Tips for Running a Lean Manufacturing Operation

When Kim and I started selling maple art panels mounted with Kim’s art photography at local art fairs in 2006 little did we know the journey that lay ahead of us. Fast forward seven years and we own a 15 person strong local (US based) manufacturing operation that delivers an on-demand, high-quality, eco-conscious maple and bamboo art panel and photo product to thousands of customers in the US, Canada and overseas.

At the end of the day Plywerk panels of all size, finish and material options await shipping. At the end of the day Plywerk panels of all size, finish and material options await shipping. In Lean terms this is also known as a "Supermarket".

Between our material, size, print, keyhole and various other options we have over 2000 unique product variations that consumers, businesses and professionals will order from us in quantities ranging from one to hundreds of units. Plus, almost everything we do is turned around in 3-14 business days.

There is one methodology, whose impact on our ability to deliver on-time and at total quality is immense: lean manufacturing. Also known as Toyota Production System (TPS), Just In Time (JIT) and Total Quality Management (TQM), it is the single most important concept that allows modern US based manufacturers like ourselves to keep their manufacturing in the US.

It’s important to point out that although the roots of lean are in manufacturing, it is equally useful in sales, marketing, customer service and administration. In fact, to get the biggest benefits out of lean, a company should adopt it in all departments, at all levels (from owners to line-workers) and promote and extend its influence to that of its suppliers as well.

I was first introduced to lean manufacturing by a friend and mechanical engineer who recommended that I read “The Gold Mine” by Freddy and Michael Ballé. The book is in the form of a novel and follows a cranky old lean guru who is persuaded to come out of retirement to help his son’s friend save his struggling manufacturing company. I was blown away by the the lean concepts that the book lays out. It was December 2010 when I read it, gave it to my co-workers to read and formally adopted a commitment to lean operations at Plywerk. We have never looked back.

This is part one of a multipart series in which I’d like to share some key insights from all we have learned in our early years of lean operational management.

Study

There is no better way to learn than to start doing. However, understanding the basics and continued study of the more complex methodologies along your journey towards a lean manager are imperative.

The Masters

There are people who did and still do dedicate their entire lives to the study of lean manufacturing and operational systems. It would certainly not hurt to read the knowledge they have chosen to share with us.

Taiichi Ohno is considered the father of the Toyota Production System (TPS). He started TPS during World War Two and continued to develop it through the 1970’s. With Ohno behind the lean manufacturing operational wheel, Toyota was able to compete with the American auto manufacturers to grow from a relatively small operation in the forties, to the largest auto manufacturer in the world today.

Taiichi Ohno is the considered the father of Toyota Production System. Taiichi Ohno inspects the assembly line. Photo © Toyota Motor Corporation

He wrote several books which are well worth reading, including: “Toyota Production System: Beyond Large Scale Scale Production” and “Workplace Management”.

For a more modern approach to Lean look at the books written by the Founder and current Senior Advisor of the Lean Enterprise Institute James P. Womack, Ph.D, including: “Lean Thinking” and “The Machine that Changed the World”.

The Lean Enterprise Institute is in and of itself one of the most respected institutions in the world with regards to the continued development, documentation and teaching of lean. Their website and forums are also an invaluable resource: www.lean.org.

Go on Lean Factory Tours

A great way to learn is to see other people’s lean operations in person. Many manufacturers are proud of their efforts and often very open to sharing what they have learned in the form of factory tours.

Leatherman Tools factory in NE Portland. Leatherman Tools factory in NE Portland.

One such manufacturer is Leatherman Tools, who still manufacture every single one of their tools right here in Portland, Oregon. We had the good fortune to tour their lean factory last year and I would highly recommend it to anyone interested in lean manufacturing: www.leatherman.com/about/tour.

Timbuk2 assembly line in San Francisco. Photo © Timbuk2 Timbuk2 assembly line in San Francisco. Photo © Timbuk2

Timbuk2 also offer tours of their lean San Francisco factory: www.timbuk2.com/wordpress_cms/about-us/manufacturing/#sftours.

Second best to going in person you can find some good virtual tours. This website also offers links to 300 factory tour videos: www.superfactory.com/content/tours.html. Note how tidy and organized the factories are, a direct result of proper 5S management, a topic I will cover in a later blog-post.

