Article | December 13, 2021
Lean manufacturing is a growing trend that aims to reduce waste while increasing productivity in manufacturing systems. But, unfortunately, waste doesn't add value to the product, and buyers don't want to pay for it.
This unusual method pushed Toyota Motor Corporation's industry to become a leading Toyota Production System (TPS). As a result, they are now efficiently producing some of the world's top cars with the least waste and the quickest turnaround.
The majority of manufacturers are now using lean management. According to the 2010 Compensation Data Manufacturing report, 69.7% of manufacturing businesses use Lean Manufacturing Practices.
Lean tools are the ones that help you in implementing lean practice in your organization. These lean tools assist in managing people and change while solving problems and monitoring performance. Lean Manufacturing technologies are designed to reduce waste, improve flow, improve quality control, and maximize manufacturing resources.
What Are the Five Best Lean Manufacturing Tools and How Do They Work?
There are roughly 50 Lean Manufacturing tools available in the market. This post will describe 5 of them and their value to your business and its developments.
The 5S system promotes efficiency by organizing and cleaning the workplace. To help increase workplace productivity, the system has five basic guidelines (five S's). The five Ss are Sort, Set, Shine, Standardize, and Sustain.
5S improves workplace efficiency and effectiveness by:
Sort: Removing unnecessary material from each work area
Set: Set the goal of creating efficient work areas for each individual
Shine: Maintaining a clean work area after each shift helps identify and resolve minor concerns
Standardize: Documenting changes to make other work areas' applications more accessible
Sustain: Repeat each stage for continuous improvement
5S is a lean tool used in manufacturing, software, and healthcare. Kaizen and Kanban can be utilized to produce the most efficient workplace possible.
Just-In-Time (JIT) manufacturing
Just-in-time manufacturing allows manufacturers to produce products only after a customer requests them. This reduces the risk of overstocking or damaging components or products during storage.
Consider JIT if your company can operate on-demand and limit the risk of only carrying inventory as needed. JIT can help manage inventory, but it can also hinder meeting customer demand if the supply chain breaks.
With Kaizen, you may enhance seven separate areas at once: business culture, leadership, procedures, quality, and safety. Kaizen is a Japanese word, means "improvement for the better" or "constant improvement."
“Many companies are not willing to change or think they are done once they make a change. But the truth is technology; consumer demands, the way we work, human needs and much more are constantly changing.”
– Michael Walton, Director, Industry Executive at Microsoft
The idea behind Kaizen is that everyone in the organization can contribute suggestions for process improvement. Accepting everyone's viewpoints may not result in significant organizational changes, but minor improvements here and there will add up over time to substantial reductions in wasted resources.
Kanban is a visual production method that delivers parts to the production line as needed. This lean tool works by ensuring workers get what they need when they need it.
Previously, employees used Kanban cards to request new components, and new parts were not provided until the card asked them to. In recent years, sophisticated software has replaced Kanban cards to signal demand electronically. Using scanned barcodes to signify when new components are needed, the system may automatically request new parts.
Kanban allows businesses to manage inventory better, decrease unnecessary stock, and focus on the products that must be stored. To reduce waste and improve efficiency, facilities can react to current needs rather than predict the future.
Kanban encourages teams and individuals to improve Kanban solutions and overall production processes like Kaizen. Kanban as a lean tool can be used with Kaizen and 5S.
PDCA (Plan, Do, Check, Act)
Plan-Do-Check-Act (PDCA) is a scientific strategy for managing change. Dr. W. Edwards Deming invented it in the 1950s; hence, it is called the ‘Deming Cycle.’
The PDCA cycle has four steps:
Problem or Opportunity: Determine whether a problem or an opportunity exists
Do: Make a small test
Examine: Look over the test results
Act: Take action depending on results
How Nestlé Used the Kaizen Lean Manufacturing Tool
Nestlé is the largest food corporation in the world, yet it is also a company that practices Lean principles, particularly the Kaizen method. Nestlé Waters used a technique known as value stream mapping, which is frequently associated with Kaizen. They designed a new bottling factory from scratch to guarantee that operations were as efficient as possible. Nestlé has been aiming to make ongoing changes to their processes to reduce waste and the amount of time and materials that can be wasted during their operations.
Lean manufacturing techniques enable many businesses to solve their manufacturing difficulties and become more productive and customer-centric. In addition, useful lean manufacturing tools assist companies in obtaining the anticipated outcomes and arranging their operations in many excellent ways to meet buyer expectations. Hence, gather a list of the top lean manufacturing tools and choose the best fit for your organization to maximize your ROI and address the performance issue that is causing your outcomes to lag.
What are the standard tools in lean manufacturing?
