Sunday, March 21, 2010

Agile Manufacturing Vs Lean Manufacturing

What is Agile manufacturing and how is it different from lean manufacturing? Agile is promoted as being the next step from lean, creating an organization that is fit and athletic; able to respond to a rapidly changing market place. Whilst lean is seen as a process by which an organization goes through a process of waste elimination to the point where it is able to efficiently produce a product time after time, but quite frankly is anorexic and unable to adapt to changes in demand.

Agile has in my mind appeared as an alternative philosophy to lean to escape from the poor perception that has blighted lean with regards to this “anorexic”, “sick” result for an organization. The typical lean implementation focuses inwardly on the organization, looking at waste elimination to the point of having a process that produces product that has minimum cost, but lacks flexibility. Thus the organization is unable to respond when there is a surge in demand or any other changes in the market place.

But is this really what lean is about? If you read the definitions of “what is lean” on the various websites of the many consultancies promoting lean, you would think so. They are on the whole selling a “quick fix”, reduction in costs program to companies, working on corporate greed to sell their services. After all, if they can reduce your costs on your main product line by 20% to 40% would you not at least listen?

These implementations often succeed in the short term, making impressive savings and improvements, but begin to revert to the old process as time passes as each subsequent problem hits and is tackled by putting back labor and reinstating old processes. Thus the perception that lean is not sustainable and quite frankly is only fit for cost saving initiatives in a mass production environment.

But this is not what lean is meant to be, the main focus of lean is not to look inwards at the companies processes to eliminate and reduce waste. Lean is about value, value as perceived by the customer. You must define what the customer values in your product and service, actual features, actual price, actual time etc. You must then look at the whole value stream from raw materials to use by the customer and try to make that value flow at the pull of the customer. Then you strive for perfection, continually improving everything that you do, continually adapting your processes using the companies greatest asset, its people.

By focusing on what is valuable to the customer you design a product and process that automatically eliminates and reduces waste. A value stream that flows requires that you remove delays and inventory. Thus reducing your costs and improving profit continually whilst remaining focused on customer needs.

If the customer requires that you are able to quickly adapt your product designs, then you design your processes to suit, if the market demands that you be able to produce product at short lead time then you design your process to be able to comply to their needs. You meet what the customer needs, is this not Agile? In my mind agile is just a rebranding of a tarnished reputation for lean that has been brought about by people trying to make quick gains without really focusing on value to the customer.

What is Lean Manufacturing

How to implement lean manufacturing is my first attempt at a blog and as such I have spent a little time on the internet just trying to refresh my own mind as to “what is lean manufacturing” and quite frankly what I have read explains to me why lean can end up with such a bad reputation.

Why do I say that; because lean is not just the removal of waste! I think most of the definitions of lean that I read major on this one small part of lean. If all you do is focus on this then it is no surprise that people’s perception is that lean is all about cost cutting and removing people from the workforce to the point that the business has no flexibility. Lean is not Mean!!

This approach to implementing lean is wrong, yes you can get some good short term gains by taking this approach but they will not be sustainable and it will not help you to meet your customer demands in the long term.

Lean is more than waste reduction, waste reduction is something that happens when you focus on achieving what your customer wants, not what the board wants for the business; reduced costs! In my mind this is why so many lean implementations fail or are so badly supported. The company instead of focusing on the customer focuses on reduction of internal costs through waste reduction only. This looks like lean on the surface but they are approaching lean from their own need to reduce costs rather than their customer’s needs.

The company goes after the quick gains, making cost savings by cutting out people on the factory floor and not focusing on what the customer wants. This generally leaves the company anorexic rather than lean, when that rush order comes or they have various problems they can’t cope and customers are let down. “We tried lean and it wasn’t for us!”

The first step of lean implementation is to identify value – in the eyes of the customer! Value is only meaningful when you express it in terms of a specific product or service which meets the needs of the ultimate customer at a specific price and a specific time. Not just looking at where you are spending money and looking to reduce it!

Then you need to create value streams, how do you get from raw materials to the ultimate customer. Then make that value flow at the rate the customer needs it without being delayed or caught up in inventory.

Build at the demand of the customer, pull production through your factory rather than push unwanted inventory through it!

Then strive for perfection, not just quality, producing exactly what the customer wants when the customer wants it at a fair price with the minimum of waste. This is how to implement lean manufacturing, not just focusing inwardly to reduce costs by removing waste.

Think about it; If you only produce products with the features that the customers want then you are already simplifying your design, if you can define the value stream and make it flow at the customers requirement then you are removing all of the wasteful steps in the process (The whole process, not just a couple of work cells, how often is the delay from an office process?). If you have your work force focused on continual improvement then you will continue to improve your ability to satisfy your customer.

Focus should be on Value to the customer, not on the selfish reduction in internal cost and improvement of profit! If you focus on value then the improvement in costs and reductions of waste will appear as will the improved profits, but they will be sustainable, enabling your business to flourish rather than just survive.