Introduction to Lean Manufacturing

EC 1636 • Oc tob er 2010

James E. Reeb and Scott Leavengood

T
his publication introduces the reader to a pro- To remain competitive, some U.S. companies have
cess called lean manufacturing, sometimes begun partnerships consisting of overseas manufac-
called the Toyota Production System. The turing with domestic sales and distribution. Typi-
intended audience is manufacturers of forest prod- cally, companies’ products that can be produced
ucts, although manufacturers of other types of prod- in large quantities, and those that have a relatively
ucts will also find this publication useful. long lead time between customer order and delivery
can be manufactured overseas, while high-margin
Global Competitiveness specialty items made in smaller quantities or those
Today, competition in the forest products sector is needing shorter lead times are manufactured in the
global. U.S. firms are finding it difficult to compete United States.
with those outside the United States that use cheaper
labor, cheaper materials, and face fewer regulations Lean Manufacturing
while manufacturing similar products. For example, Some U.S. companies are embracing a business phi-
China is highly competitive in forest products man- losophy known as lean manufacturing to compete
ufacturing. Christianson (2004) states that China’s successfully in the global market. In the forest prod-
share of U.S. furniture imports rose from 8 percent ucts industry, the approach offers firms a manage-
in 1993 to 40 percent in 2003. This trend has contin- ment philosophy and business tools that help them
ued as the value of Chinese furniture imports to the become more efficient and, therefore, more com-
United States in 2009 increased to $16 billion (U.S.- petitive. While common in industries such as auto-
China Business Council, 2010). Buehlmann et al. motive and aerospace, lean manufacturing is not
(2003) reported that the U.S. wood furniture indus- widespread in the forest products industry, perhaps
try lost 34,700 workers from 2000 to 2003. The U.S. because the sector traditionally has been conserva-
wood household furniture industry employment fell tive in adapting new technologies and methods.
from 130,000 employees in 1999 to 42,000 employ-
ees in 2009 (Bureau of Labor Statistics). The U.S. Traditional Manufacturing
economy was forecast to lose 900,000 jobs to Chi- Traditional manufacturing segregates different
nese imports by 2010 (Kiplinger, 2002). Scott (2010) functional operations. Value-added manufacturing
reported that between 1997 and 2001, growing trade facilities, for example, typically arrange engineer-
deficits displaced an average of 101,000 jobs per year; ing, customer service, scheduling, and marketing as
and since China entered the World Trade Organiza- separate departments. Processing steps are separated
tion in 2001, the number of jobs displaced increased in sequential operations such as rough-cut milling,
to an average of 353,000 per year. In 2002 imports of surfacing (planing/sanding), cut-up operations,
Chinese wood flooring were valued at $100 million finishing operations, and others. In some compa-
and in 2007 they were valued at more than $1 billion nies, these various operations take place in differ-
(FPInnovations, 2010). ent buildings, requiring materials to be transported

James E. Reeb, Associate Professor, Forestry and Natural

Resources. Scott Leavengood, Associate Professor and Director,
Oregon Wood Innovation Center.

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over long distances. The final product becomes Parts are not passed on from one processing station
part of the finished inventory, which takes up space until the next internal customer “pulls” them.
and may need to be moved several times before
eventually being loaded onto trucks or railcars and The Seven Wastes
shipped to customers. In addition, work in process The lean in lean manufacturing refers to the elimi-
(WIP) inventories accumulate anywhere along the nation of all waste. Waste is defined as any activity
manufacturing process chain. These batches of WIP that creates no value (Morton and Pentico, 1993;
inventory are also often moved before being sent Womack and Jones, 1996)—and value is defined by
downstream for further processing. It is not unusual the customer.
to find thousands of components stored in bins. In Lean manufacturing derives much of its direction
many cases, no one knows exactly what products from the methods used by the Japanese automobile
and components are in inventory or even if they will manufacturer Toyota. These methods became inter-
ever be used. nationally recognized as a result of Womack, Jones,
Downstream operations frequently find defects and Roos book, The Machine That Changed the
that were not detected during upstream manufac- World (1990). They studied the practices of 90 auto-
turing processes. In many companies, there is little mobile assembly plants in 17 countries to learn about
communication between the different operations, Japanese successes in manufacturing. They reported
and the communication often occurs late. If quality that the hallmarks of lean production are team-
problems occur, upstream operations have already work, communication, and efficient use of resources.
produced large quantities of defective pieces before The lean approach for manufacturers is to improve
feedback can be received and the problem corrected. their organizations by focusing on the elimination
If components are assembled with one or more of any and all muda—the Japanese word for waste.
defective part, then much time and effort have been The approach focuses on continuous systemwide
wasted and costs have greatly increased. improvement, not only in the manufacturing divi-
sion but businesswide, and advocates methods to
Push versus Pull control the flow of material on the shop floor (Moore
This traditional “batch-and-queue” manufacturing and Scheinkopf, 1998).
method is referred to as a push system. Push systems A few years before The Machine That Changed
emphasize manufacturing as much product in as the World was published, Taiichi Ohno, consid-
little time as possible and “push” the product to the ered by many to be the father of lean manufactur-
next operation. This type of production manufac- ing, published his book, Toyota Production System
tures and distributes products based on market fore- (1988). Ohno explained the main foundations of lean
casts that often are outdated or wrong by the time manufacturing. These principles guided the Japanese
the product is delivered. companies that were described as “world class” by
Lead time is defined as the time it takes to deliver Womack and Jones (1996). Ohno identified seven
a product to the customer after receiving the cus- categories of muda which cover virtually all of the
tomer’s order. Lead times increase when setup times means by which organizations waste or lose money.
are long. Long setup times encourage manufacturers As described by Ohno (1988), the seven wastes are as
to produce in large batches, producing products that follows:
may or may not sell. Parts and finished products are
inventoried and moved time and again. The inven- 1. Overproduction/early production—producing
tory of unwanted products is pushed onto the cus- what the customer does not want.
tomer through sales and special incentives. 2. Waiting—idle time when no value is being
In contrast, lean manufacturing emphasizes pull- added to the product or service.
ing the products through the manufacturing pro- 3. Transportation—unnecessary moving or han-
cess. Pull starts with the customer; that is, nothing dling, delays in moving material.
is manufactured until the customer orders it. Even 4. Inventory—unnecessary stored materials,
within the manufacturing process, the next process- WIP, finished products.
ing center can be thought of as an internal customer.

