Lean Production (HL IB Business Management)

• Lean production is a management philosophy that aims to maximise value while minimising waste
• It focuses on maximising efficiency, improving quality and reducing costs
  

The main principles of lean production

• Right first time approach
  • Aim for zero defects in output
  • Identify and solve problems as they arise
  • Prevent rather than correct errors
• Flexibility
  • Adaptable capital equipment and physical resources
  • Multiskilled staff and team working
  • Flexible management styles
• Waste Minimisation
  • Remove processes that do not contribute to added value
  • Consume as little as is necessary
  • Rework rather than replace
• Effective supply chain management
  • Develop excellent relationships with suppliers
  • Minimal number of suppliers
• Continuous improvement
  
  • Ongoing, small steps
  • All staff involved in improvement

The seven wastes eliminated in lean production

• Waste refers to anything that prevents a business from being efficient
• First developed in Japan in the 1970s, seven key types of waste are minimised in lean production 

1. 1. Transportation: Unnecessary movement of materials or products
   2. Inventory: Excess raw materials, work-in-progress, or finished goods
   3. Motion: Unnecessary movement of people or equipment
   4. Waiting: Delays or idle time in the production process
   5. Overproduction: Producing more than what is required by the customer
   6. Overprocessing: Using more resources than necessary to produce a product
   7. Defects: Products or services that do not meet customer requirements

• Kaizen involves a business taking continuous steps to improve work processes and productive efficiency
  • Changes are small and ongoing rather than significant one-off’s and are constantly reviewed to ensure that the desired positive impact on productivity is achieved
     

Diagram Which Shows the Impact of Continuous Improvements on Efficiency

Continuous improvements increase efficiency over time 
 

• Elements of Kaizen commonly include
  • Total Quality Management
  • Team Working and quality circles
  • Zero defects  in manufacturing
  • High levels of automation
  • High levels of cooperation between workers and management
    
    
• Kaizen requires a long-term management commitment to change 
  
  • Regular high quality training for all staff
  • Willingness to accept suggestions and delegate control to subordinate workers
  • Skills to implement and manage continual change
    
    
• It is unlikely to cause workplace conflict
  • Workers do not face sudden significant change
  • Workers are wholly involved in - and contribute to - continuous improvement

• Just in Time (JIT) stock management is a process in which raw materials are not stored onsite but ordered as required and delivered by suppliers 'just in time' for production
  
  
• Careful coordination is required to ensure that raw materials and components are delivered by suppliers at the moment that they are to be used
  • Close relationships with suppliers need to be developed
  • Suppliers may need to be in close proximity 
    
    

The Advantages and Disadvantages of Just in Time Stock Management

Advantages	Disadvantages
Stockholding costs including storage costs are minimised Close working relationships are developed with a small number of trusted suppliers Cash flow is improved as money is not tied up in stocks Unused storage space is available for productive use Teamwork is encouraged so employee motivation is likely to be improved	Bulk buying economies of scale  are not generally possible The ability to respond to unexpected increases in demand is reduced Administrative costs related to frequent ordering are increased Unreliable suppliers (e.g. late or poor quality deliveries) can quickly halt production Significant changes to organisational structure  and production controls are required

• The traditional "cradle to grave" approach refers to the one-time use of a product
  • Products are designed with a linear life cycle that ends in disposal
  • This approach has led to an unsustainable increase in waste going to landfill and associated environmental concerns
    
    
• The Cradle to Cradle (C2C) model aims to shift towards a circular economy
  • Resources are conserved and waste is minimised
  • It is focused on thoughtful design and responsible manufacturing practices
    
    

Key Principles of Cradle to Cradle Design and Manufacturing

Principle	Explanation	Example
Use responsible materials/components	Materials that can be safely returned to the environment to decompose and nourish the soil Materials that can be endlessly recycled without degradation	Elemis packaging can be returned to a retailer or by post. It is cleaned, refilled and sent back to the retailer to be sold again
Design for Disassembly	Products are designed with the intention of being easily disassembled at the end of their life cycle so that components can be reused or recycled	Swedish accessories brand Freitag sells compostable workwear featuring metal buttons that can be unscrewed and removed from the garment easily, allowing them to be collected and used again and again
Use renewable energy	The manufacturing process relies on renewable energy sources to minimise the environmental impact associated with energy consumption	Unilever uses 100% renewable electricity across all its factories, offices, R&D facilities, data centres, warehouses and distribution centres They also generate their own power with on-site solar installations in some countries
Water stewardship	Responsible and considerate water usage to protect local ecosystems, emphasising conservation and clean water practices	Levi Strauss's  Water<Less® initiative reduces water use in the production of clothing across all of its manufacturing facilities
Stakeholder responsibility	Social aspects including fair labour practices, community engagement and the worker well-being are considered	Netflix uses its social media platforms to show support for movements such as Pride month, environmental sustainability and Black Lives Matter
Continuous improvement	Making small, ongoing improvements with the goal of creating products that are increasingly sustainable over time	Coca Cola is aiming for ‘a world without waste’ by collecting and recycling every bottle, making their packaging 100% recyclable and replacing all water used in creating their drinks back to the environment to ensure water security