Lean manufacturing is what the name implies. It is a production philosophy aimed at efficiency by eliminating waste whether it is in the form of materials, labour, physical space, or time. The model was started in Japan during the 1930s by Toyota (called Toyota Production System or TPS) and it contributed to Toyota's global success as a car manufacturer. Lean manufacturing has been adopted by many companies worldwide since then.
The TPS identifies eight kinds of waste:
Waste of overproduction
Waste of time on hand (waiting / idle time)
Waste of transportation
Waste of processing
Waste of excess inventory
Waste of movement
Waste of making defective products
Waste of underutilized workers
Just in Time (JIT) is the most well-known methodology within lean manufacturing and the term is sometimes used interchangeably with lean. JIT is a system where materials and inventories are only received as the production process requires them. Inventories are kept to a minimum to maximize space usage and save on working capital costs. The key to the success of this system is strong forecasting/demand identification, reliable suppliers, and robust logistics. Poor execution of JIT may idle production lines resulting in fixed and variable costs as well as opportunity costs. Idling also creates bottlenecks by accruing backlogs.
Kanban is a methodology developed within lean manufacturing to organize workflow. It uses cards (now sometimes electronic) to signal the need to move materials within a production facility or from the supplier to the production facility. It is in effect a message that signals the depletion of products, parts, or inventory. It changes production from a push system (supply driven) to a pull system (demand driven). By aligning the rate of production to the rate of demand, it limits overproduction and manages working capital.
Lean Six Sigma
The sources or root causes of waste are sometimes not obvious. It may be due to misallocation/lack of resources, misalignment of the production process, inconsistency of operations, or some other reason. Lean manufacturing is often combined with Six Sigma to become the Lean Six Sigma methodology where process improvements are used to identify and eliminate waste. Read my post on Six Sigma for more discussion on the topic.
Future of Lean Manufacturing
Due to the various stresses on businesses currently, the trend is for operations to be more resilient. Unfortunately, efficiency and risk management are sometimes trade-offs. We have seen very successful efforts in improving efficiency; however, the context of the current environment needs to be worked into our production/supply chain and business models in general. The evolution of these methodologies or new methodologies will be needed to address and solve the problems of the future.