Copyright © Daniel Cullinane CPA.
PRINCIPLES OF LEAN MANUFACTURING
Lean business principles first entered the American business consciousness in the 1990s, primarily through the book “Lean Thinking,” by James P. Womack and Daniel T. Jones. Originating in Toyota’s automobile manufacturing model, lean approaches now enjoy widespread application across numerous industries as a means of reducing time and resource waste.
From the standpoint of lean thinking, value begins and ends with the customer. Customers require a particular product or service from your business, and you must provide it in the amount necessary and on the customer’s schedule. Determining the product or service that provides value to the customer stands as the first task for the business.
Value Stream Mapping
Once you determine what provides value to the customer, you must figure out or map the processes and procedures that get that product or service to the customer. This mapping process calls for identifying the unnecessary steps that add no value or contribute to waste. For example, if you discover that employees must go through a complicated process to place orders into the computer system, you would likely flag that process as a waste contributor.
Creating flow refers to the formal removal of unnecessary steps that hinder delivery of a product or service to the customer. For example, if a cleaning service must routinely visit an off-site storage facility for supplies, this activity delays delivery of service. To enhance flow, the business might remodel to increase on-site storage space.
Pull calls for production on an as-needed basis -- in essence, you produce in response to demand. In a service business where delivery depends on manpower, pull could translate into hiring on the basis of existing demand, rather than hiring on the basis on expected demand.
Perfection calls for an ongoing refinement of the other four principles in a bid to achieve a zero-waste delivery process of service or product delivery. The guiding idea is that additional waste gets exposed over time. The refinement process also helps a business adapt to inevitable shifts in customer demands.
Peter Hines, co-founder of the Lean Enterprise Research Center at Cardiff University, argues that the classic five principles of lean thinking may prove insufficient for the contemporary business situation. He says businesses frequently apply lean thinking only to issues such as order fulfillment, with insufficient regard given to quality management, communication and leadership. Hines proposes an eight-principle model of lean thinking that, in theory, should address these issues and provide a less manufacturing-centric approach.
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778