Business 5.3

Question 1

What is lean production

Answer 1

Lean production is an approach to operations management that focuses on eliminating waste in the production process with the overall aim of greater efficiency. (Originated from Japanese manufacturing.)

Remember that bringing in lean production may not be quick. It may involve new suppliers and new ways of working and training which might be resisted by those within the business and existing partners.

Question 2

What are the sources of waste

Answer 2

Less Waste

Sources of waste (DOWNTIME)

Type:

Defects
Definition:

Output that is substandard, so has to be reproduced and then inspected again. This wastes time and resources.
What’s Wasted?

Organisation’s time, resources and money.
Type:

Overproduction
Definition:

Producing more output than necessary (the amount demanded by customers).
What’s Wasted?

Organisation’s time, resources and money.
Type:

Waiting times
Definition:

Delays in the production process.
What’s Wasted?

Disorganised procedures, lack of training, inefficient machinery.
Type:

Non-utilised talents/resources
Definition:

Under-utilising a firm’s resources (both human and physical resources) and lead to inefficiencies.
What’s Wasted?

Organisation’s time, resources and money.
Type:

Transportation
Definition:

Unnecessary/excessive transportation adds to firm’s production costs but reduces efficiency.
What’s Wasted?

Organisation’s time, resources and money.
Type:

Inventory
Definition:

Stockpiling means having too much stock.
What’s Wasted?

Ties up liquidity and requires improved stock control. Large opportunity cost involved with stockpiling inventory.
Type:

Motion
Definition:

Excess worker movement between workstations or different job roles.
What’s Wasted?

Organisation’s time, resources and money.
Type:

Excess over processing
Definition:

Adding more features/functions to products than is necessary to meet needs or preferences of customers.
What’s Wasted?

Does not add real value to customers.

Question 3

Two main features of lean production

Answer 3

Less waste and higher efficiency

Greater efficiency

Greater efficiency if organisation can increase outputs whilst using same or fewer inputs, then unit cost is lower, allowing higher profit margin. This also allows the business to either 1) drop price, enticing more customers to buy the product and 2) keep price the same and make larger profit.

Efficiency is measured through e.g. sales per person, output per worker, output per machine hour or average cost per unit.

Question 4

What are the different methods of lean production

Answer 4

Continuous improvement (kaizen)
Just-in-time manufacturing

Question 5

Features of kaizen

Answer 5

• Employee empowerment. Employees are regularly engaged in meetings to share opinions and feedbacks or are acknowledged of their expertise. Positive impact on staff motivation and labour productivity.
• Emphasises process improvement: Direct focus towards enhancing process rather than concentrating on end result.
• Focus on eliminating waste: Foster culture of eliminating waste comprehensively.
• Emphasis on teamwork: Foster collaborative environment.
• Pursue incremental improvements: Embedding small changes along the way rather than seeking radical changes.
• Promote process standardisation: Emphasise importance of achieving consistency, minimise variations of outputs.
• Pursuit of perfection: Developing a culture that has ongoing dedication towards achieving perfection.
• Customer orientation: Pays attention to meeting customer needs and requirements.
• Embrace change: Change necessary for advancement.

Question 6

What is kaizen

Answer 6

Kaizen is a Japanese process of lean production that involves process of making continuous small, incremental improvements to various production process in order to achieve greater efficiency.

Question 7

Advantages and disadvantages of JIT

Answer 7

Advantages of JIT:

The advantages of just-in-time (JIT) as a method of lean production include:

Buffer stocks are not required, so this reduces the costs of stock management and waste.

It avoids the opportunity costs of stockpiling, such as the costs of storage, insurance, maintenance or security, damaged stocks, and obsolete (out of date) inventory.

The above points can also improve the firm’s cash (liquidity) position.

JIT fosters lean production as workers need to be more careful and ensure things are done right, first time round as there are no spare stocks.

Disadvantages of JIT:

The disadvantages of a just-in-time (JIT) stock management system include:

As orders are placed in smaller quantities at regular intervals, administrative and implementation costs of JIT can be relatively high.

Similarly, JIT stock control does not enable firms to enjoy bulk buying economies of scale as raw materials and/or component parts are only ordered as and when they are needed for production.

There is the risk of running out of stock if demand is higher than expected.

JIT is inflexible, which puts the organization at greater risks and unforeseen circumstances.

