A recent Wall Street Journal article highlighted how Starbucks was applying lean techniques to improve operations.
The article shows how the techniques are being applied in a non-discrete manufacturing environment.
We are seeing a similar trend.
However, many firms struggle with translating the lean system developed by Toyota for their environments. This can be especially difficult in long supply chains or in a environment where there is inherent batch or tank processes.
The excellent book by Hopp and Spearmen, Factory Physics, helps translate Toyota's system to other environments by defining lean as:
A manufacturing supply chain is lean if it accomplishes its fundamental objective with minimal buffering costs.
They define three types of buffers a firm can have: inventory, time, or capacity. In short, if you can make your product with a minimum of inventory, short cycle times, and excess capacity, you are getting closer to lean.
We are finding that optimization can be a great way to minimize these buffers and evaluate the trade-offs between them.
With inventory optimization, firms realize that the may not be able to eliminate inventory completely or that they have removed it from the wrong location. In these cases, optimizing inventory is important to achieving a lean operation.
In process manufacturing plants, these firms are relying on high-end optimization to better schedule the plants. They realize that they cannot get around batch and tank production, set-ups, cleaning operations, and other realities in the process industry. Optimization-based scheduling allows them to reduce manufacturing costs, improve inventory, and achieve lean operations.