The Ultimate Guide to Lean Manufacturing: Principles, Benefits, Examples, and How to Implement It

If you’re working in the manufacturing sector, you’ve probably heard the term “lean manufacturing” countless times. Many manufacturing practitioners have praised its dramatic impact on production efficiency and continuously advise manufacturers to follow this method.

Yet, what is lean manufacturing, and why is it important? Which improvements can it deliver to your shop floor? And how do you apply lean manufacturing to a real-life setting?

In this ultimate guide, we will introduce the basics of lean manufacturing, how to implement it, the benefits you can reap from it, and the tools you’ll need for a smooth transition to become a lean manufacturer.

At the end of this article, you’ll also find a lean manufacturing e-book PDF that you can download for free.

What Is Lean Manufacturing?

Lean manufacturing is a method designed to improve production efficiency by removing 8 forms of waste:

• Defective Products
• Excessive Processing
• Overproduction
• Idle Resources
• Having to Store Items
• Unnecessary Motions
• Transportation
• Underutilized Human Resources

If left unchecked, these 8 forms of waste drain your organization’s finances and your employees’ time. Learn more about the 8 wastes of lean manufacturing.

To remove them from their manufacturing operations, plant managers should implement the 5 principles of lean manufacturing:

1. Identifying What Your Customers Value
2. Value Stream Mapping
3. Creating a Lean Manufacturing Flow
4. Establishing a Pull System
5. Kaizen (Continuous Improvement)

These lean manufacturing processes must be implemented in that particular order, as each principle is interconnected.

Learn the details of each principle in our article about the 5 lean manufacturing principles.

Lean Manufacturing’s History

We can credit the modern-day concept of lean manufacturing to Taiichi Ōhno – an industrial engineer from Toyota. In 1956, he went to the US and visited several automobile manufacturing plants. There, he learned about their production methods, as well as their strengths and weaknesses.

Ōhno was fascinated by the then-new American concept of supermarkets. In a supermarket, customers can just pull a product they want from any shelf. Later on, an employee will simply restock the shelves that are depleted.

Nowadays, this doesn’t seem impressive at all. But in the 1950’s, it was still a new and revolutionary concept.

These observations inspired Ōhno to develop the world-famous Toyota Production System and the overall lean manufacturing doctrine we know today. This system is complemented by several production philosophies, such as Kaizen, Jidoka, Heijunka, and the Just-in-Time Production System.

Eventually, other manufacturers developed new lean manufacturing philosophies, like the First Time Right defect management method.

The Toyota Production System and the lean manufacturing method have proven their effectiveness countless times. In an insider piece by Deryl Sturdevant, a retired Toyota executive, he shares how applying lean management ‘dramatically improved’ their participation rate in problem-solving activities.

According to Sturdevant, the process of changing the die needed to make aluminum alloy wheels used to take 4-5 hours. With lean improvements, now it takes less than an hour to complete.

Thanks to these types of improvements, Toyota dominates the global auto industry. In 2022, Toyota was the world’s best-selling auto manufacturer, a title it held for three consecutive years. Today, countless companies use lean manufacturing in their day-to-day operations in practically all industries worldwide.

Often, people use the terms “lean manufacturing” and “agile manufacturing” interchangeably. Despite their similar-sounding names, lean manufacturing and agile manufacturing are two different methods with their own principles, goals, and techniques. Check out the agile manufacturing vs lean manufacturing differences.

How to Implement Lean Manufacturing in Your Plant?

Now that you’ve understood the basics of lean manufacturing, it’s time to apply it to a real-life manufacturing setting. How do you get started? And which tools will you need?

Implementing the Lean Manufacturing Principles

The lean manufacturing principles also act as a step-by-step guide in your transition process of becoming a lean manufacturer. Here’s what you’ll need to do in each step:

Identifying What Your Customers Value

The first thing you’ll need to do is know what your customers value from your product. Why are they willing to spend their money on your products?

• Is it because of their quality?
• Their features?
• Their price?
• Their simple maintenance?
• How easy is it to find their spare parts and access maintenance services?
• Your brand’s reputation?
• A combination of the multiple factors above?

Knowing what your customers value the most from your products is a must. With this precious information, you will know which aspects of your products should be maximized. Moreover, you can manage your production resources more efficiently by allocating them to better suit your customers’ demands.

To know what your customers value from your products, there are several methods that you can use. For starters, you can do customer surveys. Providing incentives like discounts or vouchers might encourage your customers’ participation.

