ASSIGNMENT # 1

How lean manufacturing is different from traditional

manufacturing?

Name: Muhammad Athar Jamil Roll no. B08-018

Course: Operations Management Date: Feb 14, 2011
Lean manufacturing is a production practice that considers the expenditure of resources for any
goal other than the creation of value for the end customer to be wasteful, and thus a target for
elimination. The technique often decreases the time between a customer order and shipment, and
it is designed to radically improve profitability, customer satisfaction, throughput time, and
employee morale but it is in direct opposition with traditional manufacturing approaches
characterized by use of economic order quantities, high capacity utilization, and high inventory.
Traditional manufacturing methods were developed during the age of mass production which
focused on economy of scale and machine utilization. It created the idea that if the machine was
idle, it was loosing money, so it was kept running at all costs. Traditional companies achieve
customer satisfaction by maintaining large inventories in anticipation of customer orders. They
did this by keeping a machine running with a specific setup for as long as possible to reduce the
unit cost.

The differences with respect to overall organizational characteristics and manufacturing

methods in these both types of manufacturing systems are shown as follows:

ORGANIZATIONAL TRADITIONAL LEAN

CHARACTERISTICS MANUFACTURING MANUFACTURING
Business Strategy Product-out strategy focused on Customer focused strategy focused
exploiting economies of scale on identifying and exploiting
of stable product designs and shifting competitive advantage.
non-unique technologies
Customer Satisfaction Makes what engineers want in Makes what customers want with
large quantities at statistically zero defect, when they want it, and
acceptable quality levels; only in the quantities they order
dispose of unused inventory at
sale prices
Leadership Leadership by executive Leadership by vision and broad
command participation
Organization Hierarchical structures that Flat structures that encourage
encourage following orders and initiative and encourage the flow of
discourage the flow of vital vital information that highlights
information that highlights defects, operator errors, equipment
defects, operator errors, abnormalities, and organizational
equipment abnormalities, and deficiencies.
organizational deficiencies.
External Relations Based on price Based on long-term relationships
Information Information-weak management Information-rich management based
Management based on abstract reports on visual control systems maintained
by all employees
Cultural Culture of loyalty and Harmonious culture of involvement
obedience, subculture of based on long-term development of
alienation and labor strife human resources
Production Large-scale machines,
functional layout, minimal
skills, long production runs,
massive inventories
Operational capability Dumb tools that assume an
extreme division of labor, the
following of orders, and no
problem solving skills
Maintenance Maintenance by maintenance
specialists
Human-scale machines, cell-type
layout, multi-skilling, one-piece
flow, zero inventories
Smart tools that assume standardized
work, strength in problem
identification, hypothesis generation,
and experimentation
Equipment management by
production, maintenance and
engineering

MANUFACTURING TRADITIONAL LEAN

METHODS MANUFACTURING MANUFACTURING
Production schedules Forecast — product is pushed Customer Order — product is
are based on… through the facility pulled through the facility
Products Replenish finished goods inventory Fill customer orders
manufactured to… (immediate shipments)
Production cycle times Weeks/months Hours/days
are…
Manufacturing lot size Large, with large batches moving Small, and based on one-piece
quantities are… between operations; product is sent flow between operations
ahead of each operation
Plant and equipment By department function By product flow, using cells or
layout is… lines for product families
Quality is assured… Through lot sampling 100% at the production source
Workers are typically One person per machine With one person handling
assigned… several machines
Worker empowerment Low — little input into how High — has responsibility for
is… operation is performed identifying and implementing
improvements
Inventory levels are… High — large warehouse of finished Low — small amounts
goods, and central storeroom for in- between operations, ship often
process staging
Inventory turns are… Low — 6-9 turns pr year or less High — 20+ turns per year
Flexibility in changing Low — difficult to handle and adjust High — easy to adjust to and
manufacturing to implement
schedules is…
Manufacturing costs Rising and difficult to control Stable/decreasing and under
are… control