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 5. Motion—movement of equipment, inventory, • Begin with a quick walkthrough. Walk the
or people that adds no value. entire process of material and information
6. Overprocessing—unnecessary processing and flow to get a sense of the flow and sequences.
procedures that add no value. • Collect current-state information while
7. Defects—producing defective products. walking along the actual pathways of material
and information flows.
Ray et al. (2006) identified energy consumption as • Begin at the end (shipping) and walk
an additional area of significant waste in wood-pro- upstream. The downstream processes are most
cessing operations—or any other industry in which a closely related to the customer and will set the
primary raw material is converted with energy-inten- pace for the other processes upstream.
sive processes. In such cases, a lean manufacturing • Bring a stopwatch. You will need to collect pro-
approach should include a focus on efficient energy cess and flow times to calculate value-added
consumption and/or product conversion. A muda- and non-value-added times (defined below)
free process is a process that is working correctly. A and record them on the current state map.
firm’s focus must be on work that creates value for • Map the entire value stream yourself; that is,
the ultimate customer. Providing the wrong prod- if different people map different segments of
uct or service, even with high efficiency and of high the value stream, then no one will understand
quality, is muda. As with every product, the cus- the whole.
tomer is the final judge as to whether the company • Use a pencil. Start your rough sketch as you
has created value (Womack and Jones, 1996). walk through the process. Plan to clean it up
Overall, lean companies work to define value by and transfer to a larger paper, also using a
having dialogues with specific customers about spe- pencil. Resist the temptation to use a computer
cific products with specific capabilities offered at spe- program.
cific prices. They work at identifying and delivering a
quality product that the customer wants. Companies
will often restructure their product lines and their
management and employees into product teams to Identify the Value Stream
make this happen (Womack and Jones, 1996). (Develop current state value stream map)

The Current State Map

The first step in a companywide lean transformation
effort is often to identify the value stream. A value
Radical Improvement
stream map is the tool typically used to show the (Develop and work towards future state
flow of all of the materials and information as well value stream map)
as the cycle times and wait times involved in making • Calculate value-added & non-value
a product. A current state (as compared to the ideal added time
or desired future state) value stream map is created • Improve process flow: reduce distances;
establish pull vs. push system (takt time
by visiting each process involved in making a given
and kanban); strive for single-piece flow
product in a business. When creating your map, use
consistent icons to represent processes, inventories,
information, and flows. Although you can create
your value-stream map on a computer, many experts
state that the best method is to draw it on a sheet of Continuous Improvement
paper that can be rolled out and affixed to the wall. (kaizen)
The paper map makes it easy for everyone in a room
to visualize the processes, inventories, information,
and flows, and allows room to add information to the
map. Rother and Shook (1999) suggest the following
when creating a current state value stream map: Figure 1. Value stream flowchart.

