Business Paper 1 - Lean Production (139)

Lean Production

lean production aims to remove / eliminate waste from the production process and as a result increases productivity and reduces costs lean production seeks to improves efficiency in the production process by minimising the use of resources while maintaining quality

Examples of waste in a business

• waiting time - equipment and people standing idle waiting for a production process to be completed or resources to arrive

• over-production - making more than is needed: leads to excess inventories which may then become unsalable

Kaizen

continuous improvement - employees are encouraged to make regular small changes so that the business continuously improves in terms of waste reduction, productivity and quality

Just-in-time (JIT) (Advantages + Disadvantages)

JIT tries to ensure that parts, raw materials and components are received only when needed - products are only made when ordered - this minimises stock holding and emphasises quality at all stages of production

Advantages:

• lowers stock holding - reduction in storage space saves on rent and insurance costs

• available cash freed from unnecessary stock being held up

Disadvantages:

• there is no spare finished products to meet unexpected demand

• high reliant on suppliers delivering on time as they can’t product products without materials

Cell Production

the production line is subdivided into a number of cells (teams) - the workers are trained so that they can fulfil a number of tasks within the cell - this allows job rotation - he skills of the workers mean that they can each play a role in improving quality

Advantages:

• multi-skilled + more adaptable to needs of the business

• employee motivation from variety of work, team-working and responsibility

Disadvantages:

• employee training required to be multi-skilled - takes time and resources

• if tasks are not equally distributed among cell members, they may lead to bottleneck workers (employees in a production process that slow down the entire workflow because they can’t keep up with pace or volume of work required)

Time based management

emphasis is placed on reducing time taken in all aspects of the whole production process

Importance on Stakeholders

Stakeholders:

• employees - more motivation from involvement; possible bonuses if ruction rises but stress from change, new techniques or resistance to new systems

• suppliers - can charge more for frequent, timely deliveries (JIT) but may be under pressure to meet these orders and can result in contract being destroyed if late

• manager - motivated by better systems and results but stressful to implement especially if workers are resistance to change; failure affects motivation and profits