You are on page 1of 27

CHAPTER 1 INTRODUCTION

Lean manufacturing refers to a production practice that emphasizes meeting customer expectations by delivering quality products and services at the least cost when the customer wants them. The Lean Aerospace Initiative has defined lean thin ing! as" The dynamic# nowledge$driven# and customer$focused process through which all people in a defined enterprise continuously eliminate waste with the goal of creating value!. Lean manufacturing considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful# and thus target for their elimination. %rom the customer&s point of view 'value& is defined as any action or process that a customer would be willing to pay for. (ssentially lean is centred on preserving value with less wor !. The lean production system contains several important principles as well as a collection of tactical methods for achieving them. )ey lean principles include" Let customers pull value through the enterprise by understanding what the +ursue perfection by wor ing continually to identify and eliminate non$ Involve employees in continual improvement and problem$solving Implement a rapid plan$do$chec $act improvement framewor to achieve

customer wants and producing to meet real demand* value added activity ,waste- from all processes. activities* results fast and to build
1

momentum* .se metrics and rapid performance feedbac to improve real$time decision$ Approach improvement activities from a whole enterprise or system

ma ing and problem$solving* and perspective. Lean production typically represents a paradigm shift from conventional batch and queue#! functionally$aligned mass production to one$piece flow#! product$ aligned pull production. This shift requires highly controlled processes operated in a well maintained# ordered# and clean operational setting that incorporates principles of /ust$in$time production and employee$involved# system$wide# continual improvement. 0apanese management technique# 0ust$in$Time production ,0IT- is a set of principles and practices based on the philosophy that firms should hold little or no inventory beyond that required for immediate production or distribution. That is# a manufacturer should receive raw materials or parts from its suppliers perhaps /ust hours before they will be used in production# and the firm1s output should be shipped to its customers as soon after completion as possible without holding onto a stoc of either raw goods or finished products. Lean production techniques have contributed to a spectacular improvement in efficiency# speed of response and flexibility in production at many industrial enterprises# through process$based management# elimination of waste and the highly flexible implementation of these processes. Lean manufacturing has allowed these enterprises to offer a highly diversified range of products# at the lowest cost# with high levels of productivity# speed of delivery# minimum stoc levels and optimum quality.
2

CHAPTER 2 HISTORICAL BACKGROUND ___________________________________________________


Lean manufacturing# lean production# Toyota +roduction 2ystem or simply lean are all derivatives of the 0apanese management technique 0ust$in$Time. It is commonly believed that Lean! operating principles began in manufacturing environments in 0apan ,Toyota# specifically-# but 3enry %ord had been using parts of Lean as early as the 4567&s# as evidenced by the following quote" 8ne of the most noteworthy accomplishments in eeping the price of %ord products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about# the greater is its ultimate cost.! $3enry %ord 4569

2.1 Just-in-Time
0.2T$I:$TI;( ,0IT- technique was developed by Taiichi 8hno and 2higeo 2hingo in the 45<7s and was only later labelled Toyota +roduction 2ystem! ,T+2-. =et it was not until the first oil crisis in 45>? and Toyota&s success during this period that 0IT began to attract attention. As the oil price began to stabilize# 0IT came to the fore. In 45>5@45A7 the second oil crisis followed# leading to one of the most severe recessions in Berman history in 45A4@A6.

Fig. 2.1

Just-in-Time Production

At this very moment in time a publication comparing average sizes in stoc in (urope and 0apan made headlines ,%ig. 6.6-. In short" Chile the production itself was comparable# the 0apanese logistic# which utilized simple# manual )A:DA:E cards ,material requirement card# developed by Toyota&s 8hno in 45F>-# was considerably more efficient and straightforward at very low costs. 8ver the next decade all attempts to implement )A:DA:$systems were unsuccessful. 0IT was not seen as 0IT production but as 0IT delivery. The prerequisites such as Gero$Hefect$+roduction# production methods with a
4

smoothed assembly via short setup times# small production batch sizes# multifunctional wor ers# standards as well as reliable facilities ,Total +roductive ;aintenance T+;- were largely ignored# while little notice was ta en of (nglish literature published after the year 45A7. 3ence 0IT was sometimes discredited as 0ust$in$Iongestion!

