Lean production methods such as Kaizen and Kanban allow a business to motivate staff to use less waste and treat resources as a finite resource.
Lean Production for Expansion
Most businesses that are doing well consider expanding, when they do they need to use more effective methods of production in order to survive, this means cutting cost on waste and optimising lead times and output. Lean production is about continuously checking that the business processes are as fast as possible.
- Just In Time – Just In Time (JIT) requires a good relationship with suppliers who are going to deliver when you need them, this saves on storage cost. This also means that a business will have better cash flow if they can tie this together with trade credit.
- Total Quality Management – In TQM, Each Item is checked for consistency and to meet standards, although it may be expensive and time consuming, it could mean that the business has less waste.
Businesses may want to consider increasing machinery capacity or staff work overtime during expansion. Walking, waiting time and bad quality are eliminated or minimised in a lean production.
Lean Production Techniques
- Products are made to order, when they are ordered.
- Businesses only order new stock when it is needed.
- Items are only bought when they are needed or in demand.
- Essentially Pull is JIT (Just In Time).
- There is a reduced amount of leftover resources as products are made to order.
- One item is produced at a time, so there is not confusion in manufacture.
- The flow of production becomes highly predictable and focused.
- One product is made at a time, so production could be slow.
- Large objects may only be made one at a time.
- Batch ordering may not be possible, so businesses cannot take advantage of economy of scale.
- Standardise manufactured components.
- Takt is how fast a product is manufactured to meet demand.
- It allows a business to balance work to achieve a continuous flow.
- Continuous Improvement > Kaizen says ‘Continuous Improvement’ through self reflection.
- Products with defects must be fixed before being allowed to go on to the next stage of production.
- Rate of production is improved, as the rate off success is near optimal.
- Products with defects may still have been able to sell. It means waste could be higher than before.
- Products could also be higher quality.
Lead time is the time it takes for a customer to receive a product after ordering it.
Zero based budgets are are when budgets are reviewed without reference to the previous budget. Normally this does not happen, however it is growing in popularity, as it usually results in lower costs.