Lean Production

lean production

a philosophy or organizational culture about organizing production processes in order to increase efficiency and reduce waste. It is the deliberate approach to management that focuses on eliminating waste without compromising quality.

The 8 sources of waste (or ‘muda’ in Japanese) (DOWNTIME)

• Defects

• overproduction

• waiting time

• non-utilized talents

• transportation

• inventory

• motion

• excess production

Efficiency

using resources more productively in order to generate output. There is greater efficiency if an organization can produce more goods and/or services (increasing its output) by using the same or fewer resources (its inputs).

Principles (5) (w,c,f,r,s)

• waste minimization

• right first time approach 

• flexibility 

• continuous improvement 

• supply chain management 

Methods of lean production (2)

• Continuous improvement (Kaizen) 

• Just-in-time 

Continuous improvement (Kaizen) 

Japanese-philosophy of making small and continuous improvements to increase efficiency and productivity. Small groups of employees are formed to identify change and improvements to the firm’s products, processes and procedures

ADVs of Kaizen (3)

• Change is easier to manage in small, continuous improvement.

• People tend to be resilient to big changes

• Motivates

DIS of Kaizen (2)

• time consuming and expensive

• all staff members are required to believe in the approach

Just-in-time

JIT is a Japanese inventory management system which suggests only to absolute minimum levels of stock are held and finished goods are dispatched as soon as they have been produced. This prevents stockpiling —> increasing costs of inventory/stock management

ADVS of JIT (3)

• Buffer stocks are not required, so this reduces the costs of stock management and waste.

• It avoids costs of stockpiling

• JIT fosters lean production as workers need to ensure things are done right, first time round as there are no spare stocks.

DIS of JIT (3)

• JIT stock control does not enable firms to enjoy bulk buying economies of scale as raw materials and/or component parts are only ordered as and when they are needed for production.

• There is the risk of running out of stock if demand is higher than expected.

• There is total reliance on third party suppliers to deliver the right products.