3. Lean production
Lean production refers to the various techniques a firm can adopt to reduce
wastage and increase efficiency/productivity.
Types of wastage that can occur in a firm:
• Overproduction– producing goods before they have been ordered by
customers. This results in too much output and so high inventory costs
• Waiting– when goods are not being moved or processed in any way, then
waste is occurring
• Transportation-moving goods around unnecessarily is simply wasting time.
They also risk damage during movement
4. • Unnecessary inventory-too much inventory takes up valuable space and
incurs cost
• Motion-unnecessary moving about of employees and operation of machinery
is a waste of time and cost respectively.
• Over-processing-using complex machinery and equipment to perform
simple tasks may be unnecessary and is a waste of time, effort and money
• Defects– any fault in equipment can halt production and waste valuable time.
Goods can also turn out to be faulty and need to be fixed- taking up more
money and time
5. Benefits of lean Production
• less storage of raw materials, components and finished goods- less
money and time tied up in inventory
• quicker production of goods and services
• no need to repair faulty goods- leads to good customer satisfaction
• ultimately, costs will lower, which helps reduce prices, making the
business more competitive and earn higher profits as well
6. How to implement lean production? The different
methods are:
Kaizen: it’s a Japanese term meaning ‘continuous improvement’. It aims to
increase efficiency and reduce wastage by getting workers to get together in
small groups and discuss problems and suggest solutions. Since they’re
the ones directly involved in production they will know best to identify
issues. When kaizen is implemented, the factory floor
for example, is rearranged by re-positioning machinery and equipment so
that production can flow smoothly through the factory in the least possible
time.
7. Standardization Carry out every business activity according to
established formulae.
Team working This involves dividing the workforce into small
groups. Each team will focus on a particular area of
production and team members will have the same
common aims. Both the business and workers might
benefit from teamwork
Empowerment give employees more control over their own work.
Suggestion schemes : Suggestion schemes encourage workers to suggest
ideas to improve production or reduce costs.
Quality circles are small groups of workers in the same area of
production who meet on a regular basis to solve
production problems.
Multi-skilling Multi-skilled workers are more useful to a business.
8. The importance of using resources effectively
This is important because the benefits of using resources effectively are numerous.
Financial benefits : If fewer resources are used, business costs will be lower
Improved competitiveness : Lean producers will have a competitive edge in the market.
Positive environment effects
If a business makes more effective use of resources, it will be making a positive
contribution to the protection of the environment.
Improved customer service : Customers are likely to benefit if business makes more
effective use of resources.
9.
10. Benefits:
• increased productivity
• reduced amount of space needed for production
• improved factory layout may allow some jobs to be combined,
so freeing up employees to do other jobs in the factory
11. Just-in-Time inventory control:
• This techniques eliminates the need to hold any kind of inventory by
ensuring that supplies arrive just in time they are needed for production. The
making of any parts is done just in time to be used in the next stage of
production and finished goods are made just in time they are needed for
delivery to the customer/shop. The firm will need very reliable suppliers and
an efficient system for reordering supplies.
12. Benefits:
• Reduces cost of holding inventory
• Warehouse space is not needed any more, so more space is
available for other uses
• Finished goods are immediately sold off, so cash flows in quickly
