Lean Production 

What Is Lean Production? 

Lean Production is an approach to production developed by Toyota, the Japanese car manufacturer. Its aim to use fewer resources in production. Costs can be reduced by lean production.

Benefits of lean production 

• Less storage of raw materials (e..g no need for refrigeration costs, warehouse etc…) 
• Less defects in production (broken products don’t get produced) 
• Better use of equipment 
• Speeding up production by cutting out unnecessary tasks 
• Less money tied up in stock 

Just-in-time production 

Just in Time is a technique of lean production which focuses on reducing the cost of production by eliminating warehouses. In this concept, there will be no warehouse to store the stock of finished goods or raw materials. When orders are received, suppliers will be contacted to deliver raw materials.After delivery, the production will start. Under this system, the location of the factory is going to be near the suppliers which will save transport time.

• Focus on reducing the need to hold stocks of raw material or parts that are needed (This reduces storage costs) 
• Raw materials are delivered just in time by suppliers for production 
• Reliable suppliers are needed for this to work 

e.g. Milk gets delivered to the milkshake factory 30 minutes before production starts, this means that the milkshake factory won’t have to spend money on expensive refrigerators to store milk before it gets produced. 

Kaizen 

Kaizen means continuous improvement by eliminating waste. Kaizen refers to significant or insignificant changes in the production process which will reduce lead time. 

Lead time is the time difference between two activities. 

• Workers meet regularly to discuss problems and possible solutions 
• In this way, wastage is reduced and efficiency is improved 
• Factory floors are usually rearranged so that the flow of production from one activity to the next is improved. 

One of the key drivers in kaizen is ‘good housekeeping’. A clean and well-organised working environment is needed for continuous improvement to flourish. The Japanese use a method called 5S to ensure that this is achieved. What does 5S stand for?

1. Sort – get rid of the clutter in the workplace. Only necessary items such as tools should be stored at a workstation. All other items such as excess inventory should be removed. 
2. Set in order – organise the work area, so that it is easy to find what is needed. 
3. Shine – ensure the work area and equipment are clean. Make them ‘shine’. 
4. Standardise – once the most effective working practices have been identified everyone in the workplace should adopt them. 
5. Sustain – adopt systems to lock the other 4Ss into the way people work at all times on a permanent basis. 

Once kaizen is adopted it is likely to be supported by a wide range of techniques, principles and practices. Some of these are outlined below. 

STANDARDISATION 

Standardisation means carrying out every business activity according to established formulae. These formulae may be printed out and hung in the workplace for all to see. They develop into standards for the best, most efficient and safest way to complete a job. In this way, quality is assured and customer expectations are met. It is management’s task to make sure these standards are maintained. Managers must get involved if standards are not maintained and also make adjustments to methods to avoid future failures to produce to the standard. 

TEAMWORKING 

This involves dividing the workforce into small groups. Each team will focus on a particular area of production andteam members will have the same common aims. Both the business and workers might benefit from teamwork. 

➔ Workers should develop a ‘team spirit. This may improve motivation and productivity. 

➔ Flexibility might improve. For example, team members might be more willing to cover for an absent colleague. 

➔ Teams might plan their own work schedules, share out tasks and solve their own problems. This should lead to quicker decision making and more ideas. 

➔ Communication and labour relations might also improve. 

EMPOWERMENT 

Empowerment gives employees more control over their own work. In the past, most workers have followed the instructions given to them by managers. They were rarely required to think for themselves. However, if workers are empowered, they are given the authority to make decisions, solve problems and work creatively. As a result, the business benefits from more workers realising their full potential. Also, motivation is likely to improve since workers feel trusted and their work may be more interesting. 

SUGGESTION SCHEMES 

Suggestion schemes encourage workers to suggest ideas to improve production or reduce costs. 

Quality Circles 

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 

If workers are trained in a variety of skills, they are said to be multi-skilled. 

When businesses adopt lean production, resources are used more effectively. This is because the key aim of lean production is to use less of everything.

This includes factory space, materials, inventory, suppliers, labour, capital and time. This is important because the benefits of using resources effectively are numerous. 

FINANCIAL BENEFITS 

Clearly, if fewer resources are used, business costs will be lower. For example, if JIT manufacturing is adopted there will be lower inventory levels. This will reduce stock holding costs. If costs are lowered, then businesses will make more profit. This will increase returns for the owners and provide cheap funds for investment in the future. 

IMPROVED COMPETITIVENESS 

Lean producers will have a competitive edge in the market. Businesses that use their resources effectively and will be able to lower prices. 

POSITIVE ENVIRONMENTAL EFFECTS 

If a business makes more effective use of resources, it will be making a positive contribution to the protection of the environment. For example, if a business uses less energy, such as electricity, it will help reduce emissions. 

Also, if a business uses recycled resources this will help to reduce resource depletion. If customers recognise that a business is adopting environmentally friendly production methods, this might also improve its image. 

Improved Customer Service 

Customers are likely to benefit if a business makes more effective use of resources.