company. In the book The Toyota Way (Liker, 2004), this is referred to as “The Toyota Production System (TPS) and Lean Production,” a true systems approach to achieving the high level of success that Toyota has enjoyed. This systems approach uses the same basic approach and tools to eliminate wasteful steps and processes in product development, sales and marketing, manufacturing, logistics, and management, thus becoming so cost efficient and productive at producing and providing quality product on time to your customers that your competition is not considered a possible supplier by your customer.

Many companies have superficially applied Lean concepts and, if asked, they will say, “We are doing Lean manufacturing.” The fact is that about 75% of companies in the United States say they are Lean; however, only about 3% to 5% have achieved the level of success and deployment of Lean that Toyota has achieved. The remainder are using “Lean tools” but have not achieved the systems approach and use of personnel that truly identifies them as a Lean manufacturer/producer.

A survey by the Aberdeen Group in 2004 indicated that most companies are in catch-up mode and need to rethink their tactics and tools to improve their Lean effectiveness. More than 50% of the companies in the survey said they sporadically use Lean techniques, while more than 85% had Lean knowledge in only a few people. The vast majority, more than 90%, said they still use paper-based systems for production planning (Aberdeen Group, 2004). This reaffirms that most companies have only used a fraction of Toyota’s Lean production tools and techniques.

Taiichi Ohno was the creator and founder of the Toyota Production System (TPS). In his book Toyota Production System: Beyond Large-Scale Production, he states,

All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value-added wastes.

There are two types of costs related to your business: value-added and non-value-added costs. A value-added cost is one that the customer expects to pay for, for examp...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Preface
• About The Author
• 1 Introduction
• 2 Fundamentals of Lean Production and Business Systems
• 3 Tools for Continuous Improvement
• 4 Beginning Your Journey
• 5 Value Stream Maps: The Amazing Tool (Critical to Your Success)
• 6 Identify Your Projects
• 7 Your First Kaizen Project Team
• 8 Continuous Flow
• 9 Work Cell and Factory Layout
• 10 Creating Your Lean Road Map (Strategy Deployment)
• 11 Production Scheduling
• 12 How to Schedule the Production Line (Value Stream)
• 13 Material Management
• 14 Standardized Problem-Solving Method
• 15 Working with Suppliers and Partners
• 16 Lean Accounting
• 17 Achieving a Higher Level of Lean
• 18 Final Thoughts
• Glossary
• References
• Index