Benefits From Lean and Cellular Manufacturing

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Inventory & Scheduling Benefits

Lean manufacturing benefits extend to inventory, scheduling and production control. The functional layout presents severe scheduling and inventory control difficulties. Cellular layouts, a feature of Lean Manufacturing, simplify the underlying process and thereby simplify scheduling.

Every inter-departmental move requires an outbound queue and an inbound queue. Such queues tend to be quite large because it is difficult to precisely time the completion of each operation and coordinate the subsequent move. Cellular operations dramatically reduce material movement. This consequently reduces the number of queues and the inventory in each queue.

Lot sizes tend to be larger in a functional environment. This partly results from the complexity of scheduling. It seems easier to schedule a small number of large lots rather than a large number of small lots. Equipment selection also plays a role. Functional layouts lend themselves to large-scale equipment. Such equipment processes a wide range of products and increases the volume for a given process. Large-scale equipment also tends to reduce direct labor and appears to be more efficient. But large-scale equipment is often difficult to setup. It must address a wider range of products. Expensive, large-scale equipment requires high utilization. High utilization requires more inventory.

Element	Functional	Cellular	Improvement
Lot Sizes	Large	Small	50%-100%
Queues	12-30	3-5	50%-80%
Stocking Policy	Make-To -Stock	Make-To-Order	Eliminate FG Stock
Inventory Turns	3-10	15-60	60%-90%
Throughput	Weeks	Hours	50%-90%
Equipment Utilization	40%-100%	20%-80%	Functional Utilization Often Unrealized
Scheduling	Complex (MRP)	Simple (Kanban)	Much Easier

Average throughput time is directly proportional to inventory. We refer to this relationship as Little's Law. When inventories shrink in a cellular environment, average throughput time shrinks proportionately. The reduction in inventory frees up capital and space for more worthwhile investment. The improved throughput time improves customer response and helps stabilize the system.Duplication of equipment in cells seems to cause low utilization. Several factors can mitigate this:

• The wide variation in production requirements that characterizes functional arrangements often results in lower utilization than one would otherwise expect.
• Workcells typically produce only a limited number of products out of the factory's product mix. They therefore need smaller-scale, lower-volume equipment.
• Cellular equipment is often simpler, and less expensive than corresponding equipment in a functional arrangement. Therefore, low utilization in a cell is less important.
• The capital freed by inventory reductions usually provides more than enough money for additional equipment. In effect, workcells trade inventory for excess capacity. This tradeoff is usually quite favorable.
• Cells may share equipment and thereby reduce duplication. Certain operations can remain centralized.
• The designer can often build workcells around specific pieces of large-scale, expensive equipment. Duplication is then reserved for low-cost equipment in secondary operations.
• Functional layouts usually require the capabilities of Materials Requirements Planning (MRP) systems. These systems are complex, expensive, and cumbersome. A cellular layout allows simpler scheduling approaches such as kanban and broadcast. 

Material Handling Benefits

Lean manufacturing benefits include those from material handling. The illustrations of a functional and cellular layout vividly demonstrate many of these material handling benefits. Fewer moves, shorter travel distances, and simpler route structures add up to impressive savings. These characteristics also contribute to savings in inventory, coordination and quality.

The product-focused cellular layout has fewer interdepartmental moves compared to a functional equivalent. This reduces handling frequency and cost by as much as 90%. The cellular layout also reduces the queuing, delays, tracking effort, and confusion that accompany material movement. Travel distances are shorter in the cellular layout. In addition to reducing the cost of long moves, this improves communication and often enables visual control systems. Complex routings are characteristic of functional layouts. Many products and components visit multiple work centers in multiple sequences. This, in turn, necessitates complex process plans and extensive documentation. Cellular routings are simple.

Functional layouts have variable route structures since many products move in so many different directions. This necessitates costly handling devices such as fork trucks or Automated Guided Vehicles that can accommodate such variable route structures. The cellular layout, by contrast, has simpler and more stable route structures that may allow simple and cheap handling devices such as conveyors and chutes. 

Element	Functional	Cellular	Improvement
Inter-department Moves	Many	Few	50%-90%
Travel Distance	500'-4000'	100'-400'	70%-90%
Routings	Complex	Simple	Possible Automation
Route Structure	Variable	Fixed	Simplified

Quality Benefits

Functional layouts require the product to move many times between departments with a separate operation at each department. When the product is defective, it is often difficult to pinpoint where the defect has occurred. In a cell, most or all operations occur in one area and among a small team. This focuses responsibility and motivates the team to avoid similar defects in the future. 

While Statistical Process Control techniques can improve functional operations, they are easier to apply and more effective in practice with a workcell environment. Most functional layouts use a sort of "Quality Police", the Quality Control Inspectors, to enforce quality. With teams and workcells, quality is more likely to be self-enforced.

