Lean Management Systems (LMS) is a strategic concept utilized by business leaders to initiate radical changes in their companies. The goal of every enterprise is to make a profit by increasing revenue while at the same time lowering production cost. This is where LMS comes in. The correct use of LMS principles will allow a company to reduce waste, in terms of using the least amount of resources to accomplish a task.
This in turn will result in enhancing the value of the product while allowing the manufacturer to deliver it on time and thereby increasing customer satisfaction. LMS is also about removing constraints – the obstacles that prevent an organization to increase efficiency and productivity. LMS principles can improve the standard of quality in firms struggling to survive in a highly competitive business environment.
According to experts, LMS will help an enterprise to achieve the following (Shinkle, Gooding, & Smith, 2004):
- Value enhancement through waste elimination or reduction;
- Flow improvement – viewing everything as a process that creates value;
- Speed – responsiveness in enhancement and cycle time reduction; and
- Flexibility – adaptability and the agility to handle customer and market dynamics.
One of the most important aspects of LMS is cycle time reduction. If business leaders can dramatically improve this facet of the operation, then the company will experience a tremendous boost in productivity and efficiency. Work can be completed quickly and products can be delivered to customers ahead of schedule while at the same time work can be started on other projects. This can be achieved by looking at every feature and component of the production process. Business leaders must also strive to continuously improve their techniques and finding ways to make a leaner system.
Another practical application of LMS is in finding ways to use the minimum number of workers and least amount of time and money needed to accomplish a task and manage a process (Shinkle, Gooding, & Smith, 2004). There will be value enhancement because it requires less money and effort to produce the product. This means that the company will earn more because money that is saved is also money that is earned.
On top of that customer satisfaction – due to responsiveness in enhancement and cycle time reduction – will increase demand for their product. LMS also deals with the removal of constraints or bottlenecks that hinders a company from reaching its goals (Bell, 2006). Constraints such as the lack of raw materials or insufficient labor force can easily stall production. Business leaders must learn to anticipate market demands and plan ahead so that there will be no disruption in the production cycle.
Toyota, a Japanese based company, is a globally recognized brand. In the United States alone Toyota cars are popular due to perceived quality and value for money. It is therefore interesting to know that even before LMS became a significant topic of discussion in business circles, Toyota engineers and business leaders were among the first to apply LMS principles into their production process (Toyota, 2009). One example is Toyota’s use of fully-automated machines that can detect problems and shuts down production, therefore minimizing the number of low-quality products (Toyota, 2009). Raw materials are not wasted because the system will stop producing until the problem is fixed.
Application
Valley Manufacturing Company (VMC) will do well to learn the principles of LMS and study how Toyota was able to use it to their advantage. The said company is at a critical point in its history due to global and competitive forces that can easily drive it out of business. For instance, VMC is being forced to accept projects requiring assembly operations. Moreover, competitors are outsourcing assembly work to China. This means that in order for VMC to survive and thrive it must drastically improve the assembly side of its business operations.
VMC will also improve its performance if it will learn to identify hindrances to operational flow. The most obvious problem is the lack of space because VMC has devoted a significant amount of floor space to the injection molding side of its business process. Frank Richard, CEO of VMC must not be afraid to make tough decisions such as reducing its injection molding capability to give way to the more lucrative and in-demand assembly operations. It is also possible that since VMC has not yet mastered every aspect of the assembly business there are still aspects of assembly production that requires improvement. VMC must continuously look for ways to improve its operations in order to reap the rewards of LMS.
Conclusion
In a highly competitive business environment a company cannot afford to make demands. Instead, the best thing to do is to adjust to competitive forces. VMC is not yet in struggling for survival because U.S. automotive companies has decided to outsource more than 50% of its in-house assemblies to outside companies and VMC is one of the firms that benefited greatly from this strategy. The only problem is that China is becoming a more practical option because of its cheap labor force.
VMC has to prove to their clients and to various OEMs that they can provide high-quality products that are in their price range while at the same time assuring them of a faster turnaround rate. Yet, this can only be achieved if VMC will continuously apply LMS principles. In this regard VMC will have to turn their weakness into strengths and remove constraints and hurdles that can prevent them from achieving their goals.
References
Bell, S. (2006). Lean Enterprise Systems. New Jersey: John Wiley & Sons, Inc.
Shinkle, G., L. Gooding, M. Smith. (2004). Transforming Strategy into Success. New York: Productivity Press.
Toyota. (2009).Toyota Production System. Web.