Unit 5 - Business Operations ( Lean Production) Flashcards
Lean Production
Approach to production aimed at reducing the quantity of resources used. As a result lean production:
- Raises productivity and quality
- Reduces costs and cuts lead times
- Reduces number of defective products
- Improves reliability and speeds up product design
Defective product - product that has not been made properly or is not working properly
Just-in-Time Production
Technique that is highly repsonsive to customer orders and uses very little stock holding.
If a business holds stock money is tied up and therefore wasted - money is unproductive and could be used elsewhere.
J-I-T means that a business does not:
- hold a stock of raw materials or components - suppliers deliver resources straight to the production line at regular intervals
- produce any goods unless they have been ordered - avoids the need to hold stock or finished goods
Advantages of J-I-T production
- cash flow is improved
- No waste, out of date or damaged stock
- space is released
- no stock holding costs
- stronger links with suppliers
- fewer suppliers
Disadvantages of J-I-T production
- Higher ordering and administration costs
- Relies hugely on suppliers reliability
- Hard to cope with changes in demand
- Vulnerable to a break in supply
Kaizen
Practice of continuous improvement - improve quality, increase efficiency and reduce waste. Small improvements over a longer period of time with a huge impact.
Employees are always searching to reduce waste which can include:
- time - waiting around before starting tasks, or waiting for materials to arrive
- workers moving unnecessarily in the workplace
- irregular use of a machine
Building a culture in which employees are actively involved in suggesting and implementing improvements.
Focus on customer needs also a crucial element.
Good-housing
Clean and well-organised working environment needed for continuous improvement - use 5S method:
- Sort - get rid of clutter, only necessary items and tools at a workstation
- Set in order - organise the work area so it’s easier to find what is needed
- Shine - clean work area and equipment
- Standardise - once most effective work practices have been identified, everyone in the work place should adopt them
- Sustain - adopt systems to lock the other 4S’s into the way people work at all times on a permanent basis.
Techniques, Principles and Practices of Kaizen
- Standardisation
- Team Working
- Empowerment
- Suggestion Schemes
- Quality Circles
- Multi-skilling
Standardisation
Carrying out every business activity according to established formulae - printed out and hung in a workplace for all to see - quality is assured, customer expectations are met.
Managements task to make sure standards are maintained and make adjustments to methods to avoid future failures to produce the standard.
Teamworking
Dividing the workforce into small groups - each team focusing on a particular area of production and have the same common aims.
Benefits from teamwork:
- workers develop team spirit improving motivation and productivity
- Flexibility might improve
- Teams plan own work schedules, share out tasks and solve own problems - Quicker decision making and more ideas - Communication and labour relations may improve
Empowerment
Gives employees more control over their own work - used to be that workers followed instructions given to them by managers
If empowered, given the authority to make decisions, solve problems and work creatively.
Business benefits from workers realising full potential.
Motivation likely to improve since workers feel trusted and their work may be more interesting.
Suggestion Schemes
Encourage workers to suggest ideas to improve production or reduce costs. If a worker idea is adopted they should be rewarded.
Quality Circles
Small groups of workers in the same area of production who meet regularly to solve production problems.
Gives employees opportunities to make improvements in their jobs.
Meetings should be in work time and be supported by workers and management.
Multi-skilling
Workers trained in a variety of skills.
Useful to a business because they provide more flexibility - workers can cover for absent colleagues, better motivated as can do a range of different jobs, helps make the work more interesting.
Importance of using resources effectively
When businesses adopt lean production, resources are used more effectively - aim is to use everything less - factory space, materials, inventory, suppliers, labour, capital and time.
Benefits of using resources effectively are numerous:
- Financial benefits
- Improved Competitiveness
- Positive Environmental Effects
- Improved Customer Service
Financial Benefits
Fewer resources used means business costs are lower ad the business will make more profit - increase returns for owners and provide funds for future investment.
