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Asian Journal of Business Management 2(2): 35-40, 2010

ISSN: 2041-8752
© M axwell Scientific Organization, 2010
Submitted Date: December 24, 2009 Accepted Date: January 23, 2010 Published Date: May 30, 2010

A Manufacturing Strategy: An Overview of Related Concepts,


Principles and Techniques
1
Farhana Ferdousi and 2 Amir Ahm ed
1
Department of Business Administration, East West U niversity, Bangladesh
2
International Islamic University of Chittagong, Bangladesh

Abstract: The purpose of this study is to define and discuss the related concepts, tools and techniques of lean
production system- a widely used manufacturing strategy. This paper basically introduces the most basic lean
tools and techniques necessary to understand this management philosophy and reap its full benefits. Since the
term associated with lean practice pose problems of definition and con cept, it is therefore deeme d necessary
to outline the basic elements connected with the lean production. This study is an overview of the conceptual
framework of lean. A desk study was conducted to gather relevant information in this regard.

Key w ords: Lean, manufacturing strateg, principles

INTRODUCTION using this technique to m eet their custome r requirement


(Mazany, 1995; Bruce et al., 2004).
The objective of this study is to outline the related The last two decad es have seen the top Japanese
concepts of lean production philosophy. For this purpose manufacturing firms have achieved excellent international
an extensive literature review has been conducted . It is competitiveness in a number of industries such as auto,
said that Japan was the birthplace of lean production electronics and machinery (W u, 2003). They have
(Sohal and Egglestone, 1994). The changes in the achieved success due to their different ways of doing
econ omic and comp etitive clim ate in Japan led the business. Hall (1983) and Schonberger (1982) argued that
manufacturing organ izations to devise inn ovative and the Japanese developed a new approach to manufacturing
cost-effective production methods. And, this encouraged management. The book by Wom ack et al. (1990), ‘The
the organizations to look for a revision of the production Machine That Changed the World’ benchmarked
models as well as the Japanese management system manufacturing companies around the world and found, at
(Bartezzaghi, 1999). W hile the overall Japanese economy the time, the Japanese manufacturers w ere typically more
has suffered, some well organized Japanese productive and efficient than their Western counter parts.
manufacturing companies such as Toyota, Honda, and Taichii Ohno in his book oyota Production System
Canon still remain competitive in the global market (Phan explained the foundations of lean manufacturing and
and Matsui, n.d.). This is because of the Japanese own showed that these principles guided the Japanese
way of management such as JIT production, TQM and companies to be w orld class (Ohno, 1988 ). Literature
concurrent engineering (Morita et al., 2001). These are revealed that Japanese firms are superior in performance
considered as the main strengths of the Japanese compared to the European firms because of the
manufacturers, besides their technological advantages introduction of lean in manufacturing sectors (Sohal,
(Sakakibara et al., 1993; Morita et al., 2001; Matsui and 1996). Due to the differences in the strategies and
Sato, 2002). After World W ar II when Japanese practices, Japanese firms we re highly focused on lean
manufacturers realized that they could not afford the practices and followed integrated single piece production
expense to build facilities like the USA, they concentrated flow, low inventories, small lot sizes, defect prevention
on lean concept (Pavna skar et al., 2003). They began the rather than rectification, pull production, team-based work
process of developing and refining the process of and active involv eme nt in problem solving to elimina te all
manufacturing with a view to minimize waste (Thompson non-value added wastes. These practices helped them
and Mintz, 1999). become superior in performance compared to other
Different factories of Japan have started to u se this countries. Manufacturing priorities in Japan are quite
system after it has been implemented in Toyota. After different from that of the USA and European
Japan, the US firms became interested to this concept manufacturers. As stated by Sohal (1996), the main goals
followed by the Eu ropean countries. But now the Asian of Japanese manufacturers are improving quality,
countries as well as other countries of the world are also reducing costs, and product developm ent. Oliver et al.

Corresponding Author: Farhana Ferdousi, Department of Business Administration, East West University, Bangladesh
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Asian J. Bus. Manage., 2(2): 35-40, 2010

(1993) in their study of 18 auto component plants (nine


UK firms and nine Japanese firms) reported that five
plants displayed high performance on measures of
productivity and quality. All of them are located in Japan.
These companies sho we d con sistently supe rior
performance on a number of measures, and thus provided
support for their lean production system. As stated by
Morita et al. (2001), Japanese could still be competitive
beca use they ha ve no t yet lost the ir competitiven ess.
Lean production encompasses the total manufacturing
chain from product design to product develop men t, and it
even embraces distribution (Cooney, 200 2). Ac cording to
the National Institute of Standards and Technology
Manufacturing Extension Partnerships Lean Network,
lean refers to systematically identifying and eliminating
waste through continuous improvement using the pull Fig. 1: A Lean Production Model Adopted from Sanchez and
production with a view to get perfection (Kilpatrick, Perez (2001)
2003). Lean shortens the lead-time between a customer
order and the shipment of the products by elimination of Table 1: Core concepts of lean
all forms of waste in the production processes. Sim ply Co nce pts De tails
C Value specification in the Need to specify what creates value
said, ean principles and methods focus on creating a
eyes of the customer from customer’s point of view
continual improvement of culture that engages employees C Identifying the value stream Need to identify all the activities
in reduc ing the intensity of time, materials and capital and eliminating wa ste (valu e strea m) n eces sary to produce
necessary for meeting customer need (EPA , 2003 ). This a product and el im inate all non-
value added waste.
operational strategy targets to achieve the shortest
C Making the flow of the value at Make those actions that create value
possible cycle time by eliminating waste. This strategy the pull of the customer fl o w w i t h o u t i n te r ru p tions at th e
aims to increase the value-added work by reducing pull of th e custo mer.
incidental work. This techn ique is u sed to increase C Empowering and involving Need to empow er and involve the
the employees employees at the decision making.
profitab ility by reducing cost and by understanding the
C Continuously improving Need to fo cus on co ntinuous
meaning of value to the customer because value is the for getting perfection improvement for the perfection
major determ inants of lean man ufactu ring. Companies are Source: Womack et al. (1990)
now convinced about the be nefits of lean, and they are
using this technique in both production and service influence on just-in-time production and d elivery to
functions. customers. All this in an integrated manner leads
Ss stated by Katayama and Bannett (1996), it is the com panies to achieving com petitiven ess.
paradigm for opera tions an d its influence can be fo und in As stated earlier, Lean Production (LP) focuses
a wide range of ma nufacturing and service strategies mainly on ne piece flow continuous flow. This means
(Womack and Jones, 1994). The benefits of lean that the ideal batch size is always one unlike in the
manufacturing are evident in factories across the w orld traditional manufacturing environment where ideal batch
and com panies repo rt improved product qu ality, size is determined on the basis of individual
reductions in cycle time, reduced w ork-in-progress (WIP), manufacturing processes or material handling. One-piece
improved on-time deliveries, improved net income, flow requires work cells that are organized by product,
decreased costs, improved utilization of labor, reduction rather than process (Mercado, 2007). his shift requires
in inventories, quicker return on inventory investment, highly contro lled processe s operated in a well maintained,
higher levels of production, improved flexibility, ordered and clean operational setting that incorporates
improved space utilization, reduction in tool inv estment, principles of Just-in-time production and employee
a better utilization of machinery, stronger job focus, and involved, system wide, continual improvement (EPA,
better skills enhance ment (Pavnaska r et al., 2003). 2003). Precisely, LP itself encompasses, as identified by
Lean Production is a conceptual framework based on W omack and Jones (1994), five core concepts, as
a few established principles and techniques (Sanchez and presented in Table 1.
Perez, 2001) as depicted in Fig. 1. The Figure shows that
several factors contribute towards achieving production RESULTS AND DISCUSSION
and delivery just-in-time. These factors elimination of
zero value activities, multifunctional teams, continuous Concept, tools and techniques of lean production:
improvement efforts, and supplier integration have Concept of inventory: As stated by Wom ack et al.

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Asian J. Bus. Manage., 2(2): 35-40, 2010

