What is Lean Manufacturing Scheme?
The Lean Manufacturing Competitiveness Scheme (LMCS) is an initiative by the Ministry of Micro, Small and Medium Enterprises (MSME) to enhance the competitiveness of Indian MSMEs by implementing Lean Manufacturing (LM) techniques. The scheme recognizes that operational efficiency is crucial for MSMEs to compete in global markets.
Lean Manufacturing is a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement, enabling products to be produced faster, at lower cost, and with better quality. Originating from the Toyota Production System, lean principles have been successfully adapted for MSMEs worldwide.
Objectives of Lean Manufacturing Scheme
- • Enhance manufacturing competitiveness of MSMEs through Lean techniques
- • Reduce waste in manufacturing processes and improve resource utilization
- • Improve quality and productivity of MSME products
- • Reduce manufacturing costs and improve delivery performance
- • Instill a culture of continuous improvement in MSMEs
- • Develop in-house expertise in Lean tools and techniques
Why Lean Manufacturing for MSMEs
Cost Reduction
Eliminate waste and reduce manufacturing costs by 15-30% through lean implementation
Quality Improvement
Reduce defects and rework significantly through systematic quality management
Productivity Gains
Increase output with same resources through process optimization
Delivery Performance
Improve on-time delivery through streamlined processes and reduced lead times
Lean Tools and Techniques
The scheme helps MSMEs implement various lean tools and techniques based on their specific needs:
Core Lean Tools
5S Methodology
Workplace organization system: Sort, Set in Order, Shine, Standardize, Sustain
- • Creates clean and organized workplace
- • Reduces search time and improves efficiency
- • Foundation for other lean tools
Value Stream Mapping (VSM)
Visual tool to identify value-added and non-value-added activities in processes
- • Maps material and information flow
- • Identifies bottlenecks and waste
- • Guides improvement priorities
Kaizen (Continuous Improvement)
Philosophy of continuous incremental improvements involving all employees
- • Small, continuous improvements
- • Employee involvement in problem-solving
- • Sustained improvement culture
Just-in-Time (JIT)
Produce what is needed, when needed, in the quantity needed
- • Reduces inventory waste
- • Improves cash flow
- • Increases flexibility
Total Productive Maintenance (TPM)
Maintain and improve equipment reliability through autonomous and planned maintenance
- • Reduces breakdowns
- • Increases equipment effectiveness
- • Involves operators in maintenance
Standardized Work
Document and standardize best practices to ensure consistency
- • Reduces variation in output
- • Easier training of new employees
- • Basis for further improvements
Types of Waste (TIMWOODS)
T - Transportation waste
I - Inventory waste
M - Motion waste
W - Waiting waste
O - Overproduction waste
O - Over-processing waste
D - Defects waste
S - Skills underutilization
Benefits of Lean Implementation
MSMEs implementing lean manufacturing under this scheme have reported significant improvements:
Typical Improvements
| Metric | Typical Improvement |
|---|---|
| Productivity | 15-30% increase |
| Defect Rate | 30-50% reduction |
| Lead Time | 20-40% reduction |
| Inventory | 25-40% reduction |
| Floor Space | 15-25% savings |
| On-time Delivery | 20-35% improvement |
Additional Benefits
Employee Engagement
Involving employees in improvement activities boosts morale and engagement
Safety Improvement
Organized workplaces and standardized processes reduce accidents
Customer Satisfaction
Better quality and on-time delivery improves customer relationships
Competitive Advantage
Lower costs and better quality enable competitive pricing
Scheme Components
The Lean Manufacturing Scheme provides comprehensive support:
Key Components
Lean Consultant Support
Financial assistance to engage lean manufacturing experts who guide implementation.
Training Programs
Hands-on training for MSME owners and employees on lean tools and techniques.
Tool Implementation
Support for implementing specific lean tools like 5S, VSM, TPM as per need.
Assessment and Monitoring
Baseline assessment, progress monitoring, and impact measurement.
Cluster Approach
The scheme encourages a cluster approach where multiple MSMEs in similar industry/area implement lean together:
Benefits of Cluster Approach:
- • Shared learning among cluster members
- • Lower cost per unit through shared consultant
- • Peer pressure and healthy competition
- • Common supplier/customer benefits
- • Regional industrial development
Funding Support
The scheme provides financial assistance for lean implementation:
Grant Structure
| Component | Maximum Assistance | Sharing Pattern |
|---|---|---|
| Lean Consultant Fees | Up to ₹30-50 lakh per cluster | 80% Govt, 20% MSME |
| Training Expenses | As per actuals | 80% Govt, 20% MSME |
| Assessment and Monitoring | Covered under consultant fees | 80% Govt, 20% MSME |
MSME Contribution
- • Cash Contribution: 20% of project cost
- • In-kind Contribution: Employee time, existing resources
- • Commitment: Active participation in implementation
Eligibility Criteria
To participate in the Lean Manufacturing Scheme:
Enterprise Requirements
MSME Registration
Must be registered as MSME under Udyam Registration. Both manufacturing and service MSMEs are eligible.
Cluster Formation
Typically 10-20 MSMEs form a cluster for implementation. Single MSME applications may also be considered.
Commitment
MSME must commit to implementing recommendations and providing resources as required.
Priority Sectors
Auto Components
Engineering
Electrical Goods
Food Processing
Textiles
Pharmaceuticals
Implementation Process
The lean implementation follows a structured approach:
Step 1: Cluster Formation
MSMEs in similar industry/geography form a cluster and designate a lead MSME or SPV for coordination.
Step 2: Diagnostic Study
Lean consultants conduct baseline assessment of current processes, identify waste, and quantify improvement potential.
Step 3: Prepare DPR
Detailed Project Report is prepared outlining specific interventions, timelines, expected benefits, and costs.
Step 4: Apply to Scheme
Submit application to DC MSME with DPR, MSME details, and commitment letters.
Step 5: Implementation
Upon approval, lean consultant guides MSMEs through implementation of identified interventions over 6-12 months.
Step 6: Assessment
Post-implementation assessment measures actual improvements against baseline and projected benefits.