What is “Lean”?

Surely you have already seen the word “Lean” associated with terms of supply chain management: Lean Manufacturing, Lean Management, Lean Production, Lean Logistics, …, but what is Lean and why is it giving so much to talk about? ? In this article we explain what the Lean philosophy or “Lean Thinking” is, its origin, its key concepts and why it is obtaining such good results in the management of supply chains in all business sectors and in business management.

In this article we explain:

• What is “Lean”?
• From “Lean Production” to “Lean Thinking”
• The principles of “Lean”
  • Value
  • Value Stream
  • Value Stream Mapping
  • Flow
  • Pull
  • Perfection
• Waste reduction (reducción del despilfarro)
  • Muda
  • Mura
  • Muri
• Kaizen or continuous improvement
• Lean Manufacturing
• Lean Warehousing con ATOX Soluciones Tecnológicas
• Lean Six Sigma
• Conclusions about “Lean”

“Lean” means doing more with less, eliminating all waste (muda in Japanese or waste in English) that does not provide added value from the customer’s point of view.

“Lean” is a word in English, pronounced /li:n/, which in Spanish literally means lean, thin, without fat. Summarizes the concepts that make up the Lean philosophy applied to the supply chain and business management. Following the Lean principles, it is possible to eliminate everything that is superfluous and unnecessary, that is, that does not provide added value for the client, pursuing perfection.

The Lean or Lean Thinking culture is based on always giving priority to management from the point of view of customer needs, and this is key to understanding its differences with other methodologies that focus on optimizing processes in a more isolated way.

Depending on which part of the supply chain or to which business sector we apply the Lean methodology, whose principles will always be the same, we will speak of “Lean” + something. For example, if we focus on manufacturing, we will talk about Lean Manufacturing or Lean Production; If we focus on business management, we will talk about Lean Management, Lean Enterprise and Lean Startup; if we focus on the management of a warehouse, we can talk about Lean Warehousing; If we apply this philosophy to healthcare, we will talk about Lean Healthcare; etc. But, regardless of what it is applied to, Lean is more than a methodology, it is a way of thinking, and that is why we can generally speak of Lean Thinking or Lean culture.

In the following sections we will specify the key principles of the Lean philosophy, but first let’s see how the term “Lean Thinking” originated.

To understand the true origin of the Lean philosophy and terms such as “Lean Production” and “Lean Thinking” we have to go back in time more than we might think. In the 1930s, Toyota was beginning to produce automobiles. But with Japan’s entry into World War II and the subsequent postwar period in the 1940s, Toyota found itself on the brink of bankruptcy. In the early 1950s, some of its managers traveled to the United States to visit Ford production plants, which were revolutionizing mass automobile manufacturing. But in postwar Japan the economic situation was very different and the automobile market was smaller and more diversified. Toyota managers, especially Taiichi Ohno, realized they needed a different approach. This would be the germ of what years later would become world famous: the Toyota production system, known in English as Toyota Production System or TPS for short.

TPS is actually the origin of Lean production, although the term would not come into use until several decades later when its principles became popular in the Western world.

In 1990, James P. Womack, Daniel T. Jones and Daniel Roos, from the Massachusetts Institute of Technology (MIT), after five years visiting factories and companies in the automotive sector throughout the world, published their book “The machine that changed the world” (the machine that changed the world) with the results of a detailed study comparing the mass production systems, so popular in the West, with the production systems that followed the methods originated in Toyota. The conclusions were clear. Manufacturers that had adopted this alternative production system to conventional mass production systems were able to produce much more, with much fewer resources and in much less time, all while achieving higher quality and safety. They called this way of dealing with production “Lean Production”.

