Lean Production (Cambridge (CIE) A Level Business): Revision Note

The aims and purposes of lean production

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

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

• 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

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

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

Lean production strategies

• Businesses that pursue lean production can adopt a range of strategies

1. Kaizen

• Kaizen means “continuous improvement” in Japanese

• It involves small, regular changes made by employees at all levels

  • Workers are encouraged to suggest ways to improve efficiency, quality and processes

  • These ideas are implemented gradually over time

A comparison of Kaizen with one-off improvements

Evaluating the use of Kaizen

2. Quality circles

• Small groups of employees who meet regularly to discuss work-related problems and suggest improvements

• These groups usually focus on improving quality, safety or productivity and include workers from different levels of the business

Evaluating the use of quality circles

3. Simultaneous engineering

• A production method where product development stages happen at the same time, rather than one after another

  • For example, design, engineering and marketing teams work together to reduce the time it takes to launch a new product

Evaluating the use of simultaneous engineering

4. Cell production

• A method of organising production into small teams that complete a whole part of the product process

• Instead of passing work along a production line, each cell is responsible for a complete unit of work, encouraging ownership and teamwork

Evaluating the use of cell production

5. Just-in-time manufacturing

• Where products are made only when there is demand, and each stage of production begins only when needed by the next stage

• This approach aims to match production with customer demand

  • This minimises waste, speeds up workflows, and reduces the need for warehousing

Evaluating the use of just-in-time manufacturing

6. Waste management

• Waste can be anything that does not add value, such as overproduction, excess inventory, delays or defects

• Lean waste management aims to simplify processes and reduce costs

Evaluating the use of waste management

The impact of lean production

• Lean production affects not only how goods are made but also how people work, how quality is maintained and how inventoryis managed

Lean production impacts

Limitations of lean production strategies

• Lean production can improve efficiency and reduce waste, but it also presents several challenges and limitations that businesses must carefully manage

• Dependence on reliable suppliers

  • Lean production often relies on just-in-time delivery

    • If suppliers are late or unreliable, production may stop entirely because there is little or no stock available

• Vulnerability to demand fluctuations

  • Lean systems produce only what is needed

    • This makes it difficult to respond quickly to unexpected increases in customer demand, which can result in missed sales and unhappy customers

• Initial setup costs

  • Introducing lean production may require investment in new equipment, staff training, and redesigning production processes

    • These upfront costs can be very high, especially for small businesses

• Pressure on workers

  • Lean production gives employees more responsibility and expects constant improvement

    • This can create stress or lower morale if staff feel overloaded or too closely monitored

• Limited flexibility

  • Lean strategies work best in high-volume, predictable environments

    • They are unlikely to be suitable for businesses with highly customised products or irregular demand