Application of Lean in a Small and Medium Enterprise

*Venkataramanaiah Saddikuti, Saketh Saddikuti Venkat and Ganesh Babu Shanmugam*

#### **Abstract**

Application of lean principles in manufacturing as well as services has been revolutionizing the operations for more than five decades. Many large as well as small enterprises have implemented lean and reported benefits in both direct and indirect activities of business. Due to advent of digital technologies and better understanding of process improvement approaches made lean much more effective across many sectors. In this chapter, we highlight various elements of lean and its application to a small enterprise in food processing sector in India. We draw some useful insights based on the implementation of lean and challenges faced by SMEs.

**Keywords:** lean, Toyota Production System, customer value, value chain, food processing, SMEs, Total Quality Management

### **1. Introduction**

*"One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost" [1].*

*Henry Ford 1926*

Lean was identified at Toyota Production System (TPS) to eliminate or reduce waste or non-value added activities in the manufacturing system. It is also believed that application of Lean was implemented by Henry Ford at Ford Motors in 1920s. Lean is defined as by the National Institute of Standards and Technology Manufacturing (NISTM) Extension Partnership's Lean Network [1]: "A systematic approach to identifying and eliminating waste through continuous improvement, flowing the product at the pull of the customer in pursuit of perfection." It is a systematic approach for reducing different types of wastes which are constituting around 95% of the total waste. Important elements of TPS is given in **Figure 1**. TPS/Lean system was built on two major aspects (i) Elimination of Waste and (ii) Respect for people. TPS has three pillars (JIT, Continuous improvement and Jidoka) with fundamental blocks of standardized and stable process and level production. Some of the wastes in manufacturing environment are given in **Figure 2**. **Table 1** gives the brief description of eight wastes in TPS [2, 3].

The main objective of this chapter is to highlight various elements TPS and wastes in a typical manufacturing organisation and demonstration of application of

#### **Figure 1.**

*Elements of Toyota Production System.*

**Figure 2.** *Different types of wastes in manufacturing.*


**Table 1.**

*Different types of wastes in manufacturing.*

lean at a small food processing enterprise. This chapter is organised in five sections. Section two highlights the methodology adopted in the chapter, section three describes building blocks and benefits of lean, section four application of lean at a small food processing organisation and finally conclusions in section five.

### **2. Methodology**

In this study, we have adopted a generic method for literature search and industry practices in the area of lean manufacturing. Literature search has been carried out using key words like Lean, SMEs, Food processing, Toyota Production System, customer value, TQM from the databases like ABI, EBSCO, Google Scholar, etc. The search does not include other databases. Apart from these we have also used the case of an SME in food processing sector. The author's own research and consulting experience in the area of lean and transformation of SMEs in manufacturing and services.

## **3. Building blocks and benefits of lean**

Lean/TPS uses various tools or building blocks which are proven and easy to implement in practice for minimizing or elimination of waste. Major building blocks of Lean include the following:


These are not only used in manufacturing organizations but also apply equally to service organisations. Summary of these are given in **Table 2**.

Many organisations around the world from manufacturing and service organisations have reported both operational and administrative benefits of successful implementation of Lean principles. According to NISM survey of firms implemented lean have reported operational and administrative benefits and are given below.