CHAPTER O!ER!IE" O# THE TO$OTA PRODUCTION S$STE%


The wastes encountered in manufacturing are commonly referred to as non$ valued$added activities# and are nown to Lean practitioners as the (ight Castes. Taiichi 8hno ,co$developer of the Toyota +roduction 2ystem- suggests that these account for up to 5<J of all costs in non$Lean manufacturing environments. These wastes are"

.1 O&e'(')*u+ti)n
+roducing more than the customer demands or faster than the customer order is called overproduction. The corresponding Lean principle is to manufacture based upon a pull system# or producing products /ust as customers order them. Anything produced beyond this ,buffer or safety stoc s# wor $in$process inventories# etc.ties up valuable labor and material resources that might otherwise be used to respond to customer demand.

.2 ",itin- Time ",ste

This includes waiting for material# information# equipment# tools# etc. Lean demands that all resources are provided on a /ust$in$time ,0IT- basis E not too soon# not too late.

T',ns()'t,ti)n ",ste

;aterial should be delivered to its point of use. Instead of raw materials being shipped from the vendor to a receiving location# processed# moved into a warehouse# and then transported to the assembly line. Lean demands that the material be shipped directly from the vendor to the location in the assembly line where it will be used. The Lean term for this technique is called point$of$use$ storage ,+8.2-.

.. N)n !,/ue-A**e* P')+essin2ome of the more common examples of this are 'rewor ing& ,the product or service should have been done correctly the first time-# 'deburring& ,parts should have been produced without burrs# with properly designed and maintained tooling-# and 'inspecting& ,parts should have been produced using statistical process control techniques to eliminate or minimize the amount of inspection required- through a technique called 'Kalue 2tream ;apping& .

.0 E1+ess In&ent)'2
Lelated to 8verproduction# inventory beyond that needed to meet customer demands negatively impacts cash flow and uses valuable floor space. 8ne of the most important benefits for implementing Lean +rinciples in manufacturing
6

organizations is the elimination or postponement of plans for expansion of warehouse space.

.3 De4e+ts
+roduction defects and service errors waste resources in four ways. %irst# materials are consumed. 2econd# the labor used to produce the part ,or provide the service- the first time cannot be recovered. Third# labor is required to rewor the product ,or redo the service-. %ourth# labor is required to address any forthcoming customer complaints.

.5 E1+ess %)ti)n
.nnecessary motion is caused by poor wor flow# poor layout# house eeping# and inconsistent or undocumented wor methods. Kalue 2tream ;apping is also used to identify this type of waste.

.6 Un*e'uti/i7e* Pe)(/e
This includes underutilization of mental# creative# and physical s ills and ability where non$Lean environments only recognize underutilization of physical attributes. 2ome of the more common causes for this waste include E poor wor flow# organizational culture# inadequate hiring practices# poor or non$ existent training# and high employee turnover.

The Toyota +roduction 2ystem or Lean constantly endeavors to eliminate these wastes. The lesser the wastes# more is the productivity and the organization becomes a lean organization from a traditional one.

Table 3.1 Comparison between a Traditional and a Lean Organization

Concept n!entor"

Traditional Organization An asset, as defined by accounting terminology.

Lean Organization A waste - ties up capital and increases processing lead-time.

deal #conomic Order $uantit" % &atc' (ize People )tilization

ery large - run large batc! si"es to ma#e up for process downtime.

$%& ' continuous efforts are made to reduce downtime to "ero.

(ecause wor# is based on All people must be busy at all times. customer demand, people mig!t not be busy all t!e time

Process )tilization

)se !ig!-speed processes and run t!em all t!e time.

*rocesses need only to be designed to #eep up wit! demand.