In addition, you can organize a meeting with your sales and customer success teams. There, you can ask for statistics and insights from their side for customer experience-related information such as:

• Which products sell well and which don’t
• Your products’ quality and price compared to your competitors
• The types of customer comments and suggestions that they often receive
• The most common customers complaints that they get

Value Stream Mapping

If you’ve already discovered the aspects of your products that your customers value the most, it’s time to maximize them. In order to do that, you’ll first need to map the value stream of your products. Ideally, you have a value stream map for each product type.

A value stream is the flow of resources in a product’s entire life cycle. All the way from its production until it’s no longer used.

The resources included here are your organization’s funds and your employees’ time in acquiring the materials and components of that product, manufacturing, storing, and distributing the said product. It also includes the resources spent by your customer when using and disposing/recycling/re-selling/scrapping this particular product.

You should visualize and map this value stream to have a clear picture of the flow of all resources included in that product’s life cycle. The sample below from the US Department of Commerce’s National Institute of Standards and Technology is a good illustration of what a value stream map looks like in a real-life manufacturing setting.

Creating a Lean Manufacturing Flow

Since your entire value stream has been mapped, you can easily analyze it and try to see whether there’s any form of lean manufacturing waste that exists there. If you detect any of the 8 forms of lean manufacturing waste in your value stream, you should eliminate them immediately.

Know more about the 8 wastes of lean manufacturing and the solution for each type of waste.

Establishing a Lean Manufacturing Pull System

If you’ve successfully removed all existing forms of waste in your value stream and your production line is waste-free, then congratulations! You can consider your organization to be a “lean manufacturer.” However, you can further increase your plant’s overall efficiency by switching to the “pull system” production method.

In the pull system, a product will only be manufactured if there’s a confirmed customer order for it. All resources allocated for production must perfectly mirror the order quantity from the customer.

For example, a footwear plant received an order for 5,000 pairs of shoes. Thus, that plant will only procure materials, allocate workers, and order transport trucks for precisely 5,000 pairs of shoes – not one unit more or less.

The main idea is that each product will always have a buyer. Therefore, every product will always turn a profit, and the resources used for production will never be wasted.

In addition, the plant doesn’t need to provide any room for storage – saving them funds that are otherwise required to build/rent and run a warehouse. Since all materials have been used in the production process, and all products have been sent to the customer. The pull system can be summed up by a well-known lean manufacturing quote: “making only what’s needed, when it’s needed, and in the quantity needed.”

Kaizen (Continuous Improvement)

Lastly, to complete your transition into lean manufacturing, you must install the philosophy of Kaizen (continuous improvement in Japanese) as a corporate culture in your organization. An employee who has ingrained Kaizen can spot any of the 8 lean manufacturing wastes wherever they exist – on their own initiative.

The simplest way to internalize Kaizen among your employees is by providing lean manufacturing training programs. Organizations like the Toyota Lean Academy offer lean manufacturing training and certification programs for corporate clients.

In addition, your organization can pick up several best practices to further strengthen the spirit of continuous improvement. One of them is having a daily stand-up meeting.

There, employees share which tasks they completed yesterday (and whether there are any issues they wish to report), which tasks they will do today, and whether they foresee any obstacles for today’s tasks. With this method, any issue will be immediately flagged and can be solved in a timely manner. And lastly, standardize all of the improvements that you’ve achieved into a standard work for every production activity. 

Lean Manufacturing Tools

Besides the techniques above, there are several tools that can help you in implementing lean manufacturing ideals, including:

Kanban Board

A Kanban board is a simple yet handy lean manufacturing tool. In its essence, it’s a board divided into several sections.

Each section represents a production phase in your plant. Common terms for each phase include:

• To-Do (for upcoming products)
• In Progress (for products that are currently being worked on)
• Testing (for products that are undergoing quality control)
• Done (for finished products)
• Backlog (for products that have issues in their production process)

Heijunka Board

A Heijunka board – sometimes called a Heijunka box- is another common lean manufacturing tool. A Heijunka board is typically a shelf with many boxes in it. A Heijunka board is used to plan the production timeline of goods within a plant.

On the top of the shelf, a horizontal axis displays the selected time period. This period can be minutes, hours, days, weeks, or even months for products that take a long time to produce. Meanwhile, the vertical axis on the side of the shelf showcases the names of products that are manufactured there.

In each corresponding hole, you can insert a folder containing documents related to a product that is undergoing a production process. Insert these folders in the quantity of goods produced and put them in the time column corresponding to the actual production process. Move these folders per the shop floor’s real-time production process.

With a Heijunka board, you can visualize your plant’s production timeline in the short and long terms. As a manager, you can plan your production activities accordingly and spread the production burden evenly.

