The Critical Connection Between Lean Manufacturing and World Class Quality

The philosophy and techniques involved in operating a “Lean” organization are absolutely critical requirements for World Class quality performance.  This article explains the linkages.

The fundamental Lean Manufacturing philosophy of inventory reduction, along with multiple specific Lean techniques, drives huge improvements in overall quality levels.  These affect both internal cost-of-quality as well as quality at the customer site.

In addition, Lean attacks many “quality” aspects that go beyond the product specifications, such as responsiveness and on-time delivery performance.

And, the Lean manufacturing philosophy, when correctly done, forces an environment of continuous improvement.

Reduce Inventory and Lead-Times

We have experienced order-of-magnitude improvements in company-wide overall quality levels, often within the first few months, with the only action taken being the reduction of inventories.

First, some background: We will use the terms “inventory” and “lead-time” interchangeably.  To explain this relationship, we use a simple gravity feed conveyor for illustration:

The amount of WIP relates directly with lead time

In the above illustration, operation A processes a part, and then puts it on the conveyor sending it to operation B.  If the operations can process one box per day, the lead-time can be seen to correlate directly with the amount of inventory in queue.

Small WIP equates to short lead times

Think of inventory as items waiting in line for their turn.  Obviously, the more items in line, the longer it takes to get through the process, i.e. inventory is directly related to lead-time.

So how, exactly, does reducing inventory improve quality?

Lots of inventory means lots of potential defects.

This simple, but powerful, relationship is often overlooked.
If I have 1000 items in inventory, and I discover a defect:

  1. I may need to inspect all 1000 to see if that same defect is present, and
  2. I could potentially have 1000 defective units that will need to be repaired, downgraded, or scraped.

You’ll note that these same non-value adding inventory carrying costs (inspection, repair, downgrade, or scrap) are present whether the inventory is in the form of Raw Material, WIP, or Finished Goods.

Now compare that to a lean environment with 100 items (not 1000) in inventory.  Needless to say, the cost consequences of a discovered defect are considerably reduced.

The week after we began working with a large producer of plated steel, a hidden defect was discovered that could only be detected several operations downstream.  The defect resulted in the downgrading of all of the in-process steel, at a total cost of $600,000.

Six months later, as a result of permanent work-in-process inventory reductions achieved via strict kanban controls, this client saw their total quality risk for a similar defect reduced by >70%!

Long lead times result in a “cold trail” when trying to identify the root cause of a defect.

Perhaps the largest impact that inventory reduction has on quality is in reducing the time lapse between cause and discovery.

As mentioned above, you can think of inventory as items standing in line, waiting for their turn.  The more items in line, the longer each item must wait.

We’ve discussed the cost of inspection and correction.  But what about the critical process of identifying and eliminating the root cause of the defect, i.e. prevention of a repeat occurrence?

One of the critical requirements for the elimination of quality problems is the ability to identify the root cause of the defect.

Inventory, by adding to lead times, delays the discovery, and hence reduces the likelihood of being able to recognize something that changed that might have caused the defect.

time lag and defect discovery

The ability to walk a defect back to the operation that caused it, on the same shift, greatly enhances the likelihood of identifying an underlying cause: “Oh yeh, I just changed tooling” or “I just started using the parts from a new vendor” or “I noticed that the machine started to sound a little different” etc.

Time is the enemy of causal discovery.  And inventory increases the time between creation of a defect, and its discovery.

I can’t tell you how many times we’ve seen companies, with long lead times (lots of inventory) fail to correctly diagnose the cause of a defect, only to have the same defect reoccur the next time they ran that product.

In addition to the basic concepts addressed above, the “Lean Toolkit” contains several powerful techniques that specifically target product quality improvement.  And, while some of these techniques specifically address quality improvement, others have multiple objectives, but also result in quality enhancement.  These techniques include:

  • Sequential Inspection
  • Stop the line / Fix the problem
  • Failsafe Devices
  • Standardized Parts and Processes
  • Design for Manufacturability
  • Operator Checklists
  • Work Station Organization (5S)
  • Vendor Base Reduction
  • Supplier Development

Let’s look at these in more depth:

Sequential Inspection asks each operator to think of him/herself as a “customer.”  The preceding operation is the “supplier.”  As a customer I have a right to expect a quality product.