*or+ (c'eduling Labor Costs *or+ ,roups $ualit"

(uild products to forecast

(uild products to demand

ariable .raditional /functional0 departments 2nspect3sort wor# at end of process to ma#e sure an error-free product

,i-ed 1ross-functional teams

*rocesses, products, and ser4ices are designed to eliminate errors

CHAPTER . %ECHANIS% O# LEAN %ANU#ACTURING _________________________________________________


In order to reduce or eliminate the above wastes# Lean practitioners utilize many tools or Lean Duilding Dloc s. 2uccessful practitioners recognize that# although most of these may be implemented as stand$alone programs# few have significant impact when used alone. Additionally# the sequence of implementation affects the overall impact# and implementing some out of order may actually produce negative results ,for example# you should address quic changeover and quality before reducing batch sizes-. The more common building bloc s are listed below.

:ote that some are used only in manufacturing organizations# but most apply equally to service industries.

..1 Le,n Bui/*in- B/)+8s


..1.1 Pu// S2stem The technique for producing parts at customer demand. 2ervice organizations operate this way by their very nature. ;anufacturers# on the other hand# have historically operated by a +ush 2ystem# building products to stoc ,per sales forecast-# without firm customer orders. ..1.2 K,n9,n A method for maintaining an orderly flow of material. )anban cards are used to indicate material order points# how much material is needed# from where the material is ordered# and to where it should be delivered.

..1.

")'8 Ce//s

The technique of arranging operations and@or people in a cell ,.$shaped# etc.rather than in a traditional straight assembly line. Among other things# the cellular concept allows for better utilization of people and improves communication. ..1.. T)t,/ P')*u+ti&e %,inten,n+e T+; capitalizes on proactive and progressive maintenance methodologies and calls upon the nowledge and cooperation of operators# equipment vendors# engineering# and support personnel to optimize machine performance. Lesults of
16

this optimized performance include* elimination of brea downs# reduction of unscheduled and scheduled downtime# improved utilization# higher throughput# and better product quality. Dottom$line results include* lower operating costs# longer equipment life# and lower overall maintenance costs. ..1.0 T)t,/ :u,/it2 %,n,-ement Total Muality ;anagement is a management system used to continuously improve all areas of a company1s operation. TM; is applicable to every operation in the company and recognizes the strength of employee involvement. ..1.3 :ui+8 C;,n-e)&e' <Set U( Re*u+ti)n ,n* Sin-/e %inute E1+;,n-e )4 Dies= The technique of reducing the amount of time to change a process from running one specific type of product to another. The purpose for reducing changeover time is not for increasing production capacity# but to allow for more frequent changeovers in order to increase production flexibility. ..1.5 B,t+; Si7e Re*u+ti)n 3istorically# manufacturing companies have operated with large batch sizes in order to maximize machine utilization# assuming that changeover times were fixed! and could not be reduced. Decause Lean calls for the production of parts to customer demand# the ideal batch size is 8:(. 3owever# a batch size of one is not always practical# so the goal is to practice continuous improvement to reduce the batch size as low as possible. Leducing batch sizes reduces the amount of wor $in$process inventory ,CI+-. :ot only does this reduce inventory$carrying costs# but also production lead$time or cycle time is approximately directly proportional to the amount of CI+.
11

..1.6 0S )' ")'8(/,+e O'-,ni7,ti)n This tool is a systematic method for organizing and standardizing the wor place. It&s one of the simplest Lean tools to implement# provides immediate return on investment# crosses all industry boundaries# and is applicable to every function with an organization. Decause of these attributes# it&s usually our first recommendation for a company implementing Lean. ..1.> !isu,/ C)nt')/s These are simple signals that provide an immediate and readily apparent understanding of a condition or situation. Kisual controls enable someone to wal into the wor place and now within a short period of time ,usually thirty secondswhat&s happening with regards to production schedule# bac log# wor flow# inventory levels# resource utilization# and quality. These controls should be efficient# self$regulating# and wor er managed# and include )anban cards# lights# color$coded tools# lines delineating wor areas and product flow# etc. ..1.1? C)n+u''ent En-inee'inThis is a technique of using cross$functional teams ,rather than sequential departmental assignments- to develop and bring new products to mar et. In many instances# implementing concurrent engineering has reduced time$to$mar et by <7J* the automotive and computer industries are good examples. Time$to$mar et is one of the most important tools for capturing and maintaining mar et share.