Feedback on quality problems is faster and surer in a cell than it is in a functional arrangement. This is because the various processes and people are very close, usually within conversational range. Since teams are often used within cells, team spirit motivates quality improvements.

Because the operations in a functional layout are scattered, problem solving that cuts across departmental boundaries is difficult. Departmental loyalties work against it. The coordination of information from many sources works against it. Forming an effective problem-solving group is problematic. Cellular environments generally have a functioning work team. When this team switches to a problem-solving mode, the team is immediately effective.

Element	Functional	Cellular	Improvement
Responsibility	Fragmented	Focused In Cell	50%-90% Improvement
Approach	Police Action	Self-Enforced	Happier Teams
Motivation	Avoid Punishment	Pride	Peak Performance
Problem Solving	Difficult & Fragmented	Team-Based	Permanent Solutions

People Benefits

In times past, manufacturers could ignore the psychological needs of their employees. Labor was cheap and employees were concerned with survival in a world of scarcity. The paycheck meant everything. Now, "The Greatest Generation" has given way to "Generation X" and much has changed.

The volume and complexity of information flow in any manufacturing plant is enormous. Functional arrangements increase this volume and complexity by orders of magnitude when compared to cellular arrangements. This is partly because cellular arrangements are simpler, and less information is required. In addition, since workcells are more self-contained, much information flow is within the cell. Transfer of information is quick, simple and informal. Information is often obvious from visual observation and available to all.

For a various reasons, functional layouts inhibit teamwork while cellular arrangements enhance, even demand it. Functional layouts scatter the people who work on a given product. Cellular layouts bring people together. Workcells require teamwork to function effectively; functional layouts do not. Functional layouts are often dysfunctional regardless of the level of teamwork.

In a functional layout, products are difficult to see and identify. Since the skill range is narrow, workers may become "button-pushers." People have little sense of accomplishment because they cannot see the results of their efforts.

A workcell requires a broader range of skills. These include not only job skills, but interpersonal skills. As a result, cellular workers are more involved and take greater responsibility for their work. Cellular manufacturing takes advantage of human flexibility and knowledge while meeting many psychological needs. Satisfying psychological needs is the key to motivating today's workforce.

Element	Functional	Cellular	Improvement
Communication	Slow & Uncertain	Fast & Positive	Quality & Coordination
Teamwork	Inhibited	Enhanced	Effective Teams
Motivation	Negative, Extrinsic	Positive, Intrinsic	Strong Motivation
Skill Range	Narrow	Broad	Job Enrichment
Supervision	Difficult & Fragmented	Easy & Localized	Fewer Supervisors

People in functional environments often derive motivation only from their paychecks. Such motivation is "extrinsic" and brings minimal compliance with job requirements. Cellular layouts depend on "higher" motivations such as pride in the team and feelings of accomplishment. Such motivation is necessary for superior performance.

Supervisors in a functional layout spend most of their time on coordination. With lean, coordination is simple. Most coordination is informal, fast and without disconnects.

What The Customer Sees

The customer sees improved quality and this is an obvious benefit to both customer and supplier.

Customers see faster response to unusual requests for customized products or expedited delivery. They see faster and more reliable average deliveries that make their tasks easier. Cellular manufacturing allows manufacturers to deliver small quantities reliably without holding large inventories. The inherent quality improvements in a cellular layout also find their way to appreciative customers. 

Element	Functional	Cellular	Improvement
Response	Weeks	Hours	70%-90%
Customization	Difficult	Easy	Competitive Advantage
Delivery Speed	Weeks-Months	Days	70%-90%
Delivery Reliability	Erratic	Consistent & High	Up To 90%
Delivery Quantities	Large Shipments	JIT As Required	Locks In JIT Customers
Quality	Erratic	Consistent & High	Delighted Customers

When suppliers implement Lean Manufacturing, customer response is often the most obvious improvement. Response refers to the time required for the manufacturer to react to customer needs. 

Fast, reliable deliveries are a hallmark of cellular manufacturing. This is because the reduction of queues and inventory speed products and components through the system. When fast delivery is a requirement for a given market, fast throughput or an extensive finished goods stock are the only options.

In some markets, fast delivery is not important, but reliable delivery is. This means that the manufacturer delivers the product when it says it will deliver. 

As an example, a manufacturer of large power transformers was in a market where new substations are planned years ahead. The customers have many months to order their transformers. Once on order, however, it is crucial that the transformer is delivered at the appointed time. If the transformer is not delivered on the scheduled date, construction crews wait and the project must be re-scheduled.

Functional layouts tend to require large lots and infrequent deliveries or they require extensive finished goods inventories. With cellular layouts, it is easier and less costly to manufacture in small, frequent lots. This usually matches customer needs more closely.