Manufacturers at all ends of the spectrum continue to feel the squeeze to reduce costs and increase efficiencies. Whether the push is from your customer or from their end customers, a small or medium sized manufacturer has the most to lose if they aren’t constantly adjusting and producing more with less.
Lean manufacturing is one of the methods that companies are using to consistently deliver quality products quickly and efficiently. The lean manufacturing movement is focused on the reduction of inventory and lead times for production. The push to implement lean manufacturing principles frequently comes from other suppliers or from the customer directly.
The core of lean manufacturing includes some of the following items:
Cost efficiency – this isn’t cost reduction, but looking at where costs can be more efficient. Cost efficiency can be applied to labor time, production runs, equipment operations and so forth. Variables, that if studied, more than likely can produce areas that costs can be more efficient.
Inventory reduction – This is about how much inventory is being carried by the company before it is either sold or shipped to the customer. Smaller batch production is a way to control inventory carrying costs. This leads to less overhead, more factory space and, hopefully, happier customers.
Shorter cycle times – if production times can be shortened, this opens up areas for flexibility in production, planning and space.
As you can see, these three separate and distinct elements are integral to one another. If shorter cycle times are achieved, inventory levels will be reduced, providing greater cost efficiencies. If inventory levels are reduced because of improved production processes, cycle times have likely been improved, which would also provide greater efficiencies in costs.
An example of this improvement in cost efficiencies is occurring at Shimco today. In response to our customers’ need to move towards just-in-time inventory and shorter lead-times, we are revamping our entire ERP program. Our objective is a system that will allow us to produce in smaller lots but with a significant improvement in cost control and data capture. Our new ERP system will allow us to have an even tighter control over our process flow, as we will be able to make adjustments to resource utilization in real-time. The end result will be a re-allocation of some of our costs into a system that will give us meaningful improvements in lead-times, inventory levels and customer satisfaction.
In today’s increasingly competitive market place, companies need to constantly strive for improvements in cost efficiencies. What was great yesterday isn’t necessarily good enough today. But with a dedication to always finding ways to be leaner, an organization will help tilt the odds for a successful future in their direction.