Lean Production (AQA A Level Business): Revision Note

The principles of lean production

• Lean production is a management philosophy that aims to maximise output while minimising waste

• It focuses on maximising efficiency, improving quality and reducing costs

• The use of lean production is likely to lead to a competitive advantage 

  • Lower unit costs  are achieved due to minimal wastage so prices may be lower than those offered by competitors

  • High quality output is likely as a result of supplier reliability and carefully managed production processes

  • The result should be increased profit margins

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 teamwork

  • 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 to improve processes

  • All staff are involved in improvement, not just those employed in quality management

Just in time versus just in case

The just in time approach

• Just in Time (JIT) is where raw materials and components are ordered as required and delivered 'just in time' to be used in production

• Raw materials and components are ordered from a small number of trusted key suppliers just before they are to be used

  • Close, long-term relationships with these suppliers need to be developed

    • Many businesses using JIT stock management systems aim to source raw materials and components from local or regional suppliers

    • They must be flexible and reliable

    • They may be required to hold stock on behalf of a JIT-operating customer

    • They are often in close proximity to their key JIT-operating customer

Evaluating the just in time approach

The just in case approach

• Just in case stock management involves a business holding a quantity of raw materials, components or finished goods as buffer stock

  • Stock is held in case of shortages so as to provide a  competitive edge  over rivals unable to meet demand

• The decision to keep buffer stocks is one that businesses have to weigh up very carefully

  • Holding stock incurs storage and security costs and can increase waste, as stock could be damaged, become obsolete or stolen

  • Failing to hold enough stock could mean a business is unable to meet demand, potentially missing out on sales revenue

Evaluating the just in case approach

Benefits and drawbacks of lean production

• Lean production is a whole business approach that requires significant changes to be made to the structure, culture and processes of a business

  • Processes

    • Work is reorganised into smooth, straight-line flows

    • Just-in-time deliveries cut stock rooms

    • Right-first-time checks stop faults early

    • Small, regular improvements (Kaizen) are built in

  • Structure

    • Layers of management are reduced so problems travel quickly from the shop floor to key decision-makers.

    • Cross‑functional teams replace separate departments

    • Staff are empowered to implement decisions and take ownership over quality

  • Culture

    • Everyone is taught to spot waste and suggest better ways daily

    • Blame-free problem-solving and respect for each worker’s ideas become part of “how we do things”

Advantages and disadvantages of lean production

Where lean production worked

• Lean production has been successfully embedded at Toyota

  • By designing flow layouts, empowering team leaders and celebrating tiny daily improvements, Toyota cut defects, reduced stock and shortened car assembly times

  • The result is reliable cars, lower costs and a reputation for quality that lets it sell millions of vehicles worldwide, generating healthy profits

  • Every part of the business - from purchasing to HR - lives the same lean values, so the system keeps reinforcing itself

Where lean production failed

• Boeing tried to run its 737 assembly line with almost no spare parts on the factory floor

  • When a key fuselage supplier slipped behind schedule in 2019, Boeing had no buffer stock

  • Unfinished aircraft stacked up outside the factory, costs soared and delivery dates were missed, angering customers

  • The business realised that lean production needs solid suppliers, careful planning and full workforce support