Accordingto Sanchez and Perez (2001), one of theprimary goals of lean manufacturing is to eliminate any step, process, and materials that donot add value to the final product or service.
Storage of inventory, asan example, does not add value to the product and should be eliminated wheneverpossible. Inventory levels could be reducedby reducing the time the machines spend standing due to breakdowns andmalfunction through preventative and predictive maintenance. Other techniquesfor reducing inventory could be a simultaneous reduction in manufacturing lotsizes and set-up times and the use of commonparts to manufacture different products.
Another source of zero-value activities is the transport of parts within the company. This activity does not add value to the product,but increases lead times. In lean manufacturing,the machines are laid out in flexible work cells to eliminate the frequency ofmovements among machines (Webster, 2008).According Keyes, Nahn and Lauver (2009) the reduction of non-value addingactivities improves operational efficiency which in turn can provide increasedopportunity for profitability and enhanced position among the competition. Theauthors conducted a case study aimed at measuring the effect of leanimplementation at a low-volume high variety manufacturer. Performance measuresin different categories such as financial (gross profit), operational andmaterials management were identified andmeasured three months before and three months after the implementation of leanmanufacturing. As expected the organization’sfinancial measures, i.e.
, gross profit improved after implementation of lean.The financial improvement was recognized due to the reduction in the cost of goods sold. The cost of goods sold hadreduced due to the reduction ofmanufacturing costs. Before lean implementation, the cost of goods as apercentage of sales averaged 86% and following the implementation of lean manufacturing the cost of goods sold as a percentage of sales reduced to76%. Sanchez and Perez (2001) stated that A study of Italian manufacturingcompanies showed that lean manufacturing companies used more teams in problem-solving, that workers performed ahigher variety of tasks, and that the proportion of implemented employees’suggestions was higher than in non-lean manufacturing companies.
In anothercase study of lean implementation using VSM hasmentioned by Singh et al. (2010) as an Indian manufacturing industrywitnessed 92.58% reduction in lead time, 2.17% reduction in processing time,97.
1% reduction in work-in-progress and 26.08 % reduction in manpower requirement. According to Singh et al. (2010) the goal of lean manufacturing isto reduce inhuman waste effort,inventory, time to market and manufacturing space to become highly responsive to customer demand at the same timeproducing quality products in the most efficient and economical manner.
Inthe same context, Worley and Doolen (2006) argued that lean manufacturing is often associated with benefits such asreduced inventory, reduced manufacture times, increased quality, increasedflexibility, and increased customer satisfaction. Lean implementation resultsin improved output and quality levels andachieves this using fewer resources, such as raw materials and employee effort.