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 | December 23, 2021
Every manufacturing company aims to be as efficient as possible to maximize profit. However, it's difficult to determine where you stand and what targets to establish unless you can precisely measure your efficiency. Manufacturing KPIsplay an important role in this process.
Keeping track of many indicators without considering their commercial worth is a waste of time.
“Not everything that can be counted counts and not everything that counts can be counted”
- Albert Einstein
But connecting goals to measurements is a certain way to track progress and improve processes. So let's get started with how to choose the most appropriate key performance indicators(KPIs) for your business.
Manufacturing KPI 2022: How to Choose the Right One?
Why are KPIs called “Key” Performance Indicators? While any statistic can be used to assess performance, KPIs are the most critical. Hence they are called key performance indicators. Companies' priorities while selecting their company KPIs may differ substantially depending on the industry in which they operate.
“Strategic-operational KPIs alignment gives the organization a powerful tool to use when implementing change.”
― Pearl Zhu
A corporation should not track more than ten manufacturing KPIs to avoid overblowing processes. So, manufacturing efficiency, customer satisfaction, lead times, etc., should all be included.
Depending on your business nature, you must select your KPIs. However, each of those indicators must meet a set of criteria before being considered meaningful.
So, what is a decent KPI for manufacturing?
It gives objective and clear data on progress toward a certain goal
It measures efficiency, quality, punctuality, and performance
It allows for tracking performance over time
It helps in decision making
It should be the one that matches the company's long-term objectives
It has to be measurable and quantifiable
It must be realistic and actionable
Following that, let's have a look at the most important manufacturing KPIs for 2022, which will assist you in better understanding your manufacturing business and formulating a growth strategy in line with that understanding.
Most Critical Manufacturing KPIs in Order of Priority
Despite the fact that manufacturers should also monitor general key performance indicators (KPIs) such as sales revenue, net profit margin, and so on, the manufacturing business demands the tracking of specific manufacturing metrics. Below are some of the most important manufacturing key performance indicators (KPIs).
Using this manufacturing KPI metric, you can see how much value there is in products still in progress. It assists manufacturing organizations in determining how much of their working capital is locked up in incomplete products and can aid in identifying supply chain managementdifficulties.
You can compute the Work-In-Progress (WIP) by using the formula provided below.
Return on Assets
This manufacturing KPIseems to be more about financing than manufacturing. Yes, it does. However, financial measurements are just as vital as production ones. A firm cannot exist unless it generates revenue, and this indicator measures how efficiently your company uses its assets and generates revenues.
The Return on Assets (ROA) of your company can be calculated using the formula below.
Cost Per Unit
It is critical to understand the overall manufacturing cost per unit. You can't appropriately price a product without it. This manufacturing KPIdivides total manufacturing costs by the number of units produced. Materials, overhead, depreciation, and labor are standard costs.
Companies utilize this manufacturing statisticto forecast future raw material needs to satisfy client demand. Unfortunately, this statistic is more challenging to employ because it is mainly dependent on unpredictable external circumstances. The basic formula is:
The seasonal factors are distinct
Average demand is calculated as:
A company's lead time, also known as order cycle time, is an important KPI. It shows how swiftly your organization processes orders and meets client requests. It is time it takes to complete an order from confirmation to delivery.
Long lead times can imply process inefficiencies that produce bottlenecks and excessive expenses. Conversely, short lead times are important since they allow you to respond to consumer needs swiftly and efficiently.
The total lead time can be divided into smaller segments as follows:
The time it takes to manufacture a product from start to finish
The time it takes to deliver a product from stockto a client
The time it takes suppliers to deliver products to manufacturers
By segmenting the lead time, you may more precisely identify the areas where inefficiencies in the process occur.
Toyota’s Four Key Performance Metrics
As a company, Toyota places a high focus on environmental protection. Toyota's vehicles are designed to use less fuel and produce less waste.
Regardless of the company's size, Toyota is committed to protecting the environment. Toyota's 'Earth Charter' was created in 1992 as part of the company's Global Policy initiative. It was Toyota's first overseas facility and the UK's first ISO14001-certified car manufacturer. Waterborne paints were utilized for the first time and zero waste was sent to landfills. In 2009, Toyota Manufacturing UK did not use any incinerators.
Toyota has developed a set of key performance indicators (KPIs) for each of its major production areas. There are four key performance metrics: energy, water, waste, and volatile organic compounds (VOCs).
Since its start in 1992, Toyota Manufacturing UK has attempted to mitigate its environmental impact. The figure below illustrates the environmental KPIsfor the Burnaston plant. Each year, Toyota sets new goals to improve its results.
79% reduction in vehicle energy consumption
62% reduction in waste per car
76% reduction in VOC emissions per car
79% reduction in water consumption per vehicle
You can use the aforementioned manufacturing KPIsto construct your manufacturing KPI template, but keep in mind that the manufacturing metricsyou need to track may differ from those listed here. The first prudent move any business can make while examining its operation is to identify and track the relevant KPIs. Also, in manufacturing, there are several different KPIs, phrases, and abbreviations need to be understood and used where it makes the most sense.
What is manufacturing KPI?
