Managing a Lean Enterprise

Imagine a plant with 3,000 lift trucks sitting outside, tools in the wrong location and assembly line personnel working 72-hour weeks, modifying every truck to add its missing parts.

Stressed yet?

This was the scene at Mitsubishi Caterpillar Forklift America Inc. (MCFA) seven years ago as the manufacturer and distributor of lift trucks faced the challenge of improving operations.

To ease these tensions and combat the chaos, MCFA began implementing a process commonly referred to as lean manufacturing, a practice centered on streamlining the supply chain to support the end user.

With roots dating back to Henry Ford, the Toyota Production System and GE's Six Sigma, lean manufacturing is hardly a new concept, but with end trade-offs like more options for customers, larger percentages of production costs savings and a strong work culture, the practice has become widely accepted as a great way to do business.

Admittedly, planting the seed and managing the lean process can be difficult at first. After the company's initiation of lean in 2003, it took three to five years to see visible bottom-line results such as millions saved in parts and labor costs, an 80% reduction in internal manufacturing lead time, a 75% reduction in manufacturers' warranty claims and increasingly fewer safety incidents.

Though difficult to start, once a staff has fully embraced lean manufacturing and it takes root in a company culture, the idea of continuous improvement takes hold. The lean legacy is so engrained at MCFA that long after current management leaves, the processes will continue.

Spreading the Concept

Although the lean process caught on in the industry following the review of the Toyota Production System in the 1990 book The Machine That Changed the World by Womack, Jones and Roos, the practice has spread extensively over the past decade because of its reputation to continually improve, cutting out waste in production, supply chain and management (see sidebar, “Leaning in the Right Direction,” p. 17).

Lean is a fairly common practice in the manufacturing industry, with even more manufacturers moving towards implementing it. These practices have been put to use in the material handling facilities, starting in Japan with companies like Toyota, and spreading to Europe and the United States. In recent years, such U.S. companies as Caterpillar and John Deere have adopted and formalized their production systems, significantly improving their overall operations.

Spreading the concept has been a group effort, with companies helping others improve their overall processes and flow by offering benchmark tours of their plants to local manufacturers and even competitors. In Houston, the Texas Manufacturing Assistant Center helps smaller manufacturers execute lean concepts. The University of Houston recently did a study for the Houston Police Department to reorganize its impounded inventory storage, helping the police department to reduce inventory, locate items more quickly and become more efficient.

Looking Lean

If someone were to walk into a lean manufacturing facility, they might notice practices like building products to order, providing a dealer pool and hosting just-in-time inventories.

Building to order allows customers to choose any option offered, leading to a highly customized, configurable product built to exact specifications. This process is highly visible down the production line, because no two orders are the same.

At MCFA, the dealer pool is a small strategic stock of products stored at the plant. With this, dealers have a selection of pre-made products to choose from, allowing a fast turn for their customers if needed.

Just-in-time inventory reflects its namesake — parts are ordered so they arrive on the line just in time to be added to the destined lift truck. This concept strives to reduce in-process inventory and associated carrying costs, improving material flow to a high-speed, high-turnover, low-touch supply chain.

Achieving Results

These processes, when set up properly, lead to a faster supply chain and a drastic reduction in lead times.