..2 Le,n P;i/)s)(;2 ,n* T))/s

12

The lean house or T+2 house is one of the most recognisable symbols in modern manufacturing. Although it appears in different versions the fundamental principles is the same. Li er&s ,677F- lean house ,%igure F.4- present many of the tools used in lean production. In the roof the goals of the production system is presented. The left pillar deals with 0ust$in$Time production and including the tools 'Ta t& time planning# continuous flow# pull system and quic changeover. The right pillar deals wit! in-station 7uality w!ic! in essence means ne4er letting a defect part be mo4ed into t!e ne-t wor# station and freeing people from mac!ines. *eople are t!e centre of t!e !ouse and t!ey must be trained to see waste and sol4e problems in order to continuously impro4e t!e processes. An important c!aracteristic of a lean wor# organi"ation is t!at responsibilities are decentrali"ed to multifunctional teams /8arlsson and A!lstrom 15560. .!e foundation of t!e !ouse is related to stability needed for t!e pillars to stand securely and includes t!e tools, e.g. 59, standardi"ed wor#, and le4eled production.

13

Fig -.1 T'e To"ota Production ("stem .Li+er/ 200-1

:espite t!e fact t!at t!e common opinion claim t!at t!ere is no general implementation procedure, ;onden /155+0 in !is description of t!e .oyota production system gi4es an indication of an implementation order w!en !e describe !ow t!e different lean tools wor# toget!er, see ,igure 4.2. As indicated by ,igure 4.2, introducing t!e different lean principles and tools in some cases !a4e an logical order since t!ere are logical relations!ips between some of t!e lean tools, e.g. pull system re7uires small lot si"es w!ic! must be preceded by setup time reduction. 2n ot!er cases it is possible to introduce t!e principles and tools in parallel.

14

Fig -.2 T'e To"ota Production ("stem .2onden/ 13341

As suggested by ;onden /155+0 a c!ange towards lean typical starts wit! t!e introduction of 59 w!ic! is t!e foundation of impro4ement, followed by t!e introduction of in4ol4ement and encouragement of people to wor# in teams wit! problem sol4ing. .!is is in contrast wit! t!e 4iew of A!lstrom /155+0 w!o ad4ocate t!at continuous impro4ement initiati4e s!ould be

15

introduced rat!er late since continuous impro4ement benefits from ot!er lean principles being teams implemented, and suc! as de4eloped multifunctional decentrali"ed

responsibilities.

Fig. -.3 mportant lean tools and principles and t'eir implementation order

According to ;onden /155+0 t!e ne-t step is to implement t!e prere7uisites for <ust-in-.ime production= multifunctional wor#ers and wor# enlarging, standardised wor#, layout

16

mac!inery in process se7uence, and impro4ement of setup met!ods followed by introducing small lot si"es. (efore t!e introduction of #anban t!e production s!ould be smoot!ed. Also t!e autonomation concept /<ido#a0 to ensure t!e 7uality s!ould, according model of to ;onden /155+0, lean tools be introduced principles before and t!e t!eir implementation of #anban. As a result of t!e abo4e discussion a important and implementation order of principle are presented in ,igure 4.3. .!e implementation order between t!e t!ree groups in ,igure 4.3 is read from t!e left to t!e rig!t. >it!in eac! group one possible order is presented from top and downwards.

C56PT#7 8 ANAL$SIS O# LEAN THROUGH SO%E INDUSTRIAL CASE STUDIES


0.1 C,se Stu*2 1@ Inte'n,ti)n,/is,ti)n O4 H)n*, %)t)' C)m(,n2
3onda ;otor Io.# including its subsidiaries# is a large# multinational company that manufactures a range of products including automobiles# motorcycles and lawn mowers. The company was established in 45FA and has become one of the leading manufacturers of the world. There are 445 production facilities in ?? countries that supply 3onda products to nearly every country in the world. The question arises how 3onda was able to become one of the most successful car$