There is total reliance on third party suppliers to deliver the right products, at the right time. Having direct and easy access to local and reliable suppliers is not always possible, even though it is essential for a JIT system.

Question 8

Limitations of lean production

Answer 8

To implement lean product, the business requires:

• A workforce that is willing to take on extra responsibilities
• Investment in the training of staff
• The right suppliers
• Investment in technology to connect with retailers and suppliers

The lean approach can also bring problems:

• Delays to supplies will halt the business because there are no buffer stocks. Must have very dependable suppliers.
• Highly dependent on employees because if there are no staff working, then the business has no supplies to keep producing.

Question 9

What is Cradle-to-cradle design and manufacturing

Answer 9

is an approach to developing and producing products in such a way that they can be recycled at the end of their lives.

All material inputs can be recycled/reused or are consumable/compostable. This helps minimise negative impacts of production on natural environment.

Focus on biological products that are biodegradable and considers the 5 Rs (Refuse, reduce, reuse, recycle, rot).

Criteria for a C2C certification:

• Reutilisation of the material itself.
• Amount of energy necessary for the recycling process.
• Amount of water needed as part of the recycling process.
• The CSR of the company in other areas like labour practices.

Question 10

What is quality

Answer 10

Quality are the characteristics of a product or service that meet customer needs and expectations.

Question 11

What is quality control

Answer 11

Quality control is the inspection of a product to find defects and remove them before they are delivered to retailers or customers. (AKA end of the production)

Question 12

What is quality assurance

Answer 12

Quality assurance are strategies to prevent defects and improve products, responsible of every single employee which also provides them with a form of empowerment. Such as choosing the right suppliers, self-checking by employees, employees reject faulty work and training.

Question 13

What are the different types of method to manage quality

Answer 13

Quality circles
Benchmarking
Total quality management (TQM)

Question 14

Explain quality circles + adv and disadv

Answer 14

Quality circles are a group of employees who meet regularly to discuss potential improvements to product quality.

Benefits of quality circles

• Motivation. Employees are involved and feel empowered, thus, improving employee satisfaction.
• Improved quality. Everyone is involved, likely less mistakes.
• Reduced costs. Better quality, reduced costs.

Limitations of quality circles

• Reduced productivity. Less time spent on production and can lower output per worker.
• Training costs.
• Not suited to every organisation. Works best for democratic or laissez-faire leadership or has a flat organisational structure.

Question 15

Explain Benchmarking + adv and disadv

Answer 15

Benchmarking is the process by which a business compares itself with the industry leaders to see what it can learn from other’s techniques.

1. Identify companies with best processes.
2. Find out how they do it and learn from them.

Benefits of benchmarking

• Reduce waste and improved quality.
• Understand competitors and consumers.
• Customer satisfaction/increased revenues. Improved quality allows higher sales if customer are satisfied with the product.

Limitations of benchmarking

• Lack of transferability.
• Lack of information. : May be difficult to attain details of the business to benchmark effectively.
• Selecting the right benchmark.

Question 16

Explain Total quality management (TQM) + adv and disadv

Answer 16

Total quality management (TQM) is a management approach focused on continuous improvement of all organizational processes, products, and services. It involves the participation of all members of an organization in improving processes, products, services, and the culture in which they work.

Benefits of TQM

• Motivation.
• Improved quality.
• Reduced costs.

Limitations of TQM

• Reduced productivity. Less time spent on production and can lower output per worker.
• Training costs.
• Not suited to every organisation. : Works best for democratic or laissez-faire leadership or has a flat organisational structure. Some people may be resistant to this change as it requires additional training or they’re not used to the new way and, thus, rejects it.

Question 17

The impact of lean production and TQM on an organisation

Answer 17

Lean production can lead to greater efficiency, less waste and lower costs. This can improve the profits of the business. Total quality management can lead to fewer errors and, therefore, greater customer satisfaction.

However, these two both heavily rely on employees and suppliers. Therefore, it is significant to build healthy relationships with these two stakeholders.

Question 18

The importance of national and international quality standards (benefits of it)

Answer 18

ISO 9001 is an international quality standard.

Benefits of accreditations

• Improved brand image. Reassures potential customers that they are purchasing high-quality products. This also then allows a higher price to be charged, subsequently, increasing profits.
• Widening the target market. Some companies only use suppliers with accreditations.
• Motivation for employees as they know what they are working towards.