If it’s well implemented, a Heijunka board will ensure that not a single time period will be too burdensome for your employees or the production machinery. Overworking your employees can negatively impact their physical and mental health, leading to higher turnover rates.

Furthermore, overburdening your production machinery will likely lead to malfunctions along the way and will definitely shorten its lifespan. Similarly, a Heijunka board helps you prevent overly low production activities, where your employees and machinery are idle.

Andon Systems

For lean manufacturing practitioners, Andon is a familiar term. An Andon is a lantern – commonly consisting of 3 colors: green, yellow, and red. Each of these colors has a specific meaning.

If the green Andon light is on, it means that there’s no problem in the assembly line and the production is ongoing as usual. However, if the yellow Andon light is on, it means that a minor problem has been detected, and human intervention is required to solve it. However, stopping the entire assembly line for this matter is not yet necessary.

Meanwhile, the red Andon light will be on if a more severe problem is detected, to the point that the assembly line must temporarily be stopped. For example, a foreign object has entered the assembly line, or a product with a significant defect must be removed from the assembly line.

In a manufacturing plant, it’s common to see tens or even hundreds of Andon lanterns spread across the facility. It’s best to have an Andon light in each workstation – so that all of your shop floor employees will always stay up to date with the real-time situation of their assembly line.

The primary purpose of Andon lights is to immediately alert shop floor workers if a problem in the assembly line has been detected. This allows rapid problem-solving and minimizes assembly line downtime.

Besides Andon lights, another commonly used Andon system is an Andon board. It’s a board that shows both real-time and historical data from all of the Andon lights in your plant.

It displays the current status of all assembly lines in your plant on one board. Thus, managers don’t have to go to each assembly line continuously, as they can monitor all of them from one Andon board.

Additionally, an Andon board also shows the number of past disruptions for each assembly line and their entire downtime. Managers can easily assess the performance of each assembly line, investigate the most common causes of disruptions, and execute the necessary improvements.

Advantages of Implementing Lean Manufacturing in Your Plant

At this point, you’ve understood the basics of implementing lean manufacturing in your manufacturing plant. Is it really worth your funds, effort, and time to start applying lean manufacturing in your plant?

What benefits can your organization reap from becoming a lean manufacturer? Here are some real-world examples of the positive impact of implementing lean manufacturing:

Increased Production Output and Lower Operational Cost

The most visible effects of lean manufacturing are increased production output and decreased production cost. This can be attributed to the removal of wastes such as idle production resources, unnecessary transportation & motions, underutilized human resources, having to store items, and others. In short, your plant can produce more goods in a shorter period of time while costing less to operate.

Lockheed Martin– one of the world’s largest aerospace companies – is a textbook example of how a company has successfully applied lean manufacturing and reaped its immense productivity benefits. Lockheed Martin started to implement lean manufacturing on a massive scale in the 1990’s.

The results were spectacular. Improvements in the 1992-1997 period included a 38% decrease in manufacturing costs and inventory was slashed by 50%. Moreover, the average time it took from ordering a plane until its delivery to the customer was cut from 42 months to just 21.5 months.

These spectacular productivity improvements have helped Lockheed Martin to be the aerospace giant it is today. It also helped it to win the Joint Strike Fighter program – the world’s biggest defense R&D and procurement program ever in terms of contract value.

Higher Product Quality

Another notable benefit of applying lean manufacturing principles is increased product quality due to the elimination of defects. Defective products are costly – as they must be reworked, consuming extra production resources. If the defect is too severe, they will have to be disposed of – meaning that the resources spent on manufacturing them are ultimately wasted.

If defective products have somehow passed the quality control process and end up in your customers’ hands – it will even be more expensive. You’ll have to recall these defective products from your customers and replace them with reworked or entirely new products. Not to mention the reputational damage to your organization due to these defective products.

Thus, defective products are a form of waste in lean manufacturing. Motorola is a good example of a company that has fully embraced the lean manufacturing doctrine and uses it to eliminate defects.

In the 1980’s, Motorola developed the Six Sigma, a lean philosophy that seeks to limit defects to a mere maximum of 3.4 defects per 1 million occurrences. In this philosophy, variability in the production process is kept as minimal as possible to minimize the possibility of defects.

Thanks to Six Sigma, Motorola can suppress costly defects to a minimum. Within the first 18 years since its implementation, Six Sigma has saved Motorola more than USD 17 billion from defect-related costs.

Still not sure whether implementing lean manufacturing is worth spending your funds, effort, and time? Check out our guide to lean manufacturing metrics and ROI measurement to help you calculate whether implementing lean manufacturing is worth spending your organization’s resources.