The book “The machine that changed the world” was an international success, showing data and performance comparisons between mass production and Lean Production. There were more and more managers, supply chain managers, engineers, etc. who wanted to put Lean Production into practice. However, although the results of the study spoke for themselves, it was not easy to extract the concepts and principles on which Lean Production was based, nor to figure out how to make the leap from a mass production system to a Lean system. After all, the Toyota Production System had been slowly forging itself for decades. In order to respond to the need for a global understanding of the Lean philosophy, Womack and Jones embarked on a new project, visiting companies around the world for four years, this time from various business sectors, trying to identify common methods followed by those who had adopted Lean Production. The result of this project led to the publication in 1996 of his book “Lean Thinking: Banish Waste and Create Wealth in Your Corporation” (entitled in its Spanish edition as “Lean Thinking: how to use Lean thinking to eliminate waste and create value in the company”), which exposes those that can be considered the Lean principles, together with the explanation of real cases of manufacturers that had overcome crisis situations by adopting this philosophy, including some as relevant as the legendary German manufacturer of high-end cars, Porsche, the American manufacturer of aviation engines, Pratt & Whitney, or Toyota itself.

The Lean philosophy is an open way of thinking, whose main axiom is to eliminate everything that does not add value from the customer’s point of view, that is, eliminate all waste. But to put this into practice, it is necessary to rely on the five Lean principles: Value, Value Stream, Flow, Pull and Perfection.

In a Lean philosophy, value, or “value” in English, is always determined by customers. Value is what a product or service provides that satisfies customers’ needs at the right time and at a price they are willing to pay. Therefore, all those actions that are carried out and that do not contribute to providing added value from the customer’s point of view are considered a type of waste (muda in Japanese or waste in English).

This is one of the keys to understanding the Lean culture, and what makes it different from other management strategies. In Lean, everything must always be done thinking from the customer’s point of view. A product that is manufactured and distributed efficiently but does not adequately satisfy customer needs is waste.

It must be borne in mind that each business is a link in the supply chain and the figure of the client can in turn be another business, distributor, manufacturer, etc. The consumer is a particular case of client, whose characteristic is that he consumes the product or service for his personal use and not for its resale or transformation into another product or service. Although every business is primarily focused on value from the point of view of its direct customers, the Lean philosophy recommends that you never lose the global view of the supply chain from the point of view of the consumer, which is ultimately , who originates the actual demand.

The “Value Stream” or flow of value in the Lean philosophy is the set of activities that must be carried out to produce and deliver a product or service. In addition to the activities carried out, the flow of information must also be taken into account (purchase orders, delivery notes, invoices, stock information, etc.), that is, how is the communication between the different steps.

Here it is key to keep in mind that the Value Stream refers to the entire supply chain: product design, obtaining raw materials, its manufacturing and transformation processes, distribution and delivery to the customer. Therefore, a company that participates in a supply chain must have a clear global vision of the chain, and not only its direct suppliers and customers.

Value Stream Mapping, or value stream mapping, is the main tool for applying Lean. It consists of visually representing in a diagram all the steps of a process along the Value Stream. In addition to the actions carried out, the diagram will reflect the flow of information generated, the time spent in each step, the distances traveled by each operator, the transportation distances of raw materials and semi-finished products, the inventory levels in each step, etc. This makes it easier to detect which tasks add value and which introduce waste. Value Stream Mapping must be done from the customer’s perspective. Remember that in Lean everything has to be done considering what adds value to the customer.

First, a Value Stream Map of the current state of the process or Current-State Value Stream Map is made, that is, how things are currently being done. Here it is important to see how the actions are carried out in situ, that is, go to the gemba (Japanese word), and not limit yourself to examining data, reports, etc. Once the diagram is made, the statistics (wait times, inventory levels, distances traveled, etc.) are calculated and summarized in a table called the box score. The box score makes it possible to clearly visualize, among other things, the total lead time, the time spent on tasks that provide added value and the time spent on tasks that do not provide added value.

