What is Lean Manufacturing? (Goodbye Waste, Hello Value)

What is lean manufacturing? In short, it’s a production method designed to shorten production times, quicken response rates, and minimize waste within a manufacturing environment. 

Whether you’re in the early stages of an ERP system implementation or you simply want to reengineer your processes without implementing new technology, the lean methodology can help you reduce excess time, materials, and energy within your operations.

The Role of Business Process Management in ERP Implementations

Before we dive into the principles of lean manufacturing, let’s take a step back. Why would you want to revamp your business processes in the first place?

While many organizations are content in keeping with the status quo, you may eventually find that your best practices are no longer serving you. Not only are they negatively impacting supply chain operations, but they don’t allow any room for innovation. 

When this realization occurs, many companies undertake business process management – or in some cases, business process reengineering (BPR) – to align their workflows with their short-term and long-term business goals.

Often, this occurs before an ERP implementation because companies know the dangers of automating inefficient processes. As such, BPR usually occurs before the ERP selection phase.

What is Lean Manufacturing in Business Process Management?

As you map your existing processes, some pain points will be instantly clear. This is especially true if you involve your department leads and employees in the process, as they’ll have firsthand knowledge of any ongoing issues. 

Then, there will be pain points that are more obscure. These may only become apparent as you get further into the BPR process. 

As you uncover these shortcomings, your next question will likely be: How do we fix them? While there are many different approaches to take, one popular approach for manufacturers is employing lean manufacturing principles.

Lean manufacturing looks specifically at areas of waste and seeks to reduce or eliminate waste and improve business processes and workflows.

When you think about waste, your mind may immediately go to excess inventories. However, with lean manufacturing, waste also refers to any type of expended energy that’s ultimately not serving a purpose or is slowing production times.  

While this can include products, it also includes non-essential processes, activities, and services. These require time and money but often fail to create actual value for customers.

Meanwhile, real talent often goes underused as you focus your efforts on the wrong activities.

For example, when you identify and correct areas of waste, you often uncover hidden or underutilized competencies that can:

• Organize and streamline services
• Reduce production costs
• Reduce production times
• Improve product and service quality
• Create cost savings for customers

What is Lean Six Sigma?

Conversations about lean manufacturing tools and techniques often include references to Six Sigma. This is a process improvement method that employs a team-based approach to removing waste and minimizing process variation. 

In theory, both Six Sigma and lean manufacturing center on the same ideals. Both seek to identify and reduce process defects and eliminate waste. The difference lies in how they define waste.

With lean manufacturing, waste is considered a byproduct of business process inefficiencies. This may include:

• Too many steps in the production process
• Unnecessary processes
• Unnecessary product features

On the other hand, Six Sigma views waste as a direct result of process variation. In this approach, variation is considered any result that deviates from customer expectations.

The idea is that if you can identify when, where, and why variations occur, you can create more purposeful and valuable products and services. 

As you eliminate variations, you streamline operations to create a more consistent delivery method. This improves customer satisfaction and boosts brand loyalty. 

Though the two schools of thought can be applied separately, manufacturers often combine the ideals of lean manufacturing with those of Six Sigma to create a hybrid approach called Lean Six Sigma. 

Common Tools in Lean Six Sigma

As you embrace Lean Six Sigma principles to improve and reengineer your business processes, there are several common tools you can employ.

Keep in mind that not all of these must be used simultaneously. Some companies only use a few, while others use them all.

A few of the most common tools and techniques in a lean manufacturing environment include:

• Control charts
• Value stream maps
• Continuous improvement
• Key performance indicators (KPIs)

As you use these tools, you can discover ways to fine-tune your existing processes, in turn, making your business nimbler and more responsive.

Let’s look at each of these in greater detail:

1. Control Charts

A control chart graphically tracks a specific process input or output over time. It gives you the opportunity to evaluate how stable a given process or operation is over a set period. 

The center line on a control chart indicates process results during the timeframe. There are also upper and lower control limits that depict whether the degree of process variation is within an acceptable range. 

2. Value Stream Maps

A value stream is the end-to-end processes that occur from the time a customer initiates a request until a company delivers that expected value. A value stream map illustrates these processes.

Seeing all the individual steams in a visual format can help you understand where critical hand-offs occur. Then, you can identify where inconsistencies and waste may originate.

Value stream maps are especially helpful in processes that have multiple, repeatable steps. 

3. Continuous Improvement

If you’re following a Lean Six Sigma methodology, you must also adopt an enterprise-wide commitment to continuous improvement. This means continuously seeking out new ways to innovate and remain competitive.

Some companies choose to make continuous improvement a formal practice, while others simply establish general guidelines for employees to follow.

In either case, everyone in your company should support and actively participate in the initiative. 

4. Key Performance Indicators

How can you know if your organization is making progress if you don’t know what to track?

Key performance indicators turn the abstract idea of “progress” into quantifiable goals that team leaders can easily evaluate.

A few examples include:

• Product lead times
• Production cycle time
• Rate of production throughput
• Cumulative flow

Cumulative flow is also fundamental to another lean manufacturing tool called Kanban. This is a visualization technique that demonstrates how tasks and processes are distributed over time. 

How to Implement Lean Manufacturing at Your Organization

Once you’ve established lean manufacturing concepts at your organization, don’t expect the results to occur overnight. It takes time to implement these new processes and glean value from them. 

In addition to time, it takes talent. You don’t want team members blindly copying a standardized set of lean practices. Instead, they should understand the value of each practice and the purpose it serves. Only then can you adapt a practice to fit your company’s specific needs. 

The first step is to simplify your manufacturing operations. If your workflows and processes are overly complicated, it can be impossible to successfully identify and remove all areas of waste.

With simplicity comes improved visibility and the basis for establishing a culture of continuous improvement. This is a culture where employees at all levels feel empowered to look for inefficiencies and find ways to improve them. 

Once improvements are identified, you should put steps in place to implement them throughout your processes and procedures. Ideally, you should make the changes incrementally rather than all at once. 

Finally, you can use your KPI tools to analyze the effectiveness of the improvements and ensure they’re achieving the desired outcomes. 

Transforming Your Business Processes With Lean Manufacturing

The realm of business process management is filled with practices, techniques, and tools designed to improve efficiency and performance. One of those is lean manufacturing. 

What is lean manufacturing? It’s the process of taking a close look at the workflows that drive your day-to-day business. Then, it’s about simplifying those processes to remove any steps that don’t deliver direct value to your company or your customers. 

Employing this approach can be eye-opening. Processes that you thought were working may be revealed to be ineffective. Workflows that seemed streamlined could be producing more waste than you imagined.

As you look for ways to improve quality and reduce waste, our manufacturing ERP consultants can help you employ a Lean Six Sigma approach along with lean manufacturing practices. We can also help you find the right manufacturing ERP software for your company.

Contact us below for a free consultation.