Q: What can you tell me about lean manufacturing. I run a small manufacturing company, with a dozen employees. I”™d like to be as efficient as possible. How can I apply lean manufacturing to what we do?
Thoughts of the day: It”™s good to be as efficient as possible in order to lower cost of goods sold and increase gross profit. The principal behind lean manufacturing is to reduce waste to zero. One area of difficulty for many small business owners is dealing with personnel. Operating in a lean environment will likely require additional sales to fully realize the profits that can stem from the changes you”™ll be making.
At its heart, lean manufacturing is all about reducing waste and errors in order to improve operating quality and efficiency. To be successful, it requires the cooperation and commitment of everyone ”“ from sales and marketing people to shop floor to senior management. Lean is about taking pride in a job well done.
There are good reasons for pursuing lean manufacturing. Reduced costs mean that a company has more funds available for wages and benefits and investments in infrastructure. Increased accuracy makes a company more competitive as customers get exactly what they want. Pride in a job well done becomes a reward and a motivation for employees.
Placing accurate orders, managing labor and materials and putting the emphasis on quality all contribute to improvements in the cost of manufacturing. To get lean, you will want to organize processes, personnel, material and equipment so that waste is near zero. It”™s not about working faster, it”™s about working smarter and more accurately.
Remember to work on inventory and your supply. If materials are not up to standard or don”™t arrive on time, that gets in the way of efficient production. You may have to pay a little more for a higher quality of supply in order to reduce waste and disruption. An increase of some inventory may ensure materials are available when needed.
Lean manufacturing will be a culture shift for everyone. If employees do not embrace lean principles, it will be impossible to implement the changes.
Changes in general make people feel insecure. Learning new practices can be difficult for some people. Employees often presume that lean practices will lead to a reduction in work hours. Emphasis on efficiency and quality may cause employees to question the security of their jobs if they think they can”™t keep up.
Think about your current work environment. Have you ever thought that employees slow down when they don”™t have enough work in order to make the workload last for a full day of pay? In a lean environment, the goal shifts from making work last to getting through the workload as efficiently and accurately as possible.
Keeping employees secure in their jobs means increasing throughput through sales (see below) and expanding employee utility through education. Ask employees what they need to learn in order to get better at what they do. Have machinery and inventory suppliers participate in training employees on how best to use what they supply. Encourage employees to master new skills in order to increase flexibility throughout the shop.
Lean, without growth in sales, is unlikely to be a permanent solution to improving the company”™s operating profit.
Some of the largest nonvariable costs of a manufacturing facility are the plant and equipment, as well as related costs such as heat and electricity. Amortizing those costs over a bigger base of work is one significant way to improve profits. Unless you plan to move, it”™s almost impossible to reduce the factory footprint, so the only other way out is to increase the work flowing through the shop ”“ which comes from increased sales.
You can only get so far by reducing wasted time, effort and material. Plan on material and labor costs continuing to increase as time goes on, no matter how efficient you become. You need more and more customers willing to pay for the value your shop can provide in order to stay ahead of inflation and to take advantage of the quality improvements you”™ll effect through learning about lean manufacturing.
Looking for a good book? Try “Lean Manufacturing That Works: Powerful Tools for Dramatically Reducing Waste and Maximizing Profits” by Bill Carreira.
Andi Gray is president of Strategy Leaders Inc., strategyleaders.com a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at (877) 238-3535. Do you have a question for Andi? Please send it to her, via email at AskAndi@StrategyLeaders.com or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit AskAndi.com for an entire library of Ask Andi articles.