Then a Value Stream Map of the ideal case or Ideal-State Value Stream Map is made, where there is no waiting, transportation, defects, or WIP (work-in-process) inventories, etc., that is, where only activities in ideal conditions and that provide added value to the client. Although the ideal case is unattainable, this makes it possible to compare the box scores of the current state and the ideal, favoring creativity and proposing more daring improvement approaches.

After comparing the Current-State Value Stream Map with the Ideal-State Value Stream Map, it is detected where most of the waste (muda) resides and proposals for improvement are made. Afterwards, a diagram is made with the future state that can be aspired to in practice, that is, the Future-State Value Stream Map, which will serve as a plan during the implementation of the improvements.

The principle of flow, or Flow in English, is that ideally the client will originate a demand (see Pull below) and from that moment on the product or service should never stop along the Value Stream until said demand is satisfied, that is, it should flow. Products and services should go through different steps in which only activities that provide added value for the customer are carried out. Any withholding or waiting is a waste or change, since it does not add value to the client.

For an activity in the Value Stream to be considered as adding value, it must meet the following three requirements:

• The customer must be willing to pay for it.
• You must transform the product or service in some way.
• It has to be done right the first time.

In the West, mass manufacturing processes became popular, following a push system (push in English means to push). With the push system, a previous phase in the manufacturing process or in the supply chain generates production based on demand estimates, accumulating said production until the next phase in the process needs it and withdraws it. The problem with the push system is that inventory accumulates, which requires storage space and time for maintenance tasks. This does not add value to the customer and, therefore, is wasteful, that is, it is silent or waste. In addition, the push system generates production in advance, based on demand estimates and not actual demand, which is the root cause of the bullwhip effect.

In Japan, on the other hand, Toyota promoted a pull system (pull in English means to pull something) implemented with its just-in-time system, in English just-in-time or simply JIT. In a pull system, it is the later phases of a process or supply chain that originate a production request to its previous phase, through a Kanban signal. The previous phase will in turn generate Kanban signals to its preceding phases requesting what it needs to be able to satisfy the demand of its immediately subsequent phase. In this way, only what is necessary is produced, when it is necessary and in the necessary quantity, minimizing the need for inventories. The pull or just-in-time system is, in fact, one of the ways to mitigate the bullwhip effect.

In Western culture, the mentality of “if something ain’t broke, don’t fix it” is very ingrained. In Japan, on the other hand, the production methods originating in the 1950s at Toyota and which have evolved over the decades follow a very different philosophy: “if something can be improved, then it is not enough that it is good, it must be done.” do better.” This is the essence of the Lean philosophy.

With Lean Thinking perfection is sought. Obviously perfection is unattainable in practice, but the important thing is to pursue it. In fact, some of the most successful companies that have embraced Lean have shown that while you can’t achieve perfection, you can get very close.

Continuous improvement, or kaizen in Japanese, is one of the pillars for putting the Lean philosophy into practice.

Waste reduction, or waste reduction, is the goal to pursue when applying the Lean way of thinking. Anything that does not add value from the customer’s point of view is waste. At Toyota, the different types of waste were identified, classified as Muda, Mura and Muri.

It should be noted that “eliminating waste” in Lean does not simply mean cutting costs. In fact, one of the most common mistakes when trying to adapt the Lean philosophy is to move the muda to another link in the supply chain instead of eliminating it. For example, a company might decide to switch from one supplier to a cheaper one, but the latter might have more irregular delivery times. As a consequence, the company would have to increase its safety stock and this would entail costs of warehouse space as well as time and labor in maintenance tasks, all of this being mute and representing a higher global cost than the one that was intended to be reduced. On the other hand, a supplier that could present apparently a higher cost but that follows a Lean approach and, therefore, reliable just-in-time logistics, would allow the reduction of inventories, greater overall savings and greater efficiency.