(1996), the aim of lean production is to eliminate that more products or parts or other materials are needed
everything that does not add value to the product or from the previous process. Anecdotal evidence indicates
service. Inventories are symptoms of inefficiency, that through this system, components are delivered to the
because it does not add value to the products (Sanchez production line when needed, so that there is no storage in
and Perez, 200 1). urthermore, inventories also hide other the production area. This is a system of de livery
problems on many occasions, preventing their solution instructions from d ownstream to upstream activities in
like, for example, a defective maintenance that focuses which the upstream suppliers do not produce until the
the accumulation of stocks to prevent bottlenecks in the downstream customer signals a need (Alukal and M anos,
machines which break down frequently (Sanchez and 2002). As stated by Phan and M atsui (n.d), the K anban is
Perez, 2001). Lean manufacturing focuses on fewer a physical tool for operating the pull system and this
inventories of raw materials and finished goods kept in system helps the factory in the reduction of un necessary
storage. Organ izations maintain inv entories of raw production, minimizing the work-in-process inventory.
materials; work in pro cess a nd finished goods to m aintain
flexibility in their production processes, smooth out Concept of continuous improvement/Kaizen: Lean
periods of excess or under capacity. In a lean production production is founded on the idea of Kaizen or continual
system, inventory is considered as a waste. This concept improvement (EPA, 2003). Continuous improvement is an
implies that excess of inventory incurs more cost, which ongoing program of improving quality, costs, and lead-
ultimately incre ases the cost of custome r product. time of processes and products through the cooperative
efforts of all concerned. According to Oakland (1993), the
Concept of JIT: Since the early 1980s, Just-in-Time search for continuous improvement in the products and
production has received great interest internation ally processes is another feature of lean production. As
(Phan and Matsui, n.d.). In general, the JIT philosophy defined by Sanchez and Perez (2001), ontinuous
concentrates more on improving manufacturing efficiency improvement is a process that requires involvement of
by eliminating non-value added activities and minimizing employees at different levels and supp ort of manag eme nt.
inventory (Lau, 2000). Just-in-Time (JIT) practices have This process relates to the idoka concept, which states
been used by many manufacturers as a powerful tool for that since people are not working for the machine, they
continuous man ufactu ring improvement based on the have the ability to use their best judgment to improve the
significant reduction of inventory and work-in-progress in process. This concept is often referred to as Kaizen, which
all phases of manufacturing process. This philosophy is used by the Japanese. his philosophy implies that
emphasizes materials flow not on materials storage small, incremental changes routinely applied and
(Kamoun and Yano, 1996). Originally JIT manufacturing sustained over a long period results in significant
concen trated more on increasing manufacturing efficiency impro vem ents (EPA, 2003). Kaizen is considered as the
by elimina ting all forms of waste and minim ize inventory uilding block of all lean production method. In his book,
(Lau, 2000). Today more an d more North American firms Imai (1986) em phasized that the k ey to Japan competitive
and firms in many other countries use it as an approach to success in the face of fierce global competition is the
produce the right part in the right place at the right time. adoption of aizen in the firms. He focused on the kaizen
Traditionally, inventory has been viewed as an asset. But management practices that can be put to work for
the JIT view is that inventory does not add value but improvement of processes. According to him, kaizen is a
instead incurs costs. JIT views inventory as a symptom of vital appro ach to problem so lving, however, its
inadequate managemen t, a method of hiding inefficien cies application requires change in the corporate culture.
and problems (Sanchez and P erez, 2001). As stated by
Schroeder and Flynn (2001), JIT system reduces Waste: The elimination of waste is the prime focus in
inventory, lowers cost and improves quality. According to lean production processes. Lean production basically
Hines (1996), ma ny com panies use JIT delivery as a key focuses on elimination of several types of waste. By
element in lean production deve lopm ent. U ltimately, IT avoiding non-value added activity, lean tries to increase
enables a company to produce the products its customer the customer respon siveness. n its most basic form, lean
want, when they want them, in the amount they want manufacturing is the systematic elimination of waste from
(EPA , 2003 ). all aspects of an organizations, operations, where w aste is
viewed as any use or loss of resources that does not add
Concept of Kanban: Lean production greatly emphasizes directly to creating the product or service a customer
Kanban system use of physical inventory cues to signal wants, when they want it (EP A, 2003). One study (Suzaki,
the need to move raw materials or produce new 2000), defined waste as anything beyond the minimum
com ponents from the prev ious process (EPA , 2006). needed by an organization in terms of equ ipment,
Same report stated that a kanban is a card, labeled materials, components, space or worker time to give
container, computer order or other device used to signal added value to the products. That means, anything that

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Table 2: Seven wastes of lean Table 3: Building blocks of lean


