Lean markets: a necessity in today's competitive environment. (Technology).

Saskatchewan companies may be overlooking an important means of improving their bottom line. Typically, businesses and manufacturers look outward -- to new research, new products, or new technologies -- to achieve better results. But smart managers also look inward to find ways of reducing in-house operating costs.

Many 'world-class' manufacturers using lean operating strategies are achieving phenomenal results. Imagine a 90 per cent reduction in inventories, a 50 per cent reduction in space requirements, an 85 per cent improvement in quality, a 90 per cent improvement in work in progress, or a 90 per cent reduction in lead-time.

Today's businesses are confronted with a difficult task: keeping their customers happy and at the same time keeping ahead of the competition. To do this they need to use every resource and intelligence at their disposal. When strategically planned and implemented, lean operations strategies can effectively drive down the costs of production.

The leading proponents of lean manufacturing are original equipment manufacturers in the automotive industries, such as Toyota, GM and Ford, but other proponents include companies like Microsoft, Xerox, GE, CNH and 3M. Saskatchewan businesses and organizations of all kinds, whether large or small, can benefit from studying their strategies, including 'continuous improvement'.

Continuous improvement teams made up of company personnel carry out regular and ongoing analysis of all operations. The team selects a particular processing area, analyzes it and implements ways to drive costs down and drive wastes out of the operation. The operation implements these improvements and the team returns at a scheduled date to go through the process again.

What is more, each and every company in the 'supply chain' also incorporates continuous improvement to drive down their costs, reducing the cost of parts and materials to the manufacturer. Along the production chain, everything possible is done to incorporate best practices and quality standards. With each improvement playing off the other, quality attributes are built into the product and process, while waste is driven out.

One of the most important results of process analysis has been the switch from assembly line to cell operations. Rather than using one massive line, processing is broken down to cellular segments. On an old assembly line, when one part of the process broke down, the whole line was halted. Now, when one segment stops, the other cells can continue to operate.

Another important efficiency is 'just-in-time-supply.' In most successful companies, all supplies arrive just in time for manufacturing. This eliminates the need for costly bulk inventories and expensive storage facilities. Instead of weekly deliveries, in most cases industry uses a daily cycle, with a standard of 24 hours of product on hand. The warehouse is as clear of inventory as possible. What is purchased is consumed, quickly and continuously.

Such improvements can be achieved in a variety of industries, not just manufacturing. The same principles apply to primary metal, electrical, aerospace, fabrication, value-added processing, service, utilities, institutions and many more. The environment may be different, but the philosophy can be adapted to any operation, large or small.

Saskatchewan businesses have started to incorporate lean operations programs. Some have trained personnel in house to improve efficiency in processing lines, work stations, layouts and work cells.

Ultimately, the big winner from the introduction of lean operations is the customer. When companies do all the right things to drive the costs out of products, customers reap the benefits. And when customers are happy, the bottom line shows it.

Terry Bradley is a Senior Consultant with the Saskatchewan Research Council.