Muda is the Japanese word that means waste, or waste in English. It is one of the most frequently used words in Lean. There are seven types of molt:

1. Transportation (transport): Transporting products and materials between phases of a process is wasteful, because it does not provide any added value to the customer. The more transport there is, the more possibilities of delays, damage to the merchandise or accidents.
2. You wait (waiting): Waiting times while the process is not advancing is wasteful. This refers to when products are not being transported or processed, or people are waiting for instructions, or for a machine to finish, or due to an unbalanced workload between phases of the process.
3. Excess production (overproduction): Producing more than what the customer needs is wasteful. This results in unnecessary costs of inventory, labor, etc. Just-in-time systems seek to solve this problem.
4. Defects (defects): In the Lean philosophy, everything must be done right the first time. If a defect is allowed to move to the next phase in the Value Stream, it will cause costs in quality inspections, rework, wasted materials, lost time, etc. For example, in a warehouse, picking errors will cause inventory control errors, incomplete or incorrect orders shipped to customers, etc.
5. Inventory (inventory): Inventories do not add value from the customer’s point of view. This is especially relevant in relation to WIP (work-in-process) inventories during intermediate phases of a manufacturing process. Obviously, inventories are necessary in the supply chain. For example, for an online store, its center of activity will be its warehouse instead of a factory. Here, the added value is providing a wide variety of products to consumers, taking advantage of long-tail-based business opportunities, and striving to make shopping very easy and convenient, with fast delivery and reliable and efficient reverse logistics. In this case, if you work with suppliers that are Lean and, therefore, with just-in-time logistics, the online store could drastically reduce the levels of your safety stocks.
6. Displacements (movement): Any movement of people that does not add value to the process is wasteful. For example, during the preparation of orders in a typical warehouse, more than 50% of the movement of the picking operators can be unproductive. In this case, the process can be optimized by choosing the most appropriate picking strategy, such as batch picking and zone picking, using systems such as ATOX Technological Solutions light guidance for pick-to-light and put-to-light operations in combination with intelligent roller conveyors.
7. Excess processing (over-processing): all processing that does not add value to the product or service is wasteful, which may be due to inappropriate use of technology.

Apart from the above classification, there are two types of muda from a management point of view:

• Muda type 1: actions that do not add value but are necessary and, therefore, cannot be eliminated for now.
• Muda type 2: actions that do not add value and are not necessary and, therefore, must be eliminated.

In addition to muda, one must also consider mura-type waste, or unevenness in English, that is, variability. Mura refers to the unwanted variations that can occur in the results of a process, due to differences in quality, variation in raw material costs, delivery times, etc. This leads to costs in quality inspections, rectifications, returns, etc., which are wasteful.

Finally, in addition to Muda and Mura, we must consider the Muri-type waste, or overdoing in English. Muri refers to when too much is demanded of people or equipment, which according to the Lean philosophy, will be due to poor process design. Poorly designed processes will lead to muda and if waste is not addressed, attempts may instead be made to compensate by pushing workers and machinery beyond their capabilities, resulting in muri waste. Keep in mind that one of the bases of the Lean philosophy is respect for people. Without this respect, continuous improvement or kaizen cannot be put into practice.

Kaizen is a Japanese word that means change for the better or continuous improvement. It is about introducing small changes in the processes to gradually eliminate waste along the Value Stream. Sometimes it is necessary to introduce more drastic changes, and instead of kaizen we will be talking about kaikaku.

Continuous improvement implies a change in the way of thinking, always looking for ways to make things even better. It is not enough to settle for something being right. There will always be more moult to be found to remove.

In the Lean philosophy, people are the most important thing, more than any machine or technology. In order to adopt continuous improvement thinking, it is necessary for everyone in the company to get involved, from managers to each and every one of the factory or warehouse operators. Improvement proposals should not be used to find blame, but to make things better, and everyone should be encouraged to propose ways to improve processes. This way of thinking about human capital was one of the great difficulties that arose when Lean systems originated in Japan began to spread to the Western world. If human capital is not properly managed, misgivings, fear of reprisals or lack of recognition will appear. While in Japanese factories that followed Lean thinking, all workers contributed several improvement proposals per month, in Western companies only a few were contributed per year.