Types of waste De tails Building blocks Descriptions
Over-production Producing too many products than the 5S 5S is considered as an important building block
required. Th is creates excess of inventory, of lean. Its underlying philosophy is that efficient
which ultim ately lead s to h igh p rod uct c ost. and quality work requires a clean and safe
Excessive transportation Transporting or moving pro duc ts from one env ironm ent. The 5S activities refer to five
place to another than the required. Japanese terms su ch as (i) Seri (sortin g out
E xcessive mo vem ent c aus es b oth q uali ty unn ecessary items in the w orkp lace and discard
and revenue issues because this creates them), Seiton (arran ging all ne cess ary item s in
add itiona l orga niza tiona l cost. good order so that they can be easily picked for
W aiting time w aste Long periods of in activ ity f o r p e o ple, use), Seiso (clean ing th e w ork plac e co mp letely
information or good s, resulting in poor so that th ere is no dust on the floor, machines or
flow and long lead times
equip men t), Seiketsu (maintain ing a high
Exc essive inv entory H av i n g excess of inventory or more
standa rd of housek eep ing a nd w ork plac e at all
invento ry than is minimally required,
times), and Shitsuki (training people to follow
resu lts in in ven tory w aste
good housekeeping disciplines auton omo usly).
Unnecessary motion Wh en people involved in the prod uctio n
Briefly, this is a syste m fo r org aniz ing the
process move / walk unnecessarily, that
workplace and housekeeping which is carried out
does not add any valu e to the e nd p rod uct.
This is called motion waste. gradually and syste matic ally. T he g oal o f this
Inap pro priate processing Using the wrong set of tools, procedures or technique is to cre ate a working environment that
systems in the wo rk processes. is o rga niz ed , sim ple , clea n a nd saf e.
W aste in defe cts P r o d u c ti o n o f d e f e ct iv e u n i ts i n v o lv es Visual control Lean requires the placement of all tools, parts
inspection and fixation of the defective and production activities in such a m anner so that
items. Defe cts that force reworks, or everyone involved in the process can easily view
pro duc ts to be scrapped, exa ct a and understand the whole system at a glance.
tremendous cos t on th e organizations Th is visu al co ntrol helps p eop le see wh at is
through the infrastructure changes needed happening in each s tage and what can be
to quarantine the defects, re-inspect the req uire d.
reworked material, and re-scheduling the Streamlined layout Th is focuses on designing the plant layout
reworked material back into the production sequentially. The layout design should follow the
line. op timu m o pe ratio na l seq ue nc e.
Source: Shingo (1992) Standardized wo rk Lean requires consistency in the performance of
task. This building block emphasizes on standa rd
increases cost w ithout adding value to the product is a task performance but with prescribed methods
and without any waste.
waste. Shingo (1992) strongly emphasized the elimination Teams Lean highly emphasizes teamwork. Teams can
of waste. He advised the managers not to accept any perform more effectively th an the in dividu al. In
waste as unavoidable. Nicolas (1998) and Boeing this system teams can be an improvement team
Company, (2000) identified several types of waste such as or daily work-team.
Quality at the source Lean requires quality at the very beginning.
waste of complexity, labor, space, overproduction, time,
Op erators will inspect and use process control, so
transport, energy, defect and materials. Shingo (1992) that they bec om e su re tha t the p rod uct th at is
identified seven different types of wastes as illustrated in passed on to the n ext p roce ss is o f acc epta ble
Table 2. qu ality .
Table 2 presented the most basic forms of wastes Point of use storage Raw materials, parts, inform ation, tooling , work
standards, procedures etc. are stored wh ere
involved in the production process. Lean philosophy needed.
shortens the lead -time, red uces the manufacturing cyc le Quick changeover The ability to change tooling and fixtures rapid ly
time and improves the manufacturing performance by (usually in minutes) so that m ultiple pro duc ts in
eliminating these wastes from the production processes. smaller batches can be run on to the same
eq uip me nt.
Pull /Kanban A system of cascading production and delivery
Core characteristics of lean production practice: Lean instructions from downstream to upstream
production has se veral charac teristics as identified in activities in which the upstream supplier does not
researches. Oliver et al. (1993) identified seve n core produce until the downstream customer signals a
characteristics of lean production: need.
Cellular /Flow Ph ysica lly linking and arranging manual and
machine pro cess steps into th e mo st efficient
C Organization with team that invo lves flex ible, mu lti- combination to maximize value added content
skilled operators taking a high degree of wh ile minimizing waste. The aim is single piece
responsibility for work with their areas. f lo w .
C Shop-floor with problem solving structure w hich is Total Productive A lean equip men t mainten ance s trategy for
Maintenance maximizing overall equipment effectiveness.
central to kaizen or continuous improvement TPM empowers workers to maintain and
activities. improve operations and equipment in the ir wo rk
C Lean manufacturing operations: low inventories, areas, preventing breakdow ns, malfunctions and
small number of direct workers, small batch size, just accidents.
in time production. Source: Alukal and Manos (2002)

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C High commitment human resource policies, which blocks as well as consideration of a number of conceptual
encourage a sense of shared destiny within a factory. issues such as value specification, va lue stream, w aste
C Close relationship w ith suppliers and smaller supplier elimination, empowerment of employees and continuous
base. impro vem ent. All these together create the foundation for
C Cross-functional development teams. lean implementation.
C Retailing and distribution channels which provide
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