17

manufacturers on a global scale. An answer to this question is the change in 3onda&s manufacturing approach from conventional to lean. 3onda&s internationalization began in 45<5# when it founded the subsidiary motor company# 3onda ;otor Io. Inc.! in the .nited 2tates. Iars were built in 0apan and then exported to .2A. In the late 45>7s# 3onda had to face new problems. The American government restricted import of 0apanese cars. 3onda reacted on this situation by diversification of its production and undertoo an %HI and founded '3onda of America ;anufacturing& which started production in 45A4 with assembling of the 3onda Accord. 3owever the parts of the car were still manufactured in 0apan# the assembling too place in the .nited 2tates. In this time# 3onda pursued a global strategy" the same cars were sold around the world so 3onda was able to sell cars very cheaply due to economies of scale. 3owever# in the mid 45A7s# 3onda realized that it had to adapt to local mar ets and started to change its mar eting and internationalization strategy from a global approach to a multinational approach. In order to increase mar et share# 3onda wanted to be able to serve its different customers with different needs around the world with ad/usted products. 2o the management decided to divide the world into five strategic regions" :orth America# (urope@;iddle (ast@ Africa# 2outh America# Asia@8ceania and 0apan. %urthermore subsidiaries in all the strategic regions became more independent from the parent company. They were responsible for their LNH# production# profits etc. 3onda now had to restructure its LNH and production. Huring the mid 45A7s# LNH centers were opened by 3onda in all the strategic regions# for example# 3onda Lesearch of America! in 45AF. The problem was that developing and producing different cars for each strategic regions was too expensive to sell the cars cheaply. Cith the purpose to achieve economies of scale and adapting to local mar ets at the same time 3onda

1+

developed a suitable strategy" The platform, the chassis# motor# basic body etc.for the cars was developed in a common development$centre. Afterwards# these platforms were brought to the subsidiaries in all strategic regions and were modified for the different customers. %or example# the H)n*, Ci&i+ was in the .nited 2tates a little bit longer# had a different engine# was air$conditioned etc. in contrast to (urope or 0apan. Hevelopment costs for the platforms were shared by all subsidiaries. 2o# 3onda put itself into a position in which it had diversified products which were still similar# so it could serve different mar ets with ad/usted products and could achieve economies of scale at the same time. 3onda started to change its way of manufacturing in the mid 4557s. The idea was to ma e the manufacturing process more flexible and to be able to react on different demands without having many cars in stoc . This idea was put into action by adapting the Lean ;anufacturing 2ystem!# which was invented by Toyota. The basic idea is to ma e the manufacturing process as flexible as possible and run with synchronized processes and maximum value added with minimum inventory!. In the Lean ;anufacturing 2ystem ,L;2-# people do not wor on manufacturing belts* they are wor ing in units of people ,manufacturing units-. %urthermore# machines are shared by the manufacturing units. This ma es the system very flexible# different types can be produced with high efficiency at the same time and fewer machines are needed# because machines are shared by the manufacturing units. This high flexibility puts 3onda into a position in which it can wor in a pull system @ Iars are not produced on forecast ,which is not very reliable- and put in stoc anymore. The cars are now produced on the basis how high the actual incoming orders from the retailers are.

15

An,/2sis )4 t;e +,se stu*2


3onda started its internationalization very early and achieved through steady adoption to international competition and changed operational environments# e.g. import restrictions in the .2A# one of the most competitive positions in the car business. %urthermore# 3onda&s mar eting strategy E building different# cheap cars for different mar ets E has contributed to the high demand for 3onda&s cars. (ven today# 3onda shows through the adoption of the Le,n %,nu4,+tu'inS2stemA its adaptability. ;oreover# 3onda was able to achieve economies of scale and had diversified products at the same time. Thus# 3onda will remain one of the greatest competitors in the car$industry as a consequence of its brilliant mar eting$strategy# its highly efficient production and not least its adaptability.