Once the Value Stream Mapping has been carried out to identify where the waste resides, improvement projects will be considered, but where to start? One strategy is to analyze the actions that produce muda following the 80/20 rule or Pareto principle according to which 20% of something is responsible for 80% of the results. Thus, efforts would be focused on those 20% of causes that would have the greatest impact on the production of waste.

Lean Manufacturing is applying the Lean philosophy to manufacturing processes. It is what the word “Lean” is most often identified with, because its origin is the Toyota production system (Toyota Production System or TPS) and for years the Lean philosophy was associated mainly with manufacturing. But it is important to emphasize that Lean Thinking can and should be applied to all areas of a company. Some manufacturers have not achieved the results they expected when trying to adopt a Lean strategy because they focused all their efforts only on the manufacturing processes, without applying Lean to the rest of the processes: sales system, customer service, relationships with suppliers, human capital management, etc.

What most characterizes Lean Manufacturing is its contrast to the traditional system of mass production. With mass production, a push system will be followed and the machinery will be oriented to produce large quantities, which require long setup times to change production from one product to another.

This makes it only worth manufacturing in large batches. The manufacturer, then, will wait to accumulate several orders until it pays for him to start production of a batch. This will cause customers to order larger quantities than they currently need to provide safety stock, while the manufacturer will have little flexibility in the face of unforeseen fluctuations in demand.

With Lean Manufacturing, a pull system is followed, that is, just-in-time or just-in-time, and processes will be designed to produce efficiently in small batches. This reduces necessary inventory levels, and production of different products can be rotated more quickly. In this way, variations in demand are more easily responded to and the bullwhip effect is mitigated.

When Lean thinking is applied to warehouse management, we can talk about Lean Warehousing. The optimization of a warehouse begins with the proper design of its layout and using the most appropriate metal racking systems for each type of load, turnover level and merchandise flow.

One of the most typical types of change or waste in a warehouse is the lack of space optimization. Through the industrial mezzanines or mezzanines and the elevated walkways designed and manufactured by ATOX Storage Systems tailored to each warehouse, it is possible to make the most of the space. This, in addition to increasing the storage capacity at height, makes it possible to devise more optimal layouts that allow freeing up land to optimize handling processes.

When storage needs are very high, assuming the high costs of the square meter of land is wasteful. In these cases, clad-rack warehouses and automated warehouses with stacker cranes make it possible to achieve high storage density at high altitudes while optimizing handling performance.

When it is necessary to handle palletized loads in intermediate phases of processes, agility and safety are essential. For example, the live racks manufactured by ATOX, of recognized reliability, allow pallets to move automatically by gravity at a controlled speed, optimizing space by eliminating the need for aisles while maintaining a FIFO flow. In the case of loads with lower turnover levels in which a LIFO flow is sufficient, the ATOX radio shuttle system provides maximum speed and safety with a high storage density, representing a maximum efficiency alternative to drive-through racking. in. The flexibility of the Sherpa radio shuttle designed by ATOX also allows it to provide service with FIFO flow when working with entry points at both ends of the drive-in racks.

With Lean Thinking, the level of automation must be proportioned to the real needs. An excess of technology would introduce complexities with higher maintenance requirements, which in the long run would raise costs without adding value to the customer. At present, where we all live more and more surrounded by technology, it is not uncommon to lose the global vision, ending up giving more importance to technology itself than to real needs. This occurs, for example, when trying to transfer industrial robotization, coming from the field of automotive manufacturing plants, to small warehouses. This introduces greater complexities and maintenance costs, which cause problems in warehouses, where the same specialized maintenance equipment and resources are not available as in those factories. Remember that in Lean everything must always be done thinking about what really adds value to the customer.

