Lean manufacturing: why a 'lean' strategy makes good business sense.

Buzzwords. We're all familiar with them, these catchwords used to impress and confuse the average person. At first glance, "lean manufacturing" could be lumped in with other business approaches and dismissed as another helping in the endless self-serving supply. A discerning eye, however, understands that lean manufacturing, when implemented strategically, goes beyond first impressions.

Defining lean performance -- Lean performance starts with taking a strategic look at the entire business enterprise. These days, doing things the way you've always done them may work you right into unemployment. With more jobs being outsourced overseas where the cost of labor is less, companies need to understand their customers' needs. It may be possible to offset the potential dollar savings from cheap offshore labor by improving on-time delivery or shortening lead-time. A company wanting to get the most benefit from lean will work on developing these and other competitive priorities. Getting lean includes aligning company goals with customer goals, creating a synergistic partnership. These same goals are then used to develop and drive a strategic performance improvement plan, aligning market opportunities and internal resources to achieve carefully selected improvement targets.

Achieving lean performance -- When the entire company is focused on the same goals, it is much easier to stay focused and achieve desired results. Communication is key to creating a lean culture shift where each employee knows and understands how individual performance links to company goals and objectives. Shared ownership is the incentive for employees to offer solutions for process improvements. An open door policy is the means by which management receives those suggestions. The idea is to stop the "blame game" and begin focusing on resolution. Identifying waste in processes and understanding how each activity, from quote to cash, affects the bottom line is the best place to start for an effective lean transition. The first step after culture shift is to assess or benchmark existing processes, usually by value stream mapping. Knowing how current performance stacks up against the competition is key. For example, if your on-time delivery is 98 percent and your closest competitor is at 95 percent, the time and effort spent achieving a 99 percent on-time delivery might be better used working, say, on improving inventory turns from 7 to 10, particularly if the average for your industry is 10 or more. Once improvements are identified and weighted, internal change can take place. Standardized work, visual cues, cellular manufacturing and other lean tools can help reduce and eliminate waste in the value stream. Not confined to the shop floor, lean principles and techniques have proven just as successful in the front office, particularly when combined with Six Sigma and other tools to help identify and diagnose improvement areas.

Results of lean performance -- Companies effectively achieving lean performance have typically attained a lean culture, defined strategic company goals, aligned those goals with individual employee performance, improved product quality by reducing defects, reduced machine downtime with predictive maintenance, reduced lead times and improved on-time delivery in addition to achieving customer mandates and reducing costs. All these changes lead to an improved bottom line and also help reduce employee turnover, increase job satisfaction, improve company reputation, increase brand loyalty and achieve customer recognition for quality and responsiveness.

Bob Lyscas is director of Strategic Business Solutions at the Michigan Manufacturing Technology Center.

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