Operational Strategies: Lean Production

Lean production: the adoption of techniques that help reduce waste, and therefore reduce costs
Adoption of lean production techniques such as JIT, Kaizen and Time-based management can lead to a firms achievement of efficient production as a result of making top quality products, at the lowest possible cost

Lean production techniques:

• Just-in-time (JIT)- a lean production technique which aims to minimise stock holdings reducing waste by limiting stock holding at each stage of production; materials only delivered as required and golding of finished goods minimised
• Kaizen- a lean production technique which aims to improve efficiency by making small but regular improvements small but regular improvements, rather than large irregular improvements adding up to be the same, or greater efficiency and competitiveness overall
• Time-based management- managing resources effectively to ensure products are fit for the market in the shortest possible time reducing wasted time, or inproductive time in order to improve efficiency

Critical path analysis (CPA): a technique for planning complex projects to allow them to be completed in the shorted possible time, by identifying activities that can be carried out simultaneously
Critical path network: a visual representation of the sequencing and timing of all activities involved in completing a complex project

CPA is a visual technique which shows all the activities needed to complete a project, placed in the order they can be completed in, also showing which activities can be carried out at the same time and which need to be completed in time for the next to start.
Earliest start time (EST): the earliest time an activity can start in a project based upon the completion of a current activity [TOP OF NODE] (take larger number)

Latest finish time (LFT): the latest time an activity must be completed by to avoid delaying the whole project [BOTTOM OF NODE] (take smaller number)

Critical path: the route outlining all the activities which cannot be delayed (where the EST and LFT are the same)

Float time: the amount of time by which a non-critical activity can be delayed without having an effect of the overal project
FLOAT TIME = LFT - DURATION - EST

Critical activities: those with zero float time, which cannot be delayed

Non-critical activities: those with float time which can be delayed by a certain time period without affecting the whole project

When working out CPA, EST's and LFT's, always start with the EST, working left to right, using the larger number. Then, work backwards, right to left with the LFT, using the smaller number.

The critical path is shown using  //

• The nature of the technique, as it forces management to think through fully the plan for a complex project before undertaking it. It allows the firm to identify the shortest time in which a project can be completed, from conception to implementation
• CPA can be used as a planning tool as well as to aid decision making; if it is a decision between 2 new locations or products they can consider which one can be launched quicker and potentially be bringing them profit quicker
• It helps with the implementation of JIT as the EST of an activity would indicate any materials associated with the activity will be needed
• Allows managers to allocate resources effectively, staff can be allocated to set tasks and redeployed to focus on critical activities to ensure a project is not delayed, which can be motivational for employees therefore reducing low morale etc as they have a clear target to work towards
• It gives managers a clear understanding of the whole project and a tool with which they can monitor and review progress- such as if activites are running on time and be able to pick up the pace in time without delays
• Can help in financial planning as it can indicate when money will be needed allowing for budgeting and forecasting

• However, a limitation is that it is based on estimates so its reliability is dependant on the experience and accuracy of the person creating the network
• If estimates prove inaccurate, it may cause problems with product launches