Eliminate Muda (aka Waste)

Muda is the Japanese terms for “waste”. Muda in lean is defined and as anything that does not add value to the product.

Three stages of sanding in the Plywerk woodshop makes every panel buttery smooth which equals value to the customer. Three stages of sanding in the Plywerk woodshop makes every panel buttery smooth which equals value to the customer.

Sanding a bamboo Plywerk panel adds value to the finished product. Transporting a Plywerk does not add value to the product but does at cost. A good way to think about this is to put place yourself in the customers shoes and ask if they would be willing to pay for it?

Wasted movement is one of 7 Mudas (waste). No value being added to the panel here! Wasted movement is one of 7 Mudas (waste).

Would a customer want to pay for a line-worker to walk 10 feet to the next lineworker if it is possible to rearrange their workstations so that they could hand it to each other without wasting their movement?

Without going into more detail these are the seven manufacturing wastes that Toyota identified and strive to avoid:

  • Transportation
  • Inventory
  • Motion
  • Waiting
  • Over-processing
  • Over-production
  • Defects

Kaizen, Kaizen and more Kaizen

Kaizen is the Japanese term for “continuous improvement”, a key concept in Lean thinking and operational management. The idea is that you should NEVER stop improving, no matter what. Taiichi Ohno took this so seriously that he would literally derail a process, by taking away a tool or step, in order to encourage people to “Kaizen” their way back to efficiency. This stunt later came to be known as pulling an “Oh No!” and although it seems counter-intuitive it illustrates the idea that if you think you have a process down to perfection then you are not improving and that, in Taiichi Ohno’s eyes, was not acceptable.

Kanban Cards Keep Cash in The Bank

Kanban Cards will do several things to help you keep more money in the bank (aka liquid cash that you can use for marketing, R&D, etc) as opposed to sitting on shelves gathering dust (aka inventory). Three such savings are:

  1. Labor savings by minimizing the need to track large amounts of inventory.
  2. Rent and furniture savings by minimizing the extra space you need to store large amounts of inventory.
  3. Cash savings by buying only the amount of inventory as is absolutely needed.

Standard thinking often dictates that buying in bulk will save money. Lean defies this thinking and says that the savings of buying in bulk are actually lost in the extra money spent on moving, counting, organizing, storing and (often) borrowing of cash (in interest expenses) to purchase inventory in bulk.

Taiichi Ohno use to say that we should “think like a farmer”. What he meant by this was to not try and over complicate our solutions. Kanban cards are a perfect example of an immensely powerful, but utterly simple solution. Here’s how it works for individual inventory items:

  1. Figure out your turnaround time on replenishing an inventory item.
  2. Figure out how much inventory you need in order to avoid running out while you order and wait for your replenishment order to arrive. This is your “Kanban Minimum”.
  3. Attach a physical “Kanban Card” to your minimum to alert workers that you have reached your minimum.

For example, we know that a minimum of five of these boxes (our Kanban Minimum) allows us enough time to order more and have them delivered before we run out completely. So we tape together the last five boxes and place our Kanban Card.

A Kanban Card in place in one of the Plywerk box sizes. A Kanban Card is in place and cash is being saved.

Once someone uses the first of these last five boxes, they break the tape, pull out the card and place the card in our Kanban Corral inbox.

The studio Kanban inbox with Kanban Cards. The studio Kanban inbox with Kanban Cards awaiting processing.

The person in charge of procurement will take all the Kanban Cards in the inbox and order as needed. Once the new boxes arrive we tape the last five together again and replace the Kanban Card.

2 thoughts on “Tips for Running a Lean Manufacturing Operation”

  • Lean manufacturing operations

    Yeah! I am totally agreed with you.The persons who do not know about how to run the Lean manufacturing operation , must follow the tips on this blog.

    Reply
  • Jim Beswick

    How does lean manufacturing is helpful to start-ups with very low investment? The process of acquiring knowledge of lean manufacturing is one aspect, and a successful implementation for fruitful results asks for practical knowledge. Moreover, depending upon the size of your business, it might take months to many years before you begin to fetch more profit.

    Reply
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