Efficiency in Production (AQA GCSE Business): Revision Note

An introduction to lean production

• Lean production involves the minimisation of the resources used in production

  • Less time is required as the production process is organised in the most efficient way

    • Fewer materials are used as there is a focus on waste reduction

    • Less labour is used as lean production is typically capital intensive

    • Little space is required for production and storage

    • A small number of trusted suppliers work closely with the business

• Efficiency gains through the use of lean production are likely to lead to a competitive advantage 

  • Lower  unit costs  are achieved due to minimal waste, 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

• However, lean production requires very careful coordination

  • Suppliers must be capable of responding very quickly to stock requests

  • Workers need to be motivated and flexible, capable of switching between a variety of tasks and constantly alert to changes they can make to improve efficiency

  • Managers need to maintain excellent relationships with workers to avoid disruptions to production

  • Equipment and machinery need to be well-maintained

  • Quality issues need to be identified and corrected swiftly, requiring effective quality assurance processes to be implemented and monitored constantly

    • All workers have a responsibility for quality, so ongoing training is vital

Elements of lean production

• Lean production uses strategies such as just in time production and Kaizen 

Just in time production

• Just in time production means that the business only manufactures products when a customer confirms an order for them

  • This reduces the need for storage, as stock is only ordered to arrive when needed and products only made when there is demand

Kaizen

• Kaizen involves taking continuous steps to improve productivity

  • Changes are small and ongoing, rather than significant one-off changes

  • It requires a long-term management commitment to change as well as flexible workers fully engaged in continuous improvement

How Kaizen works

• Elements of Kaizen commonly include:

  • Zero defects  in manufacturing

  • Capital-intensive methods using advanced machinery

  • High levels of cooperation between workers and management