Lean manufacturing or lean production, which is often known simply as "Lean", is the practice of a theory of production that considers the expenditure of resources for any means other than the creation of value for the presumed customer to be wasteful, and thus a target for elimination.

The Toyota Production System

In a more basic term, ‘More value with less work’. Lean manufacturing is a generic process management philosophy derived mostly from the Toyota Production System (TPS) and identified as "Lean" only in the 1990s.

The Seven Wastes

It is renowned for its focus on reduction of the original Toyota Seven Wastes in order to improve overall customer value, but there are varying perspectives on how this is best achieved. The steady growth of Toyota, from a small company to the world's largest automaker, has focused attention on how it has achieved this.

We at Fitco Consulting have been employing waste elimination principles from the TPS extensively in the organisations in which we have worked. The original seven wastes (muda) in the TPS are:

•   Transportation (moving products that is not actually required to perform the processing)

•   Inventory (all components, work-in-progress and finished product not being processed)

•   Motion (people or equipment moving or walking more than is required to perform the     processing)

•   Waiting (waiting for the next production step)

•   Over Production (production ahead of demand)

•   Over Processing (due to poor tool or product design creating activity)

•   Defects (the effort involved in inspecting for and fixing defects)

The Fitco Consulting Expertise

Our Lean specialists, and in particular Colin Janes, are highly expert in quickly identifying and providing solutions to all the above wastes. We do however practice a philosophy of changing the company culture of our clients. We aim to convince the management of the company to adopt the following principles which we are expert on helping you deliver:

•   Senior management to agree and discuss their Lean vision

•   Management brainstorm to identify project leader and set objectives

•   Communicate plan and vision to the workforce

•   Ask for volunteers to form the Lean Implementation team (5 - 7 works best, all from different     departments)

•   Appoint members of the Lean Manufacturing Implementation Team

•   Train the Implementation Team in the various lean tools; make a point of trying to visit other      non competing businesses which have implemented Lean

•   Select a Pilot Project to implement; 5S is a good place to start

•   Run the pilot for 2 - 3 months; evaluate, review and learn from your mistakes

•   Roll out pilot to other factory areas

•   Evaluate results, encourage feedback

•   Stabilise the positive results by teaching supervisors how to train the new standards across     the organisation

•   Once you are satisfied that you have a habitual program, consider introducing the next lean     tool. Select the one which will give you the biggest return for your business

Techniques to effectively implement change

•   Sort out as many of the visible quality problems as you can, as well as downtime and other     instability problems, and get the internal scrap acknowledged and its management started

•   Make the flow of parts through the system/process as continuous as possible using work cells     and market locations where necessary and avoiding variations in the operators work cycle

•   Introduce standard work and stabilise the work pace through the system

•   Start pulling work through the system, look at the production scheduling and move towards     daily orders with kanban cards

•   Even out the production flow by reducing batch sizes, increase delivery frequency internally and     if possible externally, level internal demand

•   Improve exposed quality issues using the tools

The Importance of Culture Change Including Applying Lean Accounting Principles

We at Fitco Consulting firmly believe that the management culture needs to change. We are convinced that implementing the correct measures instills the correct behaviour.

Key to this approach, we strongly encourage our clients to adopt Lean accounting principles as a first step to changing the culture. Why?  Lean accounting views inventory as a loss on the P&L whereas traditional accounting regards it as an asset on the balance sheet.

By calculating inventory as hard cash and what the cost of borrowing this cash to be, an immediate change in culture is instilled and no-one is then able to consider inventory a good thing, even if it is protecting customers from ‘stock-outs’.