Introduction
Lean manufacturing is an approach to production which involves the identification and elimination of the wastes through the continuous improvements of the production process. It is a philosophy that ensures that non-value adding activities, which are referred to as wastes are eliminated. Most companies incur a lot of costs by including many non-value adding activities into the production process. In the end, this non-value adding activities adds costs to the production process, but have no value to the customers. Using lean manufacturing as a cost-saving method, therefore, involves the elimination of wastes which add more costs to the firm, yet such costs do not have any value in the eye of the customer, and their elimination will not affect the sales. The lean manufacturing philosophy came from Japan’s Toyota production system and has since been used by many manufacturing firms to save costs and increase profitability.
Lean Approach
Lowering production costs is one of the best ways that firms can use to increase their revenue and profitability. Lowering costs can also help the management to maintain or even increase the current variable costs without getting worried over the fixed costs. One of the ways to help firms lower the production costs is the lean manufacturing philosophy. This method works by cutting off the wastes from the production process and making production more efficient while also making continuous improvements ( Chen et al., 2013 ). Wastes are defined as anything that does not add value to the customers, yet they add costs to the production process. Such activities are known as non-value adding activities. In cost-cutting using a lean approach, two major activities are identified. These activities include the value adding and non-value adding activities. Value-adding activities are those that make the product more valuable in the eyes of the customers and can increase the demand for the product. Non-value activities, on the other hand, are those that are invaluable in the eyes of the customer yet they add the costs. These are what is referred to as wastes under the lean manufacturing philosophy.
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Wastes Elimination
The major approach through which leaning manufacturing philosophy works to save the production costs is through the elimination of the wastes and increase efficiency through continuous improvements. Wastes are any elements that can increase the cost of the production, yet they add no value of the product to the customers. Several factors can cause wastes in the production process. Some of the factors include the location of the machinery, excessive setup time, lack of personnel training and poor organization at the workplace ( Chen et al., 2013 ). These factors can create wastes within the production process and increase the costs of production yet they are valueless to the customers. By adding the production costs, they have an effect on the revenue as well as the profitability of the firm.
Various types of wastes are identified under the lean manufacturing process. Once identified, these wastes are eliminated to make production more efficient.
Overproduction
Overproduction is one of the types of wastes that are eliminated by lean manufacturing to reduce costs. Overproduction means producing more than is required for the next process. Overproduction becomes a waste when what is produced cannot be sold, or the rate must be reduced to sell everything, and this affects the bottom line of the company ( Chen et al., 2013 ). Overproduction also leads to wastes when storage costs must be incurred before the products can be sold. Similarly, some of the overproduced products may get spoilt before they reach the customer thus increasing costs to the firm. Eliminating overproduction by producing what is required and what can be sold without incurring huge storage costs or reducing the price is useful in saving costs and increasing profitability.
Inventory
Keeping excess inventory is one of the ways in which the firm can incur more costs. Too much inventory means that the firm will have to incur storage and maintenance costs until these products are sold or used in the production. During storage, some of the inventories may get damaged or get spoilt thus leading to wastes and costs to the company. Inventories need to be kept at the lowest level possible to avoid storage costs or wastes due to spoilage in the warehouse. Too many inventories also mean that money has already been paid for the supplies before the return on investment has been guaranteed ( Heymans, 2015 ). When a company maintains too much inventory, the management can also be concealed by reality and led to wrong decisions. Under the lean manufacturing philosophy, the organization must eliminate excess inventory wastes and find a method that minimizes the inventory. With reduced inventory, the storage costs, as well as wastes on spoilage, can be eliminated.
Movement
These are the motions made by individuals or to machines during production. Any processes that contain a lot of unnecessary motions can cause damage to the machines, delays in the production or even cause injury to the workers. Such kinds of motions add no value to the products, yet they add costs and lower profitability. Lean manufacturing aims at eliminating the wastes due to unnecessary motion thus leading to cost saving and increased productivity.
Reprocessing
Reprocessing is processes that result when there is a defect product that requires to be reprocessed to produce a quality one. It results when there is a lack of a clear picture of what the customer wants and the resulting product is not what is demanded by the customers ( Heymans, 2015 ). Processing itself incurs a lot of costs to the company in the first place. Having to reprocess the product only adds more costs to the production process and thus seen as a waste. The goal of lean manufacturing is to induce a processing system that eliminates any unnecessary processing work because such processes only add costs to the company.
Waiting
The presence of delays in the manufacturing processes leads to time wastage and make the workers as well as machines to remain to idle. When there are delays, a worker or a machine have to remain inactive as it waits for the previous process to be completed ( Heymans, 2015 ). Idling machines and workers due to delays are lost productivity and increased costs. Delays can also result in customers having to wait longer for their order to get delivered and could lead to loss of sales. While waiting and delays are activities that continue to add costs to the process, they add no value to the product. With lean manufacturing, a system is introduced where the wastes incurred during waiting time are eliminated to save the costs. Machines and workers must remain active during production.