Among the more than 50 lean manufacturing tools, Kaizen, 5S, Kanban, Value Stream Mapping, and PDCA are the most commonly used lean manufacturing tools.
How to Select the Best Lean Manufacturing Tools for Your Business?
Choosing a lean manufacturing tool begins with identifying the issue or lag in your organization that affects overall productivity and work quality. To select the lean device that best meets your company's needs, you must first grasp each one's benefits and implementation techniques.
What is included in a Lean 5S toolkit?
The lean 5S toolbox contains some essential items for achieving the goal. It comes with a notepad or tablet, a camera, a high-quality flashlight, a tape measure, and a stopwatch.
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"text": "Among the more than 50 lean manufacturing tools, Kaizen, 5S, Kanban, Value Stream Mapping, and PDCA are the most commonly used lean manufacturing tools."
"name": "How to Select the Best Lean Manufacturing Tools for Your Business?",
"text": "Choosing a lean manufacturing tool begins with identifying the issue or lag in your organization that affects overall productivity and work quality. To select the lean device that best meets your company's needs, you must first grasp each one's benefits and implementation techniques."
"name": "What is included in a Lean 5S toolkit?",
"text": "The lean 5S toolbox contains some essential items for achieving the goal. It comes with a notepad or tablet, a camera, a high-quality flashlight, a tape measure, and a stopwatch."
Article | April 1, 2021
April 12 -15 ProMatDX, the largest material handling event, will take place virtually. It will feature dozens of AGV vendors. Sadly, some of these highly innovating products still need to be plugged-in to capture power. No more.
Wiferion in process charging eliminates the plug-in charging making AGVs truly autonomous. In process charging eliminates the waste of AGV downtime – the fleet is always working AND charging. In process charging is safe ensuring the OSHA, ergonomics, and danger to workers significantly reduced. In process charging is cost-efficient because full vehicle deployment means a reduced fleet count ensuring a rapid ROI.
For OEMs of AGVs and industrial trucks implementing inductive charging technology solves the wear and tear issues caused by conventional charging methods as well as making vehicles fully autonomous. For end-users of AGVs and industrial trucks, inductive charging in combination with lithium batteries can improve fleet availability by more than 30%.
Whether driverless transport systems (AGVs), electric forklifts, or mobile robots (AMRs), the efficient use of industrial trucks is a decisive factor for competitiveness during ever- increasing cost pressures. The energy systems are being scrutinized and lithium-ion batteries are the preferred technology. The advantages versus lead-acid batteries (including the ability to recharge faster and more often) are obvious. Until now the full potential of storage technology has not been fully realized.
Article | December 21, 2021
When it comes to developing a budget for the following financial year of your manufacturing business, many operations managers start with direct labor and material expenditures. But, what about manufacturing overhead costs?
Manufacturing overhead is any expense not directly tied to a factory's production. Therefore, the indirect costs in manufacturing overhead can also be called factory overhead or production overhead.
Outsourcing and globalization of manufacturing allows companies to reduce costs, benefits consumers with lower-cost goods and services, and causes economic expansion that reduces unemployment and increases productivity and job creation.
– Larry Elder
So, this article focuses on some highly effective overhead cost reduction methods that would help you build a healthy budget for the following year.
Manufacturing Overhead Costs: What Is Included?
Everything or everyone within the factory that isn't actively producing items should be considered overhead.
The following are some of the variables that are considered overhead costs:
Depreciation of equipment and productionfacilities
Taxes, insurance, and utilities
Supervisors, maintenance, quality control, and other on-site personnel who aren't producing signs
Indirect supply from light bulbs to toilet paper is also included in the overhead cost.
Manufacturing Overhead Costs: What Is Excluded?
Everything or everyone within or outside the factory that is actively producing items should be excluded from the overhead costs.
Factory overhead does not include the following:
Employee costs for those making the goods daily
External administrative overhead, such as a satellite office or human resources
Costs associated with C-suite employees
Expenses associated with sales and marketing - include pay, travel, and advertising
How to Calculate Overhead Costs in Manufacturing
To know the manufacturing overhead requires calculating the manufacturing overhead rate. The formula to calculate the manufacturing overhead rate i.e. MOR is basic yet vital.
To begin, determine your overall manufacturing overhead expenses. Then, add up all the monthly indirect expenditures that keep manufacturing running smoothly.
Then you can calculate the Manufacturing Overhead Rate (MOR). This statistic shows you your monthly overhead costs as a percentage.
To find this value, divide Total Manufacturing Overhead Cost (TMOC) by Total Monthly Sales (TMS) and multiply it by 100. The final formula will be:
Assume your manufacturing overhead expensesare $50,000 and your monthly sales are $300,000. You get.167 when you divide $50,000 by $300,000. Then increase that by 100 to get your monthly overhead rate of 16.7%.
