Copyright © Daniel Cullinane CPA.
LEAN MANUFACTURING ANALYTICS
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778
Lean manufacturing is a production system that eliminates waste through all steps in the process to build a product. Companies using lean systems work to reduce costs, inventory and cycle time -- the period from when an order is taken until the product ships to the customer. Lean manufacturing focuses on the needs of the customer by improving on-time deliveries, decreasing costs and eliminating quality defects. Lean businesses measure the success of their efforts by monitoring the total cost, quality, cycle time and on-time delivery.
Businesses use the total cost to produce products as a measure of lean manufacturing efforts. Incremental elimination of waste in all departments leads to a significant reduction of waste and total company costs. Manufacturing products according to customer demand instead of potentially inaccurate forecasts leads to a reduction in inventory, cycle time and waste, which lowers the total cost to the business.
Lean manufacturing techniques reduce product cycle time. Lower cycle time is used to determine the success of lean techniques such as cellular flow manufacturing. This type of manufacturing arranges machines and equipment to build a product from start to finish. Traditional manufacturing groups similar equipment together in one location and moves the product into and out of separate departments. For example, with traditional manufacturing an electronics company may have departments for plating and inspection. Parts are brought to the department in large batches and processed. In lean manufacturing, a cell contains the equipment to plate and inspect the parts as they are pulled through each step in the manufacturing process.
As cycle times are reduced in a lean business, the company improves its on-time delivery. A business using lean manufacturing techniques builds products only when a customer places an order. This allows the company to be responsive to the needs of its customers and decrease the time it takes to deliver an order. A business changing from a traditional manufacturing system to a lean one can count on-time deliveries to determine the success of its efforts.
Lean manufacturing techniques work to eliminate waste in all forms, including rework and scrap. Businesses track the number of defects at each stage in the production process along with the number of defects that reach the customer to help measure the success of lean manufacturing efforts. Inventory reduction has an effect on the quality of materials and finished products. High levels of inventory can hide quality defects by increasing the time between the creation of a defect and when it is discovered, which increases the likelihood the problem will be repeated. Lean manufacturing uses techniques to reduce waste from quality defects. Each operator in the manufacturing process inspects parts before performing his task. When a worker finds a defect, he can send the parts back to the operation responsible for the problem.
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778