Lean Manufacturing—What It Is and Why It Matters

Lean manufacturing is a methodology for reducing waste in the manufacturing process. First introduced by Toyota in 1930, the term ‘lean’ was coined in 1988. It has since become common practice in the industry.

An increasing number of manufacturers have been adopting lean methodology in recent years. But what do we mean by lean? And why is it important?

What is lean manufacturing?

Lean manufacturing is the continual pursuit of waste reduction in the manufacturing process. Waste is anything that uses resources without adding value to the customer. 

The seven wastes defined in the original Toyota Production System are:

• Unnecessary transportation
• Excess inventory
• Unnecessary motion of people, equipment, or machinery
• Waiting—inactive employees, or idle equipment
• Over-production of product
• Over-processing—putting in more resources than a customer needs
• Defects—which require resources to correct

By following the lean methodology, practitioners aim to reduce or entirely remove these seven wastes from the production cycle. Fundamental to the methodology is continuous improvement. Rather than engaging in waste reduction as a discrete exercise, lean is adopted as a guiding methodology that yields ever-finer optimizations.

Five principles of lean manufacturing

Lean manufacturing is built on five core principles, designed to inform every aspect of the production cycle:

• Customer value: Defining a top-down price the customer will pay, with a view to optimizing manufacturing to achieve profit at that price.
• The value stream: Gaining a complete understanding of the product’s lifecycle to eliminate inefficiencies.
• Continuous flow: Ensuring continuous operation; interruption inevitably leads to waste.
• Customer pull: Similar to just-in-time production, nothing is made until it is ordered.
• Perfection: Engaging in continuous improvementto relentlessly pursue the perfect process.

A number of techniques have been developed to achieve the goals of these principles, such as Heijunka, Kanban, Jidoka, Andon, and Poka-yoke.

Benefits of lean manufacturing

Waste reduction can be viewed as a primary benefit in and of itself, but the pursuit of lean manufacturing yields a number of ancillary benefits, including:

• Increased product quality: Improved efficiency allows employees to spend more time on innovation and quality control. By targeting defects as waste, production quality improves.
• Improved lead times: Treating interruptions as waste, and developing just-in-time processes accelerates production.
• Sustainability: Reduced waste and a more agile business make for an endlessly adaptable company, with a lower environmental impact.
• Increased profits: Adopting lean manufacturing means doing more with less—and that means wider profit margins.

Aside from the cost savings made in waste reduction, these benefits have made the lean methodology especially desirable, particularly as technology has amplified the effects of adopting lean.

Technology’s role in lean manufacturing

Lean manufacturing has always been data driven. But until recently, even collecting that data was a resource-intensive activity—not to mention the time, skills, and staff required to analyze and act on it. With the advent of industry 4.0—in particular, the Industrial Internet of Things (IIoT), big data, and AI—collecting data has become far more economically viable, and AI-assisted analysis of large datasets can reveal unprecedented insights at a lower cost.

The result is a paradigm shift in lean. While traditional lean optimizations tended to produce 1-2% improvements, digital lean manufacturing often achieves step-change results.

Why lean manufacturing is important

The increased availability of industry 4.0 technology has precipitated the spread of lean manufacturing. Simply, it is easier, and more effective, to engage in continuous optimization than ever before.

At the same time, it has never been more important to adopt lean methodology; partially to keep pace with competitors already well-versed in its principles, and partially to respond to an inexorably accelerating economic environment. Far from merely reducing waste, lean manufacturing enables businesses to acclimatize to tightening product lifecycles and a growing demand for customization. The principles of lean production equip manufacturers with the necessary agility to not just continually improve, but also to continually adapt.