Lean Production

Information about lean production including all 5 methods, benefits and difficulties that may arise.

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  • Created by: GeorgeB16
  • Created on: 08-03-16 10:53

Lean Production

Lean production is an approach to management which focuses on cutting out waste while ensuring quality levels are still met. It can be applied to all aspects of a business. 

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In A Nutshell

  • Doing simple things well
  • Doing things better
  • Involving employees in the continuous process of improvement
  • Avoiding waste so therefore reducing costs - greater efficiency
  • Waste = costs
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Examples Of Waste In A Business

  • Over production - Making more than needed leading to excess inventories which could become unsaleable.
  • Waiting time - Equipment and people standing idle waiting for a production process to be completed or resources to arrive.
  • Transport - Moving resources around unnecessarily.
  • Stocks - Usually held as an acceptable buffer but should not be excessive.
  • Motion - Worker who appears busy but is not actually adding any value.
  • Defects - Output that doesn't reach the required quality standard which can be a significant cost to an uncompetitive business.
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Effective Lean Production Requires

  • Good relations with suppliers
  • Committed, skilled and motivated employees
  • A culture of quality assurance, continuous improvement and willingness to embrace change
  • Trust between management and employees
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Time-Based Management

Recognises the importance of time and seeks to reduce the level of wasted time in the production process of a business.

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Benefits of Time-Based Management

  • Faster response times to meet changing market and customer needs
  • Faster new product development
  • Reduction in waste which enables greater efficiency
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Requirements for Time-Based Management

  • Flexible production methods:
    • Ability to change products quickly
    • Ability to change production volumes / runs
  • Trained employees:
    • Mulit-skilled staff
    • Trust between workers and managers
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Simultaneous Engineering

Helps firms develop and launch new products more quickly. All parts of the project are planned together with everything considered simultaneously.

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Benefits of Simultaneous Engineering

  • New products are brought to the market much more quickly
  • Businesses could charge a premium price leading to a higher profit margin and help recoup research and development costs
  • A better sense of involvement across business functions improves staff commitment to the project
  • Competitive advantage if it can bring a reliable new product onto the market with brand loyalty before its competitors
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Cell Production

Form of team working where production processes are split into cells with each cell responsible for a complete unit of work.

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Benefits of Cell Production

  • Closeness of cell members should improve communication
  • Workers will become more multi-skilled and adapted to business needs
  • Greater motivation from responsiblity
  • Quality improvements as each cell has "ownership" for quality in its particular area
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Drawbacks of Cell Production

  • Culture needs to embrace trust and participation or workers may feel they are being pushed for more output with no respite
  • May need to invest in new materials handling and ordering systems suitable for cell production
  • May not allow a firm to use machinery as intensively as in traditional flow production
  • Small scale production lines may not yield enough savings to make a switch to cell production worthwhile
  • Allocation of work needs to be efficient so they have enough work but not so much to make them unable to cope
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Aims to ensure inputs in the production process only arrive when needed.

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How JIT Works

  • Uses a "pull" system of production - customer orders determine what is produced and so what supplies are ordered.
  • Uses complex production scheduling using specialist software to connect the production department with suppliers.
  • Supplies delivered to production line only when needed.
  • Needs close cooperation with high quality and reliable suppliers.
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Benefits of JIT

  • Lower stock holding means reduction in storage spaces which means less rent and insurance costs
  • Stock only obtained when needed so less wasted capital tied up in unused stock
  • Less likihood of stock perishing, becoming obsolete or out of date
  • Less time spent checking and re-working production as emphasis spent getting it right first time
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Drawbacks of JIT

  • Little room for mistakes as little stock kept for re-working faulty products
  • Highly reliant on suppliers and whole production schedule can be delayed due to late deliveries
  • No spare finished product available to meet unexpected orders as all products are made to meet actual orders
  • Requires complex, specialist stock systems
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  • Continuous improvement - Involved employees at all levels working together to efficiently improve areas of the company. 
  • Often used in healthcare and banking sectors.
  • Worker-led method.
  • Workers know best about the production process so know what is best for the company.
  • Diminished returns likely - As time progresses, may run out of things to improve.
  • Marginal gains - Tiny improvements over time create a big improvement overall.
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