The Concept of Lean Production (Cambridge (CIE) IGCSE Business)

Lean Production

• Lean production involves the minimisation of the resources used in production

  • Less time is required as the production process is organised in the most efficient way

  • Fewer materials are used as there is a focus on waste reduction

  • Less labour is used as lean production is typically capital intensive

  • The space required for production is reduced as a result of just in time stock management

  • A small number of trusted suppliers work closely with the business

• The use of lean production is likely to lead to a competitive advantage 

  • Lower  unit costs  are achieved due to minimal wastage so prices may be lower than those offered by competitors

  • Better quality of output is likely as a result of supplier reliability and carefully managed production processes

• Lean production uses strategies such as Just in Time stock control and Kaizen 

Just in time stock control

• Just in Time (JIT) stock management is a process in which raw materials are not stored onsite but ordered as required and delivered by suppliers 'just in time' for production

• Careful coordination is required to ensure that raw materials and components are delivered by suppliers at the moment that they are to be used

  • Close relationships with suppliers need to be developed

  • Suppliers may need to be in close proximity 

The Advantages and Disadvantages of Just in Time Stock Management

Continuous improvement (Kaizen)

• Kaizen involves taking continuous steps to improve productivity through the elimination of all types of waste in the production process

  • Changes are small and ongoing rather than significant one-off’s

  • They are constantly reviewed to ensure that they achieve the desired positive impact on productivity

  • Kaizen requires a long-term management commitment to change 

Diagram: to show Kaizen (continuous improvement) 

• Elements of Kaizen commonly include

  • Zero defects in manufacturing

  • High levels of automation

  • High levels of cooperation between workers and management

• Staff training and computer inventory management systems may also reduce wastage as fewer errors are likely to be made

The Benefits of Lean Production

• Lean production leads to the following benefits for a business

  • Right first time approach

    • Aims for zero defects in output

    • Identifies and solves problems as they arise

    • Prevent rather than corrects errors

  • Flexibility

    • Multiskilled staff and team working

    • Flexible management styles

  • Waste Minimisation

    • Removes processes that do not contribute to added value

    • Consumes as little as is necessary

  • Effective supply chain management

    • Develop excellent relationships with suppliers

    • Minimal number of suppliers

  • Continuous improvement

    • Ongoing, small steps

    • All staff involved in improvement

The seven wastes eliminated in lean production

• Waste refers to anything that prevents a business from being efficient

• Seven key types of waste are minimised in lean production 

1. Transportation: Unnecessary movement of materials or products

2. Inventory: Excess raw materials, work-in-progress, or finished goods

3. Motion: Unnecessary movement of people or equipment

4. Waiting: Delays or idle time in the production process

5. Overproduction: Producing more than what is required by the customer

6. Overprocessing: Using more resources than necessary to produce a product

7. Defects: Products or services that do not meet customer requirements