0.2 C,se Stu*2 2@ Le,n P')*u+ti)n An* En&i')nment,/ %,n,-ement S2stems In T;e S;i(9ui/*in- An* S;i( Re(,i' Se+t)'
An environmental management system ,(;2- is a management framewor for reducing environmental impacts and improving organizational performance over time. An (;2 helps an organization better integrate the full scope of environmental considerations and get better results# by establishing a continuous process of chec ing to ma e sure environmental goals are met. The (;2 approach is based on the concept of Total Muality ;anagement ,TM;-# which was initially developed as a tool by the private sector to achieve higher and more consistent product quality. Lean and (;2 are fundamentally different systems* however# they are highly complementary in certain areas. Lean is broad in scope# focusing on the

26

elimination of waste ,all non$value added activity- throughout an entire organization and aiming to continually improve processes and products. An environmental management system# on the other hand# is more of a strategic management framewor than a collection of tactical tools. Cith regard to wastes# an (;2 ta es a narrower focus than lean by targeting only those wastes that have environmental implications. To research the lin s between lean production and (;2s# Loss N Associates conducted a bac ground literature review and a series of interviews with environmental# health# and safety ,(32- managers and lean managers at Dender 2hipbuilding and Lepair Iompany# ;obile# Alabama.

Table 8.1 Comparison o9 Lean and #2(

21

L#6:
O!erall T"pe *roduction p!ilosop!y oriented and tools *aste #limination Ob;ecti!es &liminate 4alue acti4ity. Primar" Participants All t!e employees <ri!ers=2oti!ation ,undamental business competiti4eness and customer e-pectations. 2et'ods .actical met!ods li#e 59, 8ai"en, .*;, <ust-in-.ime etc. operationallytactics practical

#2(
;anagement system

wit! framewor# to ta#e care of en4ironmental concerns.

non- &liminate en4ironmental added impacts and ris#s.

&n4ironmental professionals %eed to manage en4ironmental compliance, ris# and performance.

*rocesses designed by organi"ations to support management system framewor# and meet en4ironmental targets.

An,/2sis )4 t;e +,se stu*2


All of the Lean practitioners interviewed during this pro/ect expressed a strong belief that (;2 and lean are compatible and synergistic. They identified the approaches and outcomes of lean and (;2 implementation as being
22

complementary. %urthermore# they affirmed that both lean and (;2 result in a focus on waste elimination and cost reduction* both have continual improvement orientation* and both depend on common success factors such as management commitment# employee involvement# and adopting a culture of change. They often distinguish between two types of waste" type I muda# which is unnecessary and does not add value from the customer&s perspective* and type II muda, which is an important part of a company&s operations that does not necessarily add value to a product or service from the perspective of the customer. In this framewor # administrative processes designed to manage environmental performance and compliance with environmental regulations could be considered type II muda. Biven this# one might expect that a company implementing lean could view certain components of an (;2# such as rigorous documentation requirements# as type I or type II muda, or that companies implementing lean might be reluctant to adopt an (;2 because of this perception. %or these companies# an (;2 is a useful tool for minimizing the burden of type II muda and striving to produce only what the customer wants.! (nvironmental managers at Dender 2hipbuilding N Lepair Iompany volunteered to do a study with (+A on weld smo e emissions reduction# as part of their (;2 efforts. Dender used a lean )AIG(: eventOa short# structured event to rapidly identify and implement process improvementOinvolving 4? staff and a welding expert to thin about how to improve the welding process and reduce emissions. Although initiated for environmental reasons# participants in the event did not limit themselves only to process changes that would improve environmental performance* they also examined other potential process improvements. These process improvements yielded two primary benefits" lower costs and fewer smo e emissions
23

CHAPTER 3 BENE#ITS O# I%PLE%ENTING LEAN ___________________________________________________


The benefits of implementing Lean can be bro en down into three broad categories* 8perational# Administrative# and 2trategic Improvements. (ven to this day# most organizations that implement Lean do so for the operational improvements# primarily because of the perception that Lean only applies to the operations side of the business but it isn&t limited to that only.

3.1 O(e',ti)n,/ Im(')&ements


The :ational Institute of 2tandards and Technology ;anufacturing (xtension +artnership recently surveyed forty of their clients who had implemented Lean ;anufacturing. Typical improvements were reported as follows" P Lead Time ,Iycle Time- reduced by 57J P +roductivity increased by <7J P Cor $In$+rocess Inventory reduced by A7J P Muality improved by A7J P 2pace .tilization reduced by ><J

3.2 A*minist',ti&e Im(')&ements


2pecific improvements in administrative functions as observed are " ? Leduction in order processing errors ? Leduction of turnover and the resulting attrition costs

24

? Hocumentation and streamlining of processing steps enables the out$sourcing of non$critical functions# allowing the company to focus their efforts on customers& needs ? The implementation of /ob standards and pre$employment profiling ensures the hiring of only above average! performers E envision the benefit to the organization if everyone performs as well as the top 67JQ

3.