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Kaikaku: Radical Improvement Value-added time as a percent of total time:
While creating the current state map, you should be 60 seconds1
= 0.00405 × 100 = 0.41%
thinking about creating a future state map. Three 14,810 seconds2
categories of activities will help you decide how the 1
The time something of value to the customer was being accomplished.
future state value stream map will look. 2
3,600 + 300 + 10,800 + 25 + 60 + 25

For each process you have identified, three catego-

ries of activities become apparent: Non-value-added time as a percent of total time:
14,750 seconds1
= 0.99595 × 100 = 99.6%
1. Steps that create value. For manufacturing, 14,810 seconds
these are the processes that change the raw 1
3,600 + 300 + 10,800 + 25 + 25
material closer to the form for which custom-
ers will pay you; that is, steps that bring the In this example, 99.6 percent of the time added no
material closer to the final product. recoupable value to the product.
2. Steps that create no value but are necessary The 60 seconds of actually adding value (routing)
because of the current state of the system. For fits into category one, above. The 25 seconds it took
manufacturing, these might include quality to load and the 25 seconds it took to unload fit into
inspections, waiting for processing, and some category two—necessary, but you should be looking
transportation. at ways to decrease those times. The rest of the time,
3. Steps that create no value and can be imme- 14,700 seconds, is a target for immediate elimination.
diately eliminated. If the activity does not fall Kaikaku, or radical improvement, is an intense
into one of the two preceding categories, then questioning and reexamining of every aspect of a
it needs to immediately be stopped. process. Any steps that can be eliminated imme-
diately—category three— are stopped. Any steps
For each step in the manufacturing process, value- that fall into category two—those that add no value
added and non-value-added times are calculated. but are currently necessary—become targets for
Value-added time, meaning the time it takes to improvement and, whenever possible, elimination.
accomplish activities defined by (1) above, is divided The next step is to identify the flow of the process.
by the total time and multiplied by 100 to calculate This includes walking and measuring the distance
the percentage of value-added time. Non-value- the product must travel through its entire process.
added time, which is time spent on activities defined Even small operations can have product flows over
by (2) and (3) above, is divided by the total time hundreds of miles long, and much of this flow (and
and multiplied by 100 to calculate the percentage of time) adds no value to the product. Part flows in the
non-value-added time (or, more simply, just subtract aerospace industry have been estimated to be tens
percentage of value-added time from 100 for the per- of thousands of miles long (Moore and Scheinkopf,
centage of non-value-added time). 1998). The objective is to concentrate on rapid prod-
As an example: A sheet of medium-density fiber- uct flow unencumbered by the distance between
board (MDF) was sanded and placed in a stack of departments. According to Womack and Jones
MDF sheets. It sat in the stack for 60 minutes (3,600 (1996), the amount of effort, time, space, tools, and
seconds). It took 5 minutes (300 seconds) to move inventories needed to design and provide a given
the stack of sanded sheets by forklift to the router. service or good can typically be cut in half very
The sheet sat for 3 hours or 10,800 seconds before quickly, and steady progress can be maintained from
it was loaded onto the router. It took 25 seconds this point onward to cut inputs in half again within
to load the sheet onto the router, 1 minute (or 60 a few years.
seconds) to rout it, and 25 seconds to unload the Once value is defined and the value stream is iden-
material from the router. For this series of steps, the tified, focus on the actual object—specific design,
percent of value-added and non-value-added time order processing, and product creation. Next, create
are calculated as follows: lean enterprises by ignoring traditional boundaries of

