Lean manufacturing: With the help of a lean makeover that eliminates all sources of waste, your company will be transformed from a sluggish dinosaur into a nimble antilope, built for speed and efficiency.  Does this approach work, and where did it came from?

'Fat' production in large quantities creates diverging and converging streams in the factory, with materials waiting to be used at some places and intermediate stock piling up. One of the basic principles of lean manufacturing therefore is to create a flow-driven pipeline, with little work-in-progress. Lean first identifies the steps that add value for customers. Next, those steps are placed in sequence. The end result is that materials and semi-manufactured products flow through the factory in a continuous stream. That way, maximum value is created.

Sometime around 1950, Toyota manager Taiichi Ohno walked through his factory and asked himself this crucial question: “Which steps of our production process actually add value to our products?” With this thought, the factory manager laid the foundation of lean manufacturing.

Partly because of this, Toyota has been profitable almost every year since the 1950’s.

However, the term Lean was only introduced at the end of the 1980s, with the publication of the renowned 5-million-dollar, 5-year study on the future of the automobile industry, conducted by the Massachusetts Institute of Technology.

According to the authors, James P. Womack and Daniel Jones, the Toyota Production System owed its success to a special way of thinking: lean thinking.

'Everything comes down to minimizing waste', says Lean consultant Peter Leenders.. 'Adding value means only doing or making the things the customer is willing to pay for. Any other activities should be reduced as far as possible.'

There are seven categories of waste. The first five are: manufacturing errors and disruptions, waiting times, transport and movement, which includes searching for materials or tools.

Customer-driven
The remaining two categories of waste are overproduction and stock. Leenders says, 'If you want to remove waste, production must become customer-driven. Only then you make no more than what you sold. Just-in-time production follows automatically from lean manufacturing.'

Robots are painting parts in a One Piece Flow at Scania

According to Leenders, it’s best to limit the production quantity to one item at a time, thus creating a so-called One Piece Flow. 'Production in larger quantities creates diverging and converging streams in the factory, with materials waiting to be used at some places and intermediate stock piling up. One of the basic principles of lean manufacturing therefore is to create a flow-driven pipeline.'

Lean manufacturing first identifies the steps that add value for customers. Next, this steps are placed in sequence. Leenders says, 'The end result is that materials and semi-manufactured products flow through the factory in a continuous stream. This is known as the value stream.'

Lean manufacturing requires no special IT support. Leenders: 'You should make sure that the blueprint of your company’s processes is based on Lean activities. That’s important when you’re setting up an Enterprise Resource Planning or ERP-system.'

Besides lean manufacturing, there are various other process improvement methods. The Theory of Constraints for example is used to identify and then exploit the bottlenecks in a process. With Six Sigma the emphasis is on finding and eliminating quality disrupting factors, using statistical analysis. Leenders concludes, 'Those techniques actually deliver the same results as lean manufacturing: more throughput, less waste and an end product of good and constant quality.'

Standardization as starting point
Case study Scania

According to Gerard Bannink, logistics manager at Scania, the US economy has long been driven by the idea that you can never make too much. 'That’s how material requirements planning or MRP thinking was born,' says Bannink. “For instance, refrigerators were made in huge numbers, based on predicted demand.'

Bannink continues, 'In Japan however, after World War II, almost everything was in short supply. That’s why Toyota placed the emphasis on minimizing waste and building their cars on demand. Note however, that the Japanese themselves don’t talk about lean manufacturing. That is because this way of thinking has become so inherent to their manufacturing processes.'

After the recession of the nineties, people in the US and Europe started to think lean as well. 'First, emphasis was laid on the mean and clean aspects”, Bannink clarifies, 'There was to much focus on cost reduction. Later, the emphasis shifted to satisfying the customer. Since then the aim is to add value to products with as little waste as possible, and having materials stream through the factory.'

This idea is not new, Bannink points out. 'Lean manufacturing heralds a revival of many 20th century production concepts, such as Ford’s in-line production system and working with autonomous teams. And of course the Kanban system of Toyota.'

One Piece Flow painting:  A customer-specific colour is sucked up form a small can, and is transported to the painting robots.

The senior management of Scania and Toyota came together in 1995 for the first time, when seven Swedish colleagues of Bannink visited the Toyota factories in America. After a few small pilot projects, Scania rolled out the structured way of thinking and working, prescribed by lean manufacturing, through the entire company. Bannink says, 'Now we call it the Scania Production System. That is because our system is a customized version of the Toyota Production System.'

Scania Production System
The Scania Production System (SPS) is literally built like a house. Bannink explains: 'Our values are the foundation: the customer comes first, we respect our workers and we strive for as little waste as possible. The floor represents how we’ve standardized our working methods. Finally, the walls show how we’re making improvements, mainly through production-on-demand and by something which we call ‘error-free from me’. With that, we mean that we aim to produce every part correctly, first time right.'

Bannink continues, 'At first you might not see the link between standardization and minimizing waste. Let me clarify this by comparing it with standardizing the process of making a apple pie. My wife is Indonesian and she peels the apples away from her, while Western people usually peel towards themselves. The direction of peeling however has no effect on the result. Only things which influence the product quality should be written down in the recipe, which then becomes the standard working method.'

All Scania employees have attended in-house courses in lean manufacturing. Part of that course is a simulation using Lego blocks. Bannink: 'You assemble those Lego blocks to trucks, for example. First you do it the old way, and later you standardize the process. Then you will notice that the quality improves, and that it becomes easier to take over someone else’s task.'

Production capacity at Scania’s Zwolle site increased from 100 to 150 trucks a day, between 2000 and 2004. During that period, Bannink was logistics project leader. 'The SPS had little impact on the project organization, but it did influence the decisions we made. Given a choice between two alternatives, safety and quality became the deciding factors, not cost.'