5.3- Lean Production and Quality Management (HL)

What is Lean Production?
Lean Production is cutting the fat! The fat includes:
 * Time
 * Transportation
 * Products
 * Space
 * Inventory
 * Energy
 * Talents

Benefits
Lean Production effects all areas of an organization. It effects the physical resources (ex. storage space, rent, and utilities), human resources (ex. reduce unproductive travel times, use talents more efficiently, eliminate unnecessary roles), financial resources (ex. using capital in the most effective way possible).

Methods of Lean Production

 * Kaizen (Continuous Improvement)
 * Just-In-Time (JIT)
 * Kanban
 * Andon

Kaizen- "Continual Improvement"

 * "Kai"= Change; "Zen"= Good
 * must be inclusive of all levels of hierarchy
 * There should be no blame attached to any problem or issues raised
 * Systemic thinking is needed in order to consider the whole production process
 * Focusses on the process, not the end product
 * Must create an atmosphere of Respect

Just-In-Time (JIT)

 * JIT: avoid extra stock by being able to receive needed stock "just-in-time"
 * Related terms/concepts:
 * Buffer Stock: keeping stock on hand in order to be able to respond to unexpected demand
 * Stock Control: controlling stock levels of a business

Kanban: a system of messages

 * system of messages (written or electronic) to help manage production flows and JIT delivery
 * rate of demand determines rate of production
 * is not a tool of stock control, but a tool to facilitate lean production

Andon

 * a system of signals and alerts informing workers of a production problem that requires immediate attention

*Cradle-to-Cradle Design Manufacturing

 * Very new concept
 * Business Deal
 * Refers to products should be 100% recyclable/reusable
 * Launched 2012

Quality Control and Quality Assurance

 * Quality Control- a top-down, authortitative approach to quality management
 * Quality Assurance- more inclusive of workers and more reflective of modern approaches to production
 * SHOULD NOT be used interchangeably, as their meanings are different
 * Focus on quality can increase sales and help the firm acquire retreat customers, reduce costs, and achieve premium pricing.

Quality Circles

 * Formal group of employees/volunteers
 * People from different parts of an organization
 * Discusses ways for a company to improve quality
 * Intended that different perspectives lead to different ideas for improvement
 * