Manufacturing: What’s holding back lean?

Though its visibility is growing, lean practices still haven’t flourished in the US.

By Allison Manning, Associate Editor -- Modern Materials Handling, 9/30/2008

Many companies are still shying away from embracing lean practices, hesitant to break from longtime, but possibly wasteful, processes.

Narayan Laksham, president and founder of Ultriva, a provider of lean manufacturing solutions, spoke last week during National Manufacturing Week on a panel discussing the current state of lean manufacturing. 

Lean is prevalent in Japanese culture, Laksham said, especially in automotive plants, and Europe is also doing fairly well in terms of lean practices. But the US is slightly behind the curve, held back in part by a lack of creativity in manufacturing. Companies often look to cut costs by turning to outsourcing first, which is “really not the greatest thing,” Laksham said.

“We have through our client base proven that you can compete with any manufacturer in China if you use lean principals on the shop floor in the US,” he said. 

American accounting practices have also held back change and reduction in inventory levels. One of Laksham’s co-panelists, a lean accountant, said a company’s high inventory – a negative quality for a lean organization – reflects well on its balance sheet to Wall Street. Low inventory frees up cash flow.

“There’s a mismatch between what needs to be done on the floor versus what the corporate accounting is looking for,” Laksham said. “That’s causing a certain level of friction.” 

But the biggest barrier, he said, is the cultural change. Warehouse managers have been doing their business a certain way for decades and may be uneasy about fixing a process they don’t view as broken.

“The only way these changes will happen is if there is a corporate mandate and someone goes down and explains to people why doing this really is going to improve the quality of their work and take away headaches,” he said. 

“Everybody’s talking about cost reduction,” Laksham continued. “We’re talking about value addition.”

Only in the last three or four years, has there been a much greater awareness of lean processes, Laksham said. More executives are going down to the shop floor and telling the plants that they will throw their support behind lean initiatives. 

“I’d definitely say, in the last 18 to 24 months, there’s been what I call the tipping point, where lean is getting into the mainstream,” Laksham said.

There has been plenty of spending on products to increase productivity, but often, these products are optimizing processes that aren’t very efficient to begin with. “That’s sometimes where we fall apart,” he said. “Automating a bad process, you aren’t getting anything out of it.” 

For example, even the best and most extensive conveyor system isn’t going to help if one SKU is spread across five different locations, due to too much inventory. If the order picker can’t find the item, it will never get to the point of consumption. The same applies to ordering bigger lot sizes, looking to save money and reduce travel time. But by not checking how much is actually used on the floor, and not having enough room to stock the inventory, can create other problems. If suddenly your business changes direction, months of inventory could be left obsolete and unused.