Transportation
Another waste that can be eliminated by lean manufacturing philosophy and reduce costs is transportation. In some manufacturing layout, various parts have to be moved from one point to the next during production. The constant movement of the items or products from one point to the next place where they are needed represent a waste. The lean manufacturing aims to make the production facility layout in a manner that ensures the distance is eliminated and this helps save costs.
Correction
This is a waste that occurs when a work that has already been done must be repeated to correct the error. When a product is manufactured with errors, the company have to incur more costs correcting these errors. With lean manufacturing, the aim is to perfect the preceding process in a way that ensures all errors in the production are eliminated. Error elimination helps save costs, reduce wastes and increase efficiency.
Principles of Lean Manufacturing
The way to getting the benefits of lean manufacturing in cutting costs is to implement the principles of lean. By using lean, flexibility increases thus directing the business towards the cost saving goal. With increased flexibility, the changes to the process are enhanced within the normal workflow thus making it possible to reduce redundancies and implement quick changes. Cost saving using lean therefore require that a business implement the five basic principles of lean manufacturing.
The first principle of lean manufacturing is the value specification. The value is what marks the foundation of any lean process. Value is defined from the perspective of the customer with the production of what meets the needs of the customers ( Bhamu & Singh Sangwan, 2014 ). To first save costs using lean, the business must identify what adds value to the customers and what is a waste. With this identification, the production will be oriented towards value adding activities and ensure complete elimination of the wastes that are cost adding to the process. The second principle of lean is the identification of the value stream. The value streams are the steps and processes that are necessary to deliver a valuable product to the customers. With the knowledge of the steps required to produce a valuable product, it becomes easy to identify and eliminate any waste that may be present in the process.
The third principle is the flow which involves making the production process have a smooth flow from one step to the last. Having a smooth flow in the production process ensures that delays and waiting, which have been identified as wastes are eliminated from the process ( Bhamu & Singh Sangwan, 2014 ). The smooth flow of production is a way to eliminate delays in the processes that could lead to the idling of machines and workers. After the above three stages have been implemented, the fourth principle is the pull. Here, the lean business allows the customer to pull the product. By value creation, the customers will demand the product rather than pushing the product to them. The benefit of the pull principle is that it increases the demand and eliminates the need to have large inventories which could lead to high storage costs. After the principles are implemented, the business focuses on making continuous improvements as it moves towards perfection. Lean does not end with the implementation of the principles. It requires the pursuit of perfection and increasing effectiveness every time.
Implementation and Focus on Improvements
What has been the major problem with cutting costs using lean is the evaluation of what is considered as a waste. In most cases in the business world, wastes refer to scrap or defective products. However, lean views waste in a broader perspective and entail much more than just the scraps. Therefore, changing the perception of the wastes require setting certain steps to make the whole process simple. Designing a simple manufacturing system is the first way to make things work. When the system is simple, it ensures that there is a reduced amount of inventory needed to be kept. This also increases productivity and enhances efficiency.
One of the key areas of focus for the lean manufacturing philosophy is the existence of room for improvement. In this process, anything that does not add value to the customer is considered a waste. Even after the implementation of the lean principles, there could be chances that some processes with wastes could still exist thus the need to make improvements continuously. Setting a culture that values continuous improvement and enhancing innovation is critical in making lean manufacturing to work ( Wahab, Mukhtar & Sulaiman, 2013 ). There is a need to monitor and evaluate both the internal and external processes constantly. Through constant evaluation and monitoring, the organization can identify and make small improvements throughout the system.
The success of a lean manufacturing process depends on the ability of the management to convince everyone to support it. The managers must lead by example, and then the junior employees can follow. Making lean culture is essential to making it successful in reducing costs and eliminating wastes. The implementation of lean manufacturing process takes patience, time and commitment from every member of the organization. When successful in the end, the organization can reap big through the elimination of wastes and saving costs.
Conclusion
Lean manufacturing is a systematic approach that identifies and eliminates non-value adding activities. As a time-based philosophy, it reduces the time needed for production and thus ensures that the products reach the market very fast. Through the focus on the reduction of various types of wastes, lean manufacturing has ensured increased efficiency and cost saving. The model developed by Japan’s Toyota has been used by many manufacturing firms to increase their efficiency and cut costs. Through the implementation of its principles, the lean philosophy ensures that there is a flow in the work process and a reduction in the delays as well as delays time. The lean manufacturing identifies key seven types of wastes which has been the major cause of increased production costs and which must be eliminated. The idea is to eliminate activities that are non-value adding and only focus on the value-adding activities.
References
Chen, J. C., Cheng, C. H., Huang, P. B., Wang, K. J., Huang, C. J., & Ting, T. C. (2013). Warehouse management with lean and RFID application: a case study. The International Journal of Advanced Manufacturing Technology , 69 (1-4), 531-542.
Heymans, B. (2015). Lean manufacturing and the food industry. Journal of Technology Management & Innovation , 10 (3), 120-30.
Bhamu, J., & Singh Sangwan, K. (2014). Lean manufacturing: literature review and research issues. International Journal of Operations & Production Management , 34 (7), 876-940.
Wahab, A. N. A., Mukhtar, M., & Sulaiman, R. (2013). A conceptual model of lean manufacturing dimensions. Procedia Technology , 11 , 1292-1298.
