The main benefit of a lean manufacturing strategy is the elimination of waste. This does not just apply to waste in terms of materials, but the inefficiencies in all of its forms including manpower and system processes.
Looking at it from the customer’s point of view, the prime principle of lean manufacturing is to identify value and quality. Any company that does this will then strive to supply top quality products within specific timescales. By achieving this, customers will be satisfied and will be more likely to place repeat orders, ultimately allowing improved business process management and improved productivity.
Statistics from the Manufacturing Advisory Service
The Manufacturing Advisory Service is a government backed agency whose remit is to help manufacturers improve their productivity, develop their capabilities, enter new markets and become leaders in their fields. Across the thousands of projects they have undertaken, the following statistics have been gathered about the changes brought about by businesses implementing lean principles.
- Delivery targets met – up by 26%
- Increases in stock turnover – up by 33%
- Improved productivity – increased by 25%
- Reduction in scrap – reduced by 26%
- Space efficiency – improved by 33%
Just imagine what your business productivity and profits could be like if you achieved these sorts of statistics from utilising lean principles.
10 signs that indicate your business needs to adopt lean principles
- High rate of defects and rejects requiring rework (both in-house and at the customer’s premises)
- Too much manufacturing downtime caused by machinery and process breakdowns
- High levels of inventory
- Not turning over stock quickly enough
- Too much space being taken up by production and storage
- Low levels of efficiency in terms of output per man hour
- Constantly failing to meet delivery deadlines.
- Finding it difficult to implement change
- Suffering from low employee morale
- Not achieving high levels of customer satisfaction
The financial benefits
Some may consider having high levels of stock as being a benefit to a business. Yes, it is an asset, but if stock levels are unnecessarily high and take ages to shift, they can prove to be a major hindrance. Stock is expensive to store and ties up money, with the potential to cause cash flow issues. Reducing stock while still supporting continuous production through just-in-time principles will help release cash back into the business.
For most businesses, they arrive at a selling price for their products by taking the costs of manufacture and adding on margin - but if the sales prices are set too high, customers will go elsewhere, if they are set too low you may have the volume but not the profits. Pricing is a fine balancing act, the formula should be working to is selling price - costs = profit.
Lean manufacturing will improve productivity and help drive costs down. Using this formula means that the lower you drive your costs down, the more profit you make. It means that companies that successfully operate lean manufacturing principles will be more profitable.
WinMan ERP software is a leading scalable ERP solution that is beneficial for businesses that want to successfully adopt lean manufacturing principles and processes. You can find out more by completing the contact form or by calling us on 44(0)121 749 8050.