ATOX Soluciones Tecnológicas automation systems are carefully designed to respond to the real needs of modern warehouses. As a manufacturer, ATOX adapts its solutions to suit each warehouse, adapting to the different scenarios that it must face in order to achieve high-performance internal logistics.

There are warehouses where you have to face high peaks of work. For example, in pharmaceutical logistics it is common for orders to be concentrated at specific times of the day, due to the time windows for delivery to pharmacies. If the warehouses are not properly designed, there is a risk of overtaxing the warehouse staff to compensate them during these work peaks, generating deaths. This implies the preparation of orders in conditions of great stress, favoring errors and, therefore, generating muda. In cases like these, the Disban H automatic dispensers, carefully designed by ATOX, energy efficient, robust and very reliable, allow automatic order picking at very high speed, even with high workloads. ATOX automatic dispensing works in coordination with intelligent roller conveying to achieve maximum performance.

In a typical warehouse, more than 50% of the operating costs correspond to the preparation of orders and the greatest amount of wastage such as muda is due to the movements of the picking operators. In modern warehouses, with increasing demands, slotting is not enough. The ATOX light-guided system in combination with intelligent roller conveyors allows adopting the most appropriate picking strategies for each warehouse, such as zone picking (or zone picking) and batch picking (or batch picking). Through pick-to-light and put-to-light operations, order preparation is streamlined, reducing picking errors and keeping inventory synchronized with warehouse management software. In addition, operators are guided through the most optimal route, thus reducing the distances covered.

ATOX intelligent roller transport manages to eliminate the need to move, allowing each warehouse operator to remain at their post. Roller conveyors integrate sensors and diverters acting as sorters that allow the merchandise to be automatically classified according to the status of an order or its destination.

Sometimes it is referred to as “Lean Six Sigma” or simply “Lean Six”, as an attempt to combine the six sigma methodology with Lean principles. But this is debatable. Lean is an open way of thinking, and the different tools that already exist for management, quality control, etc., can be used as long as they do not generate muda, mura or muri. In fact, six sigma focuses on eliminating variability, relying on statistical tools, and it is a very effective system to reduce mura-type waste. Defenders of the Lean philosophy are in favor of considering six sigma as such, as one more tool that can be integrated naturally with a Lean strategy. But it must be taken into account that Lean Thinking encompasses much more than six sigma, it is a way of thinking that once adopted will be applied to each and every one of the aspects of a company: production, customer service, service post-sales, administrative processes, etc.

Having its origin in the Japanese production methods, originated in Toyota in the 50s, the Lean philosophy has crossed borders and fields, and today enjoys fervent defenders and followers, demonstrating drastic results when applied in the different links of the companies. supply chains and in various business sectors, as well as in institutions and public administrations.

Lean is more than a production system or a management method. Lean is a way of thinking that, once incorporated, will mark the present and the future of a company, with an attitude of continuous improvement. If we had to summarize what Lean is, we could say that it is to achieve excellence in customer service using the least amount of resources for it.

ATOX Storage Systems, with more than 50 years of history, celebrated its 25th anniversary in May 2016 since Grupo ATOX acquired the manufacturing plant and began a comprehensive update, continuous improvement and internationalization plan. At ATOX, people are the most valuable and this has allowed us to grow by pursuing excellence in service to our clients. ATOX is currently recognized for its high quality and commitment to its customers, with a consolidated presence in Europe and Latin America.

As a manufacturer, ATOX’s adaptability is one of the keys to success, adapting its storage systems to the specific needs of each client, assuming new challenges with each project. As an example of this, ATOX is the European leader in the manufacture of high-bay clad-rack warehouses, both for standard loads and non-conventional loads.

Continuous improvement is the essence of the success of ATOX Storage Systems. In the words of Mr. José Blásquiz, president of Grupo ATOX, “none of this would have been possible without ATOX’s technical, commercial, productive and administrative team […] and if we were not always thinking about the future”.