This means your monthly overhead expenditures will be 16.7% of your monthly income. Being able to forecast and develop better solutions to decrease production overhead.
Five Ways to Reduce Manufacturing Overhead Costs
A variety of strategies may be used by manufacturing organizations to reduce their overhead costs. Here is a summary of some of the most important methods for reducing your manufacturing overhead costs.
Value Stream Mapping – A Production Plant Process Layout
A value stream map depicts the entire manufacturing process of your plant. Everything from raw material purchase through client delivery is detailed here. The value stream map provides you with a complete picture of the profit-making process. This overhead cost-cuttingmethod is listed first for a reason because every effort to reduce manufacturing overhead costsstarts with a value stream map.
Lean manufacturingis also one of the techniques of eliminating unnecessary time, staff, and work that is not necessary for profit and has gained undue favor in the manufacturing process. You must first create a value stream map of the whole manufacturing process for this technique to work. Once the lean manufacturing precept is established, the following strategies for decreasingmanufacturing overhead expenses can be examined.
Do Not Forget Your Back Office Management
Before focusing on factory floor cost reduction techniques, remember that your back offices, where payment processing and customer contacts occur, may also be simplified and increase profitability. Fortunately, automation can achieve this profitability at a cheap cost.
Manufacturers increasingly use robotic process automation (RPA) to sell directly to customers rather than rely on complex supply networks. This automation eliminates costly human mistakes in data input and payment processing by automatically filling forms with consumer data. Moreover, the time saved from manual data input (and rectifying inevitable human errors) equates to decreased labor expenses and downtime.
Automating Your Manufacturing Plant
For a long time, manufacturers saw factory automation as a game-changer. As a result, several plant owners make radical changes in their operations using cutting-edge technologydespite knowing it realistically. Over-investing in technologies unfamiliar to present industrial personnel might be deemed a technology blunder. Investing in new technology that doesn't generate value or is too hard for current staff to use might be a mistake.
It's usually best to start small when implementing newtechnology in manufacturing. Using collaborative robots in production is one way to get started with automation. They are inexpensive, need little software and hardware, and may help employees with mundane, repeated chores that gobble up bandwidth. It is a low-cost entry point into automation that saves labor expenses and opens the door for further automation investments when opportunities are available.
Reuse Other Factory Equipment and Supplies
Check with other factories to see if they have any unused equipment or supplies that may be "redeployed" to your manufacturing plant. Redeployment would save you time and money by eliminating the need to look for and install new equipment while lowering your overhead costs.
Outsourcing a fully equipped factory, equipment, or even staff can also assist in lowering overhead costssince you will only pay for what you utilize. As such, it is a viable method to incorporate into your production process.
Employ an In-house Maintenance Expert
An in-house repair technician can service your equipment for routine inspections, preventive maintenance, and minor repairs. This hiring decision might save money on unforeseen repair expenses or work fees for an outside repair provider. Having someone on-site who can do emergency repairs may save you money if your equipment breaks after business hours.
Manufacturing overhead costis an essential aspect of every manufacturing company's budget to consider. Smart manufacturingis intended to be productive, efficient, and cost-effective while effectively managing production expenditures. Calculating the manufacturing overheadcan provide you with a better understanding of your company's costs and how to minimize them. Depending on the conditions or geographical needs, each manufacturing plant's overhead expensesmay vary. As a result, identify your production overhead costsand concentrate on reducing and improving them.
What are manufacturing overheads?
Manufacturing overhead cost is a sum of all indirect expenses incurred during production. Manufacturing overhead expenses usually include depreciation of equipment, employee salaries, and power utilized to run the equipment.
What is a decent overhead percentage?
When a business is functioning successfully, an overhead ratio of less than 35 % is considered favorable.
How can I calculate the cost of manufacturing per unit?
The overall manufacturing cost per unit is determined by dividing the total production expenses by the total number of units produced for a particular time.
Article | May 13, 2021
When the manufacturing industry began to embrace digital technology a decade ago, it adopted a new identity — smart manufacturing or Industry 4.0. Applying cloud, automation, analytics, machine learning and big data to production operations created a connected ecosystem for manufacturing and supply chain management, and became a high-growth market. At the start of 2020, the sector was on track to grow into a market worth more than $300 billion in the coming five years.
Then the pandemic hit. By spring, millions of workers had lost their jobs. Some plants closed temporarily or slowed production so workers could spread out to maintain a safe distance from one another. Investment in smart manufacturing fell too, by 16 percent between March and April alone. Some researchers predicted that such a pull-back would dampen investment through 2025.
But the conversations we’ve had with C-suite manufacturing executives and service providers suggest investment in smart manufacturing will intensify. By 2025, it could be worth more than $400 billion. It’s no wonder.