St',te-i+ Im(')&ements

3ighly successful companies will learn how to mar et these new benefits and turn them into increased mar et share. 8ne specific example involves a mid$ western manufacturer of a common health care product. 8f approximately forty ..2. competitors# the third largest company in the industry decided to implement Lean manufacturing principles. The industry average lead$time was fifteen days# and this company was no different. At the end of the pro/ect# Iompany&s average lead$time was four days# with no products shipped in less than seven days. In order to capitalize upon these improvements# the company began a mar eting campaign# advertising that customers would receive the product in ten days# or the order would be free!. 2ales volume increased by 67J almost immediately. After ma ing the appropriate improvements to handle the new demand# they company initiated another mar eting campaign* for only a 47J premium# they would ship within seven days. Again# sales volume increased ,by only <Jbecause new customers wanted the product within seven days# but more than ?7J of existing customers also paid the premium# even they were already receiving the product in less than seven days. The end result was that the company increased revenues by almost F7J with no increase in labor or overhead costs.

25

CHAPTER 5 CONCLUSION
Lean organizations are able to be more responsive to mar et trends# deliver products and services faster# and provide products and services less expensively than their non$lean counterparts. Lean crosses all industry boundaries# addresses all organizational functions# and impacts the entire system E supply chain to customer base. Chile it was noted that inventory reduction is not the sole goal of lean@0IT implementation# it is a very obvious benefit. Less wor space is now needed due to the use of smaller lot sizes and reduced inventory levels. ;uch of this inventory was stored between and within wor centers. Dy reducing inventory# firms have been able to actually move wor centers closer together# freeing up space and reducing material handling distances. This results in a neater# more organized facility that provides for speedy identification of bottlenec s and fewer lost parts. Additionally# this reduction in inventory and lot sizes promotes rapid feedbac from downstream wor centers when there is a quality problem. This feedbac results in a reduction in scrap and rewor # and ultimately a higher level of overall quality. Leduced inventory and lot sizes also result in increased inventory turns. The lean@0IT producer combines the advantages of craft and mass production# while avoiding the high cost of the former and the rigidity of mass production. Lean@0IT producers set their sights explicitly on perfection" continually declining costs# zero defects# zero inventories# and endless product variety. Lean@0IT manufacturing is the new paradigm for manufacturing# replacing a mass$production system that has existed for more than >7 years.
26

RE#ERENCES ___________________________________________________
R4S 2tefan 2chmidt# %rom 3ype to Ignorance EA Leview of ?7 =ears of Lean +roduction!# 0ournal of Industrial (ngineering# Corld Academy of 2cience# (ngineering and Technology >? 6744# Twww.waset.org/journals/waset/v73/v73-186.pdfU. R6S H. 0orge Leon# Toyota +roduction 2ystem and Lean ;anufacturing!# Twww.etidweb.tamu.edu/ftp/entc41 /!rc"ive/#ean1.pdf - $nited %tatesU. R?S 0erry )ilpatric # Lean +rinciples!# &www.m"c-net.com/w"itepresentations/#ean'rinciples.pdfU. @4A Boss C Associates &n4ironmental 1onsulting, Dtd., E,indings and Becommendations on Dean *roduction and &n4ironmental ;anagement 9ystems in t!e 9!ipbuilding and 9!ip Bepair 9ectorF, <www.epa.gov/sectors/sectorinfo/sectorprofiles/ shipbuilding/em s.html>. R<S 8lsson 0ohansson and ;ats I. 0ohansson # Ihanges in the +lanning and Iontrol 2ystem during Implementation of Lean +roduction# &www.plan.se/files/(lsson)*o"ansson)+7.pdf,.

27