Choosing what works

High-mix, low-volume small manufacturers must supplement the right lean tools with other strategies

By Shahrukh Irani

The essence of lean thinking is the identification and elimination of waste in all administrative and manufacturing processes of a production system. Waste is any element or activity that does not provide value to the customer. Value is anything that the customer is willing to pay for. Lean theory holds that customers pay for the final product, so they deserve price cuts from cost reductions derived from eliminating wastes in the process of fulfilling orders. Eliminating waste is an immediate, simple and effective strategy to impress customers, cut operating costs and improve profit margins. Even job shops that make hundreds of different components or assemblies can, like Toyota, find waste in their administrative and manufacturing processes, and therefore gain savings by eliminating or reducing those wastes.