Lean Production

Lean production Lean production refers to the range of measures that can be put in place in the workplace to help reduce waste. Although traditionally used in manufacturing, lean principles can equally be used in service industries.

Lean production concepts Cell production Just-in-time stock control Kaizen (continuous improvement) Total quality management (TQM) Time based management Value Stream Mapping

Cell production Involves team working Production is split into self-contained units (cells) Each cell is responsible for a complete product or production process Workers in each unit are multi-skilled, allowing for greater flexibility Wastage can reduce as  each cell is responsible for its own quality  there should be few communication problems as the cells are small

JIT Just-in-time is a stock control method. JIT aims to keep stocks held to a minimum Production is generally made to order i.e. products have already been sold and are therefore ‘pulled’ through manufacture Stock arrives only when it is needed (just-in-time) No buffer stocks are held

Benefits of JIT Reduces storage of stock  Lowers costs of storage  Reduces chance of stock getting damaged or becoming obsolete Less cash tied up in stock – working capital improves Reduces risk of making unwanted products Increases responsiveness to changes in demand in the market Incentive to ‘get it right first time’ as there are no back up stocks

Limitations of JIT Relies on good relationships with suppliers Cannot increase production quickly if there is an increase in demand or a sudden unexpected order There is no room for mistakes as there are no buffer stocks to fall back on Requires excellent channels of communication with both customers and suppliers Relies on a flexible, multi-skilled workforce

Kaizen and TQM Kaizen is a Japanese concept of making ongoing incremental improvements to quality and efficiency Ideas for improvement come from the workers Quality circles may be used within Kaizen Total quality management is a quality assurance approach whereby ALL workers are responsible for quality TQM aims to ‘get it right first time’

Time based management Time based management aims to eliminate time wasted during design and production. Time based management: analyses where time is wasted and acts to reduce this e.g. equipment set-up times looks for opportunities to carry out processes simultaneously reduces new product development and launch times makes firms more responsive to market changes

Value Stream Mapping (VSM) Value Stream Mapping is a decision making technique that looks at the most efficient way to carry out a project or process, ensure value is added at every stage VSM allows for planning and monitoring of a project or process VSM allows resources to be allocated only when they are needed

Benefits of lean production Cuts costs Increases efficiency Increases responsiveness of firms to market changes Provides competitive advantage