Sequential inspection identifies the key attributes that each operator should check prior to performing his/her own operation.  Doing so further minimizes the number of defects that can be produced before discovery.  It also provides immediate feedback to the causing area.

Stop the Line and Fix the Problem is pretty self-explanatory.  Instilling the discipline to halt production puts a spotlight on the defects, as, when, and where they occur.  Production resumes only after the problem has been corrected, and a clear accountability has been assigned to “failsafe” the process.  Needless to say, instilling this discilpline can have a dramatic impact on overall product quality.

Failsafe is the technique of making an operation “incapable of producing a defect.”  Once the cause of a defect has been discovered, we attempt to install failsafe devices to make the process robust enough that either it can no longer produce this defect, or that if a defect does occur, it is immediately “flagged” for human adjustment / correction.

Common failsafe devices include go/no-go gauges, limit switches, optical sensors, weight checkers, torque wrenches, on-machine gauging, lock-up devices, part re-design, one-way fixtures, parts standardization, etc.

Standardized Parts and Processes:  The basic idea is to minimize the “opportunity for error.”  In addition to the efficiency gains attributable to standardization, the likelihood of installing a wrong part is reduced.

We worked with a natural work team that was able to reduce an assembly from 15 different fastening devices to 4.  There was an immediate improvement of both quality and efficiency as a result.

Design for Manufacturability:  Some product designs are just flat difficult to produce!  Simplifying the design, standardizing parts and processes, and taking into consideration the production methods, equipment, and tooling capabilities can make for huge improvements in both cost and quality.

Operation Checklists, and Work Station Organization (5S) are additional mechanisms to minimize the chance of an error creeping into the process.

Just as you wouldn’t want your pilot to skip over his/her pre-flight checklist, a “bulletized” listing of critical steps/checks helps operators bolster their quality process.

And a thorough workplace organization discipline (5S) keeps tools, parts, and fixtures in pre-determined locations.  Clear labeling, color coding, shadow boards, etc. help to minimize the chances of an error.

Vendor Base Reduction narrows your suppliers to only those capable of providing quality parts and assures raw material consistency.  I recall a client that had a huge problem created when they bought an electrical component from another supplier.  The new parts DID meet all the specs.  It turned out, however, that some additional critical quality parameters had NOT been specified.  The parts from the old supplier just happened to work!

Another client had significant machine set-up issues on some of their automatic equipment.  Setting the machine to the previous settings did NOT work, primarily, because the raw material came from a variety of suppliers and each had slightly different properties.  If the operators did not “tweak” the set-up, un-usable parts would be generated.  And, during this adjustment period, scrap was being generated.  Note that while the raw material from all sources would work satisfactorily in the end unit, the set-up issues were substantial.

Note that some of our supplier problems are likely internally generated.  It’s probably worth taking a look!

Note: A quality “product” is the minimum requirement.

Define product quality

Customers also expect their suppliers to be responsive (short lead times), flexible (small lot sizes, and small minimum order requirements), and 100% reliable (on-time delivery performance).

We have already discussed how inventory reduction shortens lead times.  Inventory reduction also forces lot sizes to be reduced.

But how does Lean improve delivery performance?

Let’s go back to our analogy of items standing in line waiting for their turn.  The longer the line, the longer the lead-time.

But what happens when a critical customer calls and demands that his order be delivered in less than our standard lead-time?

You’re right!  We expedite his order by moving it to the front of the line.  And what impact does that have on the rest of the orders?

Right again!   It makes some of those orders late!


And, in addition to long internal lead times causing more expediting, long lead times also force our customers to “guess” what they’ll need further out.

The crystal ball gets hazy out there, so the customer places orders, then requests changes, causing even more expediting and non-value activities.

The bottom line is quite simple, and extremely powerful.
Lean Manufacturing philosophy and techniques have a huge positive impact on both product quality and on customer perceived total quality.

If you would like to discuss your specific situation, send us a note or give us a call.   There’s no charge and I can guarantee that you’ll find the time spend “Value Adding”!

All the best on your lean journey.

Jack B. Harrison
Senior Partner
The Hands-On Group

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