5.3 Lean production & quality management

Lean production: producing goods and services efficiently with the minimum of waste resources while maintaining high quality.
- Less waste
- Greater efficiency
- Productivity: ratio of outputs to inputs during production, e.g. output per worker per time period.

Methods of lean production
- Simultaneous engineering: method of developing new products by ensuring that essential design, market research, costing and engineering tasks are done at the same time catch other (simultaneously) - not one after the other (sequentially).
- Flexible specialisms: approach that leads to quicker responses to consumer demand changes, wider ranges of products offered to customers, reduced stockholdings as goods can be made to order and higher productivity.

Continuous improvement (kaizen)
- Kaizen: Japanese term meaning “continuous improvement”.
- The philosophy behind kaizen is that all workers have something to contribute to improve the way their business operates and the way the product is made.
- The continuous improvement philosophy suggests that, in many cases, workers actually know more than managers about how a job should be done or how productivity might be improved.

Just-in-time (JIT): stock-control method that aims to avoid holding stocks by requiring supplies to arrive just as they are needed in production and completed products are produced to order.
- Conditions that need to be met for JIT to work effectively:
- Relationships with suppliers have to be excellent
- Production staff must be multi-skilled and prepared to change jobs at short notice
- Equipment and machinery must be flexible
- Accurate demand forecasts will make JIT a much more successful policy
- The latest IT equipment will allow JIT to be more successful
- Excellent employer-employee relationships are essential for JIT to operate smoothly
- Quality must be everyone’s priority

Kanban: Japanese manufacturing system in which the supply of components is regulated is through the use of an instruction card sent along the production line.

Andon: manufacturing term referring to a system to notify management, maintenance, and other workers of a quality or process problem.

Cradle to cradle (C2C): manufacturing principle that seeks to create production techniques that are not just efficient but are essentially waste-free and truly sustainable.

Quality product: good/service that meets customers’ expectations and is therefore '“fit for purpose”.

Quality standards: expectations of customers expressed in terms of the minimum acceptable production/service standards.

Quality control is based on inspection of the product or a sample of products.
- Stages to effective quality control:
- Prevention: the most effective way of improving quality. If the design of the product follows the requirements of the customer and allows for accurate production, then the other two stages will be less significant.
- Inspection: traditionally, this has been the most important stage, but it has high costs these could be reduced by “zero-defect” manufacturing which is the of total quality management.
- Correction and improvement: this is not just about correcting faulty products, but also concerned with correcting the process that caused the fault the first place. This will improve quality in the future.

Quality assurance: system of agreeing and meeting quality standards at each stage of production to ensure consumer satisfaction.
- Stages to effective quality assurance:
- Product design: Will the product meet the expectations of consumers?
- Quality of inputs: quality must not be let down by bought-in components. Suppliers will have to accept and keep to strict quality standards.
- Production quality: this can be assured by total quality management (TQM) and emphasizing with workers that quality levels must not drop below preset standards.
- Delivery systems: customers need goods and services delivered at times convenient to them. The punctuality and reliability of delivery systems must be monitored.
- Customer service including after-sales service: continued customer satisfaction will depend on the quality of contact with consumers after purchase.

Benchmarking involves management identifying the best firms in the industry and then comparing the performance standards including quality of these businesses with those of their own business.
- Stages of the benchmarking process:
- Identify the aspects of the business to be benchmarked
- Measure performance in these areas
- Identify the firms in the industry that are considered to be the best
- Use comparative data from the best firms to establish the main weaknesses in
  the business
- Set standards for improvement
- Change processes to achieve the standards set
- Re-measurement

Quality circles: groups of employees who meet regularly to discuss ways of resolving problems and improving production and quality in their department/organization.
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Total quality management (TQM): approach to quality that aims to involve all employees in the quality improvement process.
- Internal customers: people within the organization who depend upon the quality of work being done by others.

The impact of lean production methods can help to transform the competitiveness.
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Main advantages of lean production:
- Waste of time and resources is substantially reduced/eliminated
- Unit costs are reduced, leading to higher profits
- Working area is less crowded and easier to operate in
- Less risk of damage to stocks and equipment
- New products are launched more quickly

Impact of lean production on business functions
- Finance: purchase of new and advanced capital equipment is expensive.
- Human resources: if lean production is being introduced into a traditional business, then the existing workforce and management team will need to be prepared to accept the necessary changes in working conditions and levels of empowerment.
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Note

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