12 December 2021 Lean Production cutting costs Objectives

12 December 2021 Lean Production – cutting costs Objectives; • To understand the principles and techniques of lean production

Lean Production A question to ponder, what is the objective of MOST businesses? How do you maximise this? Lean Production – A technique developed in Japan, lean production aims to minimise all waste in terms of time, physical and material resources.

Causes of waste Overproduction Defects – supply exceeding demand Sources – Addressing and using resources to correct errors Solution: Kaizen Stocks – opportunity cost of storing, securing and maintaining stock Solution: JIT production Waiting – at any stage at any time, from concept to delivery

Lean Production Five techniques; 1. Cell production 2. Time-based management 3. Benchmarking 4. JIT (see previous notes) 5. Kaizen (see previous notes)

Flow Production Methods 2 Operation 1 3 4 5 6 7 Finished Product 11 10 9 8

Cell Production Methods Cell 1 Finished Product Cell 2 Cell 3 Finished Product

Cell Production takes place in a series of teams, who have some responsibility for organising the flow of tasks and the production process Features; l Team spirit (more care, job right for ‘internal customer’) l Involvement in whole process (ownership) l Motivation (through responsibility and more diverse range of tasks) l Self-checking

Time-based management Which companies are going to perform better? Speed of delivery; The delivery company who offer 20 delivery, or the one who offer 30 minute delivery? Speed of service; The photo shop who can develop in one hour, or the shop that offers next day service? Development time; The car company who developed an alternative fuel car in two months or six months

Time-based management Speed of delivery; Implication of serious costs both financially and competitively for a company. Speed of service; This is increasingly important, due to the increasing time pressure consumers are under. Development time; Simultaneous Engineering takes place when the development of new products is undertaken by teams (incorporating all functions of the business) rather than a more traditional process which will see each functional area developing the concept in turn. This is possible as IT now allows communication and information sharing to take place Ultimately the quicker an organisation can react to the market the better their market position will be (links back to JIT)

Benchmarking The continual process of implementing the industry best practice in production (links to Kaizen) By comparing products with competitors a business will be able to assess; – – – Reliability Delivery accuracy and lead times to customers Production time (from order to completion)

Benchmarking; labour productivity Motoring Example

Benchmarking Process 1. Plan (what to benchmark, who to benchmark against, how to collect data) 2. Collect data (either through visits or less specific published information) 3. Analyse (What do we do, what do they do – identify the areas that could be improved) 4. Adapt (all businesses have a unique culture and mix of resources, so some modification will be required 5. Implement (put into process and monitor)

Benchmarking Advantages; J Better market, competitor and customer knowledge and understanding J Reduced waste J Better quality J Fewer complaints and so improved competitiveness

Benchmarking Disadvantages; L This approach alone is ‘reactive’ rather than ‘proactive’ L Competitors are unlikely to want to disclose information, making comparison hard May necessitate comparison with businesses in other industries therefore, reducing the quality of findings L Adapting methods may not be possible, or may negate benefits

Summary l l l Requires a democratic / participative leadership style Ultimately aims to reduce costs, not increasing revenue Can be introduced in any business Lean production is vital to competitiveness Is it more important with increasing focus on carbon footprints and dwindling world resources?