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jobs, careers, functions, and firms. And finally, strive conflict with the traditional manufacturing tendency
to make every operation work on the pull principle. to continuously work as fast as possible and continue
Pull means that nothing should be produced to build inventory using uninformed employees who
upstream until the customer asks for it. Inventory are often skilled at only one job.
is considered muda. Therefore, any product manu- Takt time and each resource’s progress relative to it
factured but not sold is muda. The final customer are posted for all to view. This is an example of visual
should pull the product through the system. This is a control, another lean technique, in which the status
difficult concept for managers to grasp. In traditional of an activity is displayed so every employee can see,
manufacturing, managers focus on lowering pro- make the appropriate conclusions, and, together with
duction cost per unit, and on machine up-time and their team, take appropriate action (Womack and
utilization rates. This is a push system. They produce Jones, 1996). Manufacturing systems’ lack of flexibil-
all they can, as fast as they can, and push the product ity to respond to changes in takt time is considered
through the system. Each machine center is expected muda and becomes a candidate for improvement
to operate at maximum capacity regardless of actual teams to eliminate. Takt time provides a sense of the
customer demand. After implementing lean tech- desired pace of an organization’s output.
niques, the process is shortened as wasteful steps,
wasteful activity within steps, and the distance parts Single-piece Flow
must travel are reduced or eliminated. By becoming A major objective in lean manufacturing is to imple-
lean, companies greatly increase their capacity to ment single-piece flow, which involves sequentially
produce, and if they remain in a push system, fin- aligning processes so that items are manufactured
ished inventory will only build more waste. But in a one at a time rather than in batches. Single-piece
pull system the tendency to overproduce is controlled flow improves productivity and increases through-
and activities are directed toward removing excess put while reducing lead time, errors, and inventory
capacity or increasing the rate of pull (Moore and costs. In manufacturing, single-piece flow is often
Scheinkopf, 1998). difficult to achieve. When single-piece flow is not
Pull is accomplished using two methods, takt time possible, companies striving to become lean use
and kanban. Takt is a German word that refers to a method called kanban to control the amount of
the beat of music. You might think of the rhythmic inventory in their system. The literal meaning of the
tick-tock of a metronome that music students use word kanban in Japanese is “sign board.” Kanban is
to stay in time while practicing their instruments. often described as a card that contains information
Similarly, takt time is a cycle or rhythm calculated about the lot size, process, quantity, location, and
for your manufacturing process based on the needs other data about the material. Kanban are used to
of the customer. Takt time is used to balance produc- signal production and link disconnected processes.
tion rates with customer demand. It is calculated by Rother and Shook (1999) define two types of
dividing the available production time by the rate of kanban: A production kanban triggers processing of
customer demand. For example, in a plant that oper- parts, while a withdrawal kanban is a shopping list
ates on a single eight-hour shift (480 minutes) with a that instructs the material handler to retrieve and
demand of 120 units/day, the takt time is four min- transfer parts. In either case, a kanban system is made
utes: 480/120 = 4 (Moore and Scheinkopf, 1998). Takt up of a set of rules for calculating kanban quanti-
time needs to be defined during each step and any ties, routes for withdrawal from stores and delivery
given point in time in relation to demand. to kanban posts, the cycle of kanban collection and
When orders do not require full utilization of delivery, and the material replenishment lead times to
equipment and workers, takt time is increased. Man- support production at “minimum” but “safe” inven-
ufacturing (machinery) is slowed down and multi- tory levels. Only kanban can start production, and
skilled workers can be used elsewhere in the plant. the quantity produced is strictly regulated—if cards
A lean organization does not cut its labor force but are used, the quantity is listed on the card.
instead ensures that its people are multitalented and You can probably visualize that kanban does pro-
can be assigned to many different tasks or to produce duce safe amounts of WIP inventory. The goal of lean
new products. Note how this philosophy is in direct manufacturing is to connect processes so that WIP

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inventories are eliminated and one-piece material the future-state map, some significant changes to the
flow occurs. Thus, a goal of becoming a lean organi- process will likely be needed—at first, and into the
zation is to eliminate kanban. Jeffrey Liker, author future. This is where the firm embarks on continu-
of The Toyota Way (2004), states that “…experts get ous improvement.
very impatient and even irritated when they hear
people rave and focus on kanban as if it is the Toyota Continuous Improvement
Production System. Kanban is a fascinating concept The next step is kaizen (the Japanese word for
and it is fun to watch…. When is the kanban trig- improvement)—that is, continuous improvement.
gered? How are quantities calculated?... The challenge You do not stop striving for perfection after initially
is to develop a learning organization that will find completing the steps that resulted in reduced effort,
ways to reduce the number of kanban and thereby time, space, cost, mistakes, and defects while becom-
reduce and finally eliminate the inventory buffer…. ing better at offering products and services that the
So, kanban is something you strive to get rid of, not customer wants. Successful lean organizations share
to be proud of.” information with their employees and continually do
However, kanban is often a way for traditional kaizen to become more efficient at giving customers
manufacturers with push processing systems to start what they want, when they want it.
down the road toward becoming lean. For instance, Lean manufacturing is a way of thinking about
sawmill operators who begin to focus their daily pulling semi-finished and finished products all the
production targets on actual customer demand way through the supply chain and delivering a high-
instead of obtaining maximum yield are beginning quality final product to the customer on time.
the struggle to understand the benefit of kanban in
a wood products context (Ray et al., 2007). What is Toward Leaner Manufacturing
unique about kanban is that it is self-synchronizing This publication has given a brief overview of the
and self-regulating (Eade, 1995). lean management philosophy. It has not covered all
the tools of lean manufacturing, nor was it meant
The Future State Map to, but it has given the reader an opportunity to
After completing a current-state map, the next step see that lean practices are not difficult to apply to
is to create a future-state map of your manufacturing business processes. The authors believe that lean
process. Base the flow of your process on takt time. manufacturing techniques are easy to understand
If you have to initially maintain safe WIP inventory, but that acceptance and application of them in an
use kanban, remembering that this is a candidate for organization are often difficult. Future articles will
elimination. Identify ways to eliminate non-value- cover other lean tools and will delve deeper into the
added processes; link your processes to attain con- creation and use of the methods mentioned in this
tinuous single-piece flow. Obviously, to implement publication.

6
References
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Published October 2010.