Lean Application at Lantech

Liker (2004) defined continuous flow as a manufacturing strategy anchored in Just in Time, Kanban and kaizen methodology designed to create a balanced, flexible and responsive processes capable of answering to the customers exact requirements with the highest level of quality defect free product, lowest affordable cost and minimum waste. This calls for an ultimate integration and collaboration of all the elements of the systems that work together to bring the desired product to the customers. For Lantect, adopting continuous flow manufacturing (CFM) involved re-designing their whole processes and adopting a whole new concept of manufacturing, moving away from batch manufacturing (multiple product made to inventory) to lean manufacturing (one product deliver to order). The changes and impact as a result of CFM implementation at Lantech can be seen in the following areas (Womack and Jones, 2003): 1. Production Moving from Batch production to one product one cycle method was made possible by changing the production floor lay-out and the work flow structure. Lantech used to produce in 10-20 batches depending on the product type, creating buffer for demand changes/variation in a departmentalised flow (i.e sewing team will get to sew all 4 different product types, the same in welding team, machining team and so on). With continuous flow, each product type was assigned a dedicated production team and production cell, producing 1 product at a time in accordance to the order. These changes resulted in improved production throughput time by 95%, decrease in finished goods inventory by 54%, decrease of manufacturing space per product of 50% and 50% improvement in employee handling time per product. Number of defect per machine was reduced significantly by 90%. 2. Order Flow Lantech order flow was improved as delivery lead time reduced from 4-20 weeks to 1-4 weeks. This was made possible by the kaizen team effort which together reviewed and re-designed the order flow process. Two visible changes were the use of MRP system that is limited to only long term materials order and the use of white board in the sales office creating visual control for short term and immediate order fulfilment status. Order deliver lead time is no longer a guessing exercise as the white board provided a clear status of each order fulfilment. 3. Product Development Lantech established a team consisting of people with different and wider range of skills set dedicated to product development projects. This was a major improvement which proven to be highly effective in comparison to the previous approach where there were no team dedicated to product development, rather a team overlooking all projects at same time. Having a dedicated team with a wider skills set ensure better distribution of work and expedition of new product launch which is improves from 3-4 years to 1 year (75% increase). The fundamental concept that Lantech introduced to implement CFM approach was the value stream concept which as explained by Rother and Harris (2002) includes redesign of whole processes to establish an integrated value stream that allows for a minimum set of activities in designing, producing and delivering products as per customer s specification in a flawless, continuous and rapid manner. This requires everyone to sit together and think about the way they do their work and create

new way of working that would eliminate waste. Other methods such as process standardisation, takt time improvement, continuous improvement thorough kaizen team, right-sizing equipment, visual control through white board and automate only when appropriate were also some of the ways to creating continuous flow as suggested by Rother and Harris (2002) which was adopted by Lantech. In conclusion, the overall benefits of continuous flow go beyond those of waste elimination that can be measured by the performance result (Abdulmalek and Rajgopal, 2007). In the case of Lantech, these benefits were: 1. A clear and consensus agreement to prioritise long term philosophy over short term gain. Lantech in their desperation to improve performance stick to their gun and chosen to prioritise long term belief over short term gain. They were sure that fire fighting to immediately solve current problem is no longer giving them the needed benefits, so they went on to fight for continuous flow implementation with the aim to establish a flawless, continuous, rapid processes and sustainable quality in delivering product and services to the customers. Short term lost in the gain of future sustainable improved position. 2. Lead by example Lantech managers was forced to led by example during continuous flow implementation as they needed to show the workers that they were not afraid to get their hands dirty to get the company where it needed to be. This was a huge boost to the overall company morale and work ambition. 3. Higher awareness for critical thinking The workers have difficulties accepting the uncommon concepts related to continuous flow approach and in the journey, the overall condition forced them be more critical of what they do and to challenge the reasons and the way they do things. 4. Cross Team Training Lantech owner promoted that there will be no downsizing as a result of continuous flow implementation, rather formulation of kaizen team, focusing on delivering improvement in the organisation. Came with this promised was cross training as it becomes necessary to equipped the employees with the necessary skills and knowledge to contribute to the Kaizen initiative. CFM enabled Lantech to create an improved and sustainable way of working that catapulted their performances beyond those of the competitors and as a result enabled them to regain the market leader position. Reference List: Liker, Jeffrey K (2004). The Toyota Way: 14 Management Principles from the World s Greatest Manufacturer. New York, USA: McGraw Hill. Womack, James P., and Jones, Daniel T (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation. New York, US: Free Press. Rother, M., and Harris, R (2002). Creating Continuous Flow: An Action Guide for Managers, Engineers and Production Associates. Massachusetts, US: The Lean Enterprise Institute. Abdulmalek, Fawzy A., and Rajgopal, J. (2007). Analyzing the benefits of lean manufacturing and value stream mapping via simulation: A process sector case study. International Journal of Production Economics. (107)1, p.223-236