A manufacturing Key Performance Indicator (KPI) or metric is a well-defined and measurable indicator that the manufacturing sector uses to evaluate its performance over time and compare it to that of other industries.
What are the key KPIs for manufacturers?
On-Time Delivery, Production Schedule Attainment, Total Cycle Time, Throughput, Capacity Utilization, and Changeover Time are some of the key manufacturing KPIs.
Article | December 13, 2021
Lean manufacturing principles enable manufacturing businesses to achieve spectacular results and overhaul their conventional operations. A wide range of industries have adopted lean manufacturing because of its enormous advantages, and they have seen excellent results as a result.
The 2010 Compensation Data Manufacturing survey indicated that 69.7% of manufacturing organizations employ lean manufacturing principles. By consuming this data, we can understand how far organizations have progressed toward incorporating lean principles into their operations.
“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, Manufacturing Industry Executive at Microsoft
Let's look at some examples of lean manufacturing from some well-known companies. These leading-edge examples of lean manufacturing will shed light on how lean principles positively affect.
Leading Companies Using Lean Manufacturing Effectively
Successful manufacturing businesses like Toyota, Nike, and Caterpillar are currently employing lean manufacturing ideas in their production processes. In addition, Intel, Parker Hannifin, and John Deere embrace these techniques. From them, we've described three different organizations in various sectors that are successfully adopting lean manufacturing.
John Deere has also implemented a lean manufacturing strategy. As a result, many of their quality control procedures are automated, which means that more components can be checked for flaws in less time. This means that more supply can be released each day, and the product can be supplied at a lower price to the consumer.
Additionally, these controls monitor the manufacturing process for each component of their products, ensuring that they never manufacture more than is required and waste essential materials in the process.
Intel, known for its computer processors, has used lean manufacturing techniques to provide a higher quality product for an industry that requires zero defects. In the past, it took more than three months to get a microprocessor to the manufacturer, but this principle has helped shorten that time to less than ten days.
Intel rapidly learned that creating more but worse quality was not the way to raise revenues and increase consumer satisfaction with its products, which were extremely precise and technical. Instead, both parties gain from quality control and waste reduction initiatives. This is even true in the tech industry, where goods are constantly changed and upgraded.
Toyota, the world's largest automaker, was the first to implement lean manufacturing in its manufacturing operations. But, even more importantly, they've learned how to limit products that don't match customer expectations by eliminating waste. To achieve these goals, Toyota employs two essential procedures.
The first is a method known as Jidoka, which loosely translates as "automation with the assistance of humans." This implies that, although some of the work is automated, humans always ensure that the result is of the highest quality.
When something goes wrong, the machines have built-in programs that allow them to shut themselves down. Known as the Just In Time (JIT) model, this is the second stage. Once the last part of a process has been finished, the next phase can begin. No unnecessary work will be done if there is a problem with the assembly line. This lean manufacturing technique has inspired thousands of other businesses.
Lean manufacturing principles and their execution require discipline and patience to get the results out of them. When we see the successful lean manufacturing examples, it is not a fraction of a second success. They have devoted their time, energy, and efforts to modifying every single operational process in order to become a part of lean manufacturing. Lean manufacturing is not a method; it is a way of life that transforms your business practices and takes your firm to a new level of operations. Gain insights from renowned organizations' lean manufacturing success stories to help you become a part of the lean companies of 2022.
What is the effect of lean manufacturing?
Lean is a performance-based, continuous-improvement strategy that removes waste and unnecessary processes from organizational operations. As a result, your company becomes more focused on the results.
Is it possible for lean manufacturing to fail?
It is conceivable in some circumstances, such as failing to focus on a single system implementation or implementing too many system changes at once and failing to have a sound follow-up system to check that everything is working effectively.
Why do certain businesses struggle with lean manufacturing?
Most businesses fail to see that lean is a management philosophy, not a set of tools. As a result, most corporate leaders either don't understand or lack the patience and control to implement lean manufacturing.
"name": "What is the effect of lean manufacturing?",
"text": "Lean is a performance-based, continuous-improvement strategy that removes waste and unnecessary processes from organizational operations. As a result, your company becomes more focused on the results."
"name": "Is it possible for lean manufacturing to fail?",
"text": "It is conceivable in some circumstances, such as failing to focus on a single system implementation or implementing too many system changes at once and failing to have a sound follow-up system to check that everything is working effectively."
"name": "Why do certain businesses struggle with lean manufacturing?",
"text": "Most businesses fail to see that lean is a management philosophy, not a set of tools. As a result, most corporate leaders either don't understand or lack the patience and control to implement lean manufacturing."
Article | November 20, 2021
The manufacturing business has always prioritized providing the excellent and most user-friendly products worldwide to its target consumer groups. However, digitalization and customer interaction approaches have altered the manufacturing industry's traditional business model.
Now, manufacturers must prioritize improving the customer experience for their target consumer group and keeping up with new trends daily to flourish and remain competitive in the upgrading market. Because, in the end, the buyer is the one who drives your business and generates money. Manufacturers are committing significant efforts to improve the customer experience in the following years.
To assist manufacturers in their sincere efforts to improve the customer experience in the manufacturing industry, we have compiled some key facts that must be understood and executed by the industry's or business-specific needs.
Before going into manufacturing customer experience statistics, it's essential to understand why customer experience is so critical in the manufacturing industry.
The Importance of Customer Experience in Manufacturing
Customer service and experience are critical components of any business, which is true in the manufacturing sector. Customer experience can be described as any activity taken by a business to positively influence a customer's impression and opinion of the business, its products, or services.
“You’ve got to start with the Customer Experience and work back toward the technology, not the other way around”
– Steve Jobs.
Customer experience benefits your business in a variety of ways, including the following,
It increases customer retention
It increases the customer lifetime value
It creates brand loyalty
It influences brand reputability
It can deliver businesses with a competitive edge.
Manufacturing Customer Experience Statistics
Make your manufacturing business more customer-centric and reap the benefits that many customer-centric companies, such as Apple, Nissan, and Chick-fil-A, are experiencing.
To better understand what the customer and industry have explored regarding the customer experience in 2022, below are some statistics from well-known businesses.
Businesses that prioritize customer experience see an 80% increase in revenue.
A positive customer experience increases customer interest in the product and acts as a form of word-of-mouth marketing. This way, the business benefits from increased sales and organic promotion by genuine consumers, critical for any manufacturing organization.
# Stat 2
73% of customers say that customer experience influences their purchasing decision.
Customers are not solely concerned with the product's quality or pricing. Instead, they are interested in the complete experience they get while purchasing a product. Therefore, if customers have a negative experience during the purchasing trip, it is pretty likely that they will leave the purchase process in the middle and hunt for other viable solutions on the market. Whereas, if the purchasing journey and post-purchase service are satisfactory, they will gladly purchase the goods and suggest new clients to your business.
# Stat 3
By 2023, AI and machine learning will manage around 40% of all consumer contacts.
(Source: Super Office)
Manufacturing production and revenue are increasing as a result of technological advances and applications. However, the customer experience is not far behind in implementing cutting-edge technology like AI, VR, and AR. For instance, chat bots are the best example of how artificial intelligence, natural language processing, and machine learning are being used to increase consumer engagement.
Virtual interaction is becoming more prevalent in the manufacturing industry daily, and both manufacturers and customers like this digital interaction.
“Our interactions with our customers have become much more virtual, which frankly seems to work well for the customer and us.”
-Scott Heide, Chief Executive Officer at Engineering Intent Corporation
Technology application in manufacturing will be maximized, and businesses intend to automate the customer experience by 2023.
# Stat 4
According to 70% of customers, an ideal customer experience should be quick, convenient, and cooperative, as well as friendly.
Customer service is a skill, and it's always a good idea to put yourself in your clients' shoes. According to an Adobe study, 70% of customers want a quick and convenient service that saves them time. In addition, they anticipate full collaboration throughout the purchasing process, including post-purchase servicing.
# Stat 5
72% of customers with a good consumer experience will tell six or more people about it.
(Source: Nice Reply)
In the first statistic, we discussed word-of-mouth marketing. You will always receive referrals for the excellent products or services you provide to your target consumer group. Customers that have a positive experience will always bring you two additional potential customers, and this number will grow exponentially with each pleasant experience delivered by your organization.
How did MacDonald's plan to increase revenue simply by improving the customer experience?
When McDonald's revenues started to decline, they focused on the customer experience rather than marketing strategies.
They began by listening to their clients and giving them a more streamlined experience. Customers told McDonald's to simplify the menu, increase order accuracy, and use higher-quality ingredients.
McDonald's also improved store interiors and introduced digital self-order kiosks and table service, reducing customer wait times. BTIG predicted a 4.1% increase in revenues as these modifications were made. As a result, McDonald's may outperform competitors by improving total customer service.
Customer experience is crucial in manufacturing, and manufacturers must leverage digital customer experience trends to improve their reputation. These a fore mentioned customer experience statistics can assist you in shaping a compelling client experience for 2022 and propelling your organization to new heights of success.
Why should a manufacturing company invest in customer experience?
Client experience improves customer retention, builds brand reputation, and gives companies a competitive edge. So manufacturers must invest in the consumer experience.
What is the difference between customer service and customer experience?
Customer service is one aspect of the customer journey, whereas consumer experience is the sum of all customer encounters with the brand.
What does a customer experience include?
Customer experience is the overall perception of your business or brand. It is the consequence of a customer's engagement with your website, customer service, and the product they purchase. So, it is the aggregate of all elements from browsing to buying to the product experience.
"name": "Why should a manufacturing company invest in customer experience?",
"text": "Client experience improves customer retention, builds brand reputation, and gives companies a competitive edge. So manufacturers must invest in the consumer experience."
"name": "What is the difference between customer service and customer experience?",
"text": "Customer service is one aspect of the customer journey, whereas consumer experience is the sum of all customer encounters with the brand."
"name": "What does a customer experience include?",
"text": "Customer experience is the overall perception of your business or brand. It is the consequence of a customer's engagement with your website, customer service, and the product they purchase. So, it is the aggregate of all elements from browsing to buying to the product experience."