5.3 Lean Production

Efficiency

How well a business transforms physical, human and financial inputs into outputs

How a business can achieve efficiency

• Improved level of motivation

• Improved tech and capital equipment

• Improved provision of training and development

Benefits of efficiency/lean production

• Increased quality

• Increased speed

• Increased results

• Decreased costs

TIM WOOD

• Transportation

• Inventory (stock)

• Motion (staff risking injury while making products)

• Waiting

• Over-processing (adding features to a product that are not required by customers → do not add value

• Over-production

• Defects (finished goods that don’t meet quality control standards

Lean Production

Set of strategies to reduce waste in production process and increases efficiency

Kaizen

“Change for better” in Japanese

• Benefits

  • Diversity of ideas

  • Better ideas

  • Employee motivation

• Limitations

  • Higher labour costs

Just-in-time production

• aw materials are ordered and delivered immediately before their use so stock can be minimised

  • Benefits

    • Improved cash flow and reduces costs

    • Improved operations

    • Increased capacity

  • Limitations

    • Reduced economies of scale

    • High risk

    • Reduced resilience

Andon

• Audio-visual control and warning systems

  • E.g.: Shopping centre and lights on the tills

    • Green → everything is going well

    • Amber/yellow → Potential bottlenecks

    • Red → Closed/non-functional

Cradle-to-cradle design and manufacturing

Aims to work more like nature, by designing systems that feedback outputs and inputs

Quality

Consumer satisfaction, characteristics of a product or service that meet customer needs and expectations

Quality control

Inspection of a product to find defects and remove them before delivered

Quality assurance

Strategies to prevent defects and improve products

Quality circles

Group of employees who meet regularly to discuss potential improvements to product quality

• Benefits

  • Motivation

  • Improved quality

  • Reduced costs

• Limitations

  • Reduced productivity

  • Training costs

  • Not suited for every organisation

Benchmarking

Process by which a business compares itself on certain criteria- with the industry leaders to see what it can learn from others’ techniques

• Benefits

  • Improved quality

  • Understand competitors and consumers

  • Customer satisfaction/increased revenues

• Limitations

  • Lack of transferability

  • Lack of information

  • Selecting the right benchmark

Steps involved in benchmarking

1. Identifying which companies have best processes/results

2. Finding how those companies do things

Total Quality Management

• Every employee is jointly responsible for maintaining the overall quality of the final product, two fundamental principles:

  1. Empowerment

  2. Internal customers

• Benefits

  • Motivation

  • Improved quality

  • Reduced costs

• Limitations

  • Reduced productivity

  • Training costs

  • Not suited to every organisation

ISO 9000

An international accreditation, which is awarded to businesses for their quality assurance systems