Lean Production

Lean production is the term given to a range of measures traditionally used by Japanese businesses in an attempt to reduce waste and costs in production.

Just-In-Time

This is a method of manufacturing products which aims to minimise:

- the production time

- the production costs

- the amount of stock held in the factory.

Raw materials and supplies arrive at the factory as they are required, and consequently there is very little stock sitting idle at any one time. Each stage of the production process finishes just before the next stage is due to commence and therefore the lead-time is significantly reduced.

With a just-in-time production system, the level of production is related to the demand for the output (i.e. the number of orders) rather than simply producing finished goods and waiting for orders. This means that raw materials and stock only needs to be ordered from suppliers as required - this reduces the amount of money tied up in stocks, and leaves more money available for investment elsewhere.

The advantages of a just-in-time production system are:

) Cashflow is improved, as less money is tied up in raw materials, work-in-progress and finished goods.

2) Less need for storage space for raw materials and finished goods.

3) The business builds up strong relationships with its suppliers.

4) Communication and co-operation between the marketing and the production departments are improved.

The disadvantages of a just-in-time production system are:
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) The business may struggle to meet orders if their suppliers fail to deliver the raw materials on time.

2) The business is unlikely to 'bulk-buy' its raw materials and, therefore, it may lose the benefit of achieving economies of scale.

3) Buffer stocks are minimal and this may lead to the business having to reject customer orders requiring delivery immediately.

Cell Production

This method of manufacturing an item organises workers into 'cells' within the factory, with each cell comprising several workers who each possess different skills.

Each cell is independent of the ...

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