Lean Production

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Lean Production
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What is Lean production?

• Lean production is a Japanese approach to
  management that focuses on cutting out waste,
  whilst ensuring quality.
• This approach can be applied to all aspects of a
  business from design, through production to
  distribution.

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What is Lean production?

• Lean production aims to cut costs by making the
  business more efficient and responsive to market
  needs.
• This approach sets out to cut out all activities
  that do not add value to the production process,
  such as holding of stock, repairing faulty
  product and unnecessary movement of people and
  product around the plant.

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Lean production

• Lean production, as the name suggests involves
  producing goods and services while stripping out
  waste.
• As a result there is no 'fat' involved in
  production.
• Lean production is efficient and hence likely to
  be profitable.

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Jaguar example

• At the Jaguar car production plant in Castle
  Bromwich near Birmingham the production line has
  been designed using the principles of lean
  production.
• In the 'old days' Jaguar production took up much
  more factory space because a lot of stocks and
  supplies were kept on the factory floor. Nowadays
  all stocks are kept in a separate storage area
  where they are delivered just-in-time to feed the
  production process.
• On the production line operative's work with the
  minimum required quantity of stocks. When more
  are needed, production line workers use a
  'kanban' signalling system to inform the stores
  that they need more supplies.

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Video example

• From last lesson Video Toyota had a lean
  production
• They did not store car seats in the factory.
  Instead they phoned the order through got
  deliveries 5 hours later. Just when the car was
  ready for the seats to be put in!

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Lean Production includes

• The most important aspects of lean production are
  as follows
• Just in time production (JIT)
• Total Quality Management (TQM) and zero defect
  production
• Time based management
• Simultaneous engineering
• Cell production
• Kaizen (Continuous improvement)
• Quality Circles

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Just in Time

• Just in time is a pull system of production, so
  actual orders provide a signal for when a product
  should be manufactured.
• Demand-pull enables a firm to produce only what
  is required, in the correct quantity and at the
  correct time.
• This means that stock levels of raw materials,
  components, work in progress and finished goods
  can be kept to a minimum. This requires a
  carefully planned scheduling and flow of
  resources through the production process.

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JiT technology

• Modern manufacturing firms use sophisticated
  production scheduling software to plan production
  for each period of time, which includes ordering
  the correct stock. Information is exchanged with
  suppliers and customers through EDI (Electronic
  Data Interchange) to help ensure that every
  detail is correct.
• Supplies are delivered right to the production
  line only when they are needed.
• For example, a car manufacturing plant might
  receive exactly the right number and type of
  tyres for one days production, and the supplier
  would be expected to deliver them to the correct
  loading bay on the production line within a very
  narrow time slot.

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Advantages of JIT

• Lower stock holding means a reduction in storage
  space which saves rent and insurance costs
• As stock is only obtained when it is needed, less
  working capital is tied up in stock
• There is less likelihood of stock perishing,
  becoming obsolete or out of date
• Avoids the build-up of unsold finished product
  that can occur with sudden changes in demand
• Less time is spent on checking and re-working the
  product of others as the emphasis is on getting
  the work right first time

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Disadvantages of JIT

• There is little room for mistakes as minimal
  stock is kept for re-working faulty product
• Production is very reliant on suppliers and if
  stock is not delivered on time, the whole
  production schedule can be delayed
• There is no spare finished product available to
  meet unexpected orders, because all product is
  made to meet actual orders however, JIT is a
  very responsive method of production

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Time Based Management

• Time-based Management is an aspect of Lean
  Production.
• It is a general approach that recognises the
  importance of time and seeks to reduce the level
  of unproductive time in an organisation.
• As with other aspects of Lean Production,
  Time-based management also calls for flexible,
  multi-skilled staff, and a culture of mutual
  trust between workers and managers.

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Benefits of Time Based Management

• Quicker response times (reduced lead times) to
  meet changing market and customer needs
• Faster new product development
• Reduction in waste, therefore greater efficiency
• For a firm to operate time-based management
  effectively, it needs to have flexible production
  facilities that enable it to make changes easily.
  
• For example, it may need to be able to switch
  production quickly between different products and
  to alter the length of production runs as needed.

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Simultaneous Engineering

• Simultaneous Engineering is part of the
  Time-based Management approach. It is a project
  management approach that helps firms develop and
  launch new products more quickly.
• All of the areas involved in a project are
  planned together. Everything is considered
  simultaneously (together, in parallel) rather
  than separately (in series).

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Simultaneous Engineering

• Product teams are set up to include people in all
  areas that are relevant to the new product
  design, development, production, marketing etc.
• 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
• A teamwork approach is used, with all areas
  involved in the project working on the project at
  the same time.

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Simultaneous Engineering Issues

• The new product is brought to the market much
  more quickly
• The firm may be able to charge a premium price
  that will give a better profit margin and help
  recoup RD costs
• There is 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.
• This can therefore 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.