The key is to ensure that you, as the supplier, never overproduce. Remember overproduction is one of the 7 Wastes! It means making or providing more than the customer wants at that point in time. This applies if you are a manufacturing company or a service provider.
If you are starting to plan your lean system, or doing future state Value Stream Mapping I would recommend you use these 7 principles as a start point.
You don’t have to incorporate each one in your solution. Some will be more relevant than others for your circumstances. Consider each one and design what works best for you.
1. Make (or provide) what product the customer wants, when they want it, in the quantity required
Ideally you need to be able to make (or supply the service) to order. To do this you need to:
- Ensure your capacity equals demand.
- Work at exactly the same rate as the customer wants to consume the product (takt time).
If you cannot do this then you will make to stock instead
2. If the downstream customer demand varies, then level the demand internally to allow you to introduce pull and flow within your process
Customers do not always send in their orders in a level format, however you must level it across all your own functions to eliminate waste.
Flow means producing or processing one piece or unit at a time, with each item passed immediately from one process to the next without being stored or waiting.
In later blogs we will look at some of the methods you can use to do this.
3. Minimise the amount of inventory throughout the system
Inventory between processes, departments and different organisations represents a lack of flow, costs you money and extends the lead time of the process.
All of this is bad for your cash flow cycle!
As a guideline only allow inventory where the supplying process cannot keep pace with the next downstream customer.
Ensure the quantity of inventory is standardised and controlled.
4. Minimise the amount of transport required
Exactly the same issues apply where you have excessive transportation as they do for inventory.
Try to eliminate the distance items are transported, rather than substituting a faster form of transport.
5. Minimise the amount of information processing in the information flow
Excessive processing of information in a system is a waste. The less the information is processed, the less chance there is of order corruption occurring.
Ideally you should design and deploy formal communication systems that are visual, are located in the area where the process is carried out and can be viewed and used by everybody.
6. Minimise and standardise the lead time
The shorter the lead time, the quicker the response to meet the customer order.
It also means you can complete the cash flow cycle more quickly.
7. Visually manage the process
All the elements of the pull systems, working to takt (or other target) and information flows you have set up, need to be maintained for your lean system to work.
Visual Management is the tool for this.
If you would like to find out more about the principles, let me know, or contact the Industry Forum team who will be pleased to help.