Lean manufacturing

What is lean manufacturing?

a summary from McKinsey article: Goland, Hall and Clifford, First National Toyota, Nov 1998

Characteristics of lean manufacturing

Lean manufacturing was developed by Toyota 

• to optimize production - by eliminating waste.
• building quality into manufacturing processes + recognizing the importance of cost reduction.

four defining characteristics:

Waste awareness

to banish seven types of waste: 

• overproduction, 
• unnecessary motion, 
• repairs, 
• overprocessing, 
• waiting (for parts or for a machine to finish its cycle), 
• excess inventory, and 
• inessential transportation. 

frontline employees - Responsible for 

• spotting waste and 
• figuring out ways to prevent it lies with . 
• Spread the solution quickly within the organization 

Continuous quality assurance. 

NOT - inspecting work after it is completed and then performing any necessary rework, 

DO - build in quality assurance at every step in the process. 

In some cases, frontline workers have the authority to stop a production line if they see it putting out substandard products. 

• supported by standard-ized work instructions that prevent differences in execution and 
• rigorous maintenance procedures that minimize breakdowns and other hiccups in machine performance.

Just in time (JIT)
aims to 

• supply each process with
• right quantity
• right item
• right time
• normally associated with external suppliers, but can extends to internal functions. 
• Central idea: continuous flow
• elimination of stagnation in and between process steps --> 
• minimize in-process inventory, 
• avoid waste in transportation and motion, and 
• improve feedback on defective output. 
• Flexibility (reducing set-up times to the minimum)
• to promote effective capacity utilization
• cross-training employees to enable them to switch between assignments
• minimum inventory
• using tracking mechanisms to keep tabs on stock levels, 
• avoiding bottlenecks 
• to minimize work in progress (WIP), and timing deliveries to demand

Level production

Level production is the end state achieved by a lean manufacturing system. 

• Peaks and troughs in volume are minimized to ensure optimum capacity utilization, 
• process is designed to enable the fastest possible throughput. 
• (internal perspective) tasks are balanced between work stations and process steps 
• so that utilization is maximized and 
• overall cycle time kept to a minimum. 
• 
  

3 examples applying Lean Manufacturing in financial services

• check processing, 
• loan processing, and 
• call centers