Lean Production

  • Created by: Charlotte
  • Created on: 01-11-18 09:05
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  • Lean Production
    • Definitions
      • Lean Production= An approach to management that focuses on cutting out waste, whilst ensuring quality.
      • Efficiency= the ability to avoid wasting materials, energy, efforts, money and time in doing something or in producing a desired result.
    • Methods of Production
      • Just In Time (JIT)
        • Advantages
          • Increased focus on quality
          • Costs are reduced
          • Opportunity cost reduced because less invested in stocks.
          • Storage space can be used for other productive purposes.
          • Less opportunity for stock to become outdated or damaged.
          • More flexibility in production is requires which leads to adapting to changing customer needs.
          • Multi-skilled workers may be more motivated.
        • Disadvantages
          • May be difficult to meet unexpected major increases in demand.
          • Can be problems caused by suppliers.
          • Loss of discounts for buying bulk
          • Delivery costs increase as smaller quantities are delivered.
          • Administration costs rise because more attention is needed to multiple orders.
          • Reduction in bulk discounts pricing because of smaller orders.
          • Significant dependence on outside factors- the quality and dependability of outside suppliers.
        • Definition
          • Denoting a manufacturing system in which materials or components are delivered immediately before they are required in order to minimise storage costs.
      • Just In Case (JIC)
        • Definition
          • An inventory strategy in which companies keep large inventories on hand. It aims to minimise the probability that a product will sell out of stock.
        • Advantages
          • Easy to meet unexpected increase in demand by increasing production.
          • Stockpiles of inventory can meet expected increases such as seasonal items.
          • Raw-material "hold-ups" will not lead to stopping production
          • Economies of scale are realised with bulk buying discounts
        • Disadvantages
          • High opportunity costs of working capital tied up in stock costs
          • High storage costs
          • Risks of damaged stocks or outdated stocks.
          • "Getting it right" is less important because of replacement stocks which increases costs.
          • Space to store check cannot be used for other purposes.
      • Cell Production
        • Definition
          • A form of team working that helps ensure worker commitment, as each cell is responsible for a complete unit of work.
        • Advantages
          • Closeness of cell members should improve communication.
          • Workers become multi-skilled and more adaptable to the needs of the business.
          • Greater employee motivation, from variety of work, team working and responsibility.
          • Quality improvements as each cell has 'ownership' for quality on its area.
        • Disadvantages
          • Culture has to embrace trust and participation or workers can feel that they are being pushed for greater output with no respite.
          • Business may have to invest in new materials handling and ordering systems suitable for cell production.
          • Cell production may not allow a firm to use its machinery as intensively as in traditional flow production.
          • Some small scale production lines may not yield enough savings to make a switch ell production worthwhile.
          • Allocation of work to cells has to be efficient so that they are unable to cope.
          • Recruitment and training of staff must support this approach to production.
      • Simultaneous Engineering
        • Definition
          • Part of the time based management approach. It is a project management approach that helps firms develop and launch new products more quickly.
        • Advantages
          • New product is brought to the market much more quickly.
          • Business may be able to charge a premium price that will give a better profit margin and help recoup R+D costs.
          • Less likelihood of a need to modify the product later due to unforeseen problems.
          • A greater sense of involvement across business functions, improves staff commitment to the project.
          • Can be a source of competitive advantage ('first mover advantage') for the firm if it can get a reliable new product into the market and build brand loyalty before its competitors.
          • Suppliers are involved in the new product development so that potential delays in resourcing of raw materials, components and services can be anticipated and avoided.
      • Time Based Management
        • Definition
          • A general approach that recognises the importance of time and seeks to reduce the level of wasted time in the production processes of a business.
        • Advantages
          • Quicker response times (reduced lead times) to meet changing market and customer needs.
          • Faster new product development.
          • Reduction in waste, therefore greater efficiency.
        • Disadvantages
          • A firm must have flexible production facilities that enable it to make changes easily. E.g. it may need to be able to switch production quickly between different products and to alter the length of production runs needed.
          • Staff must be multi-skilled and flexible.
          • There must be a culture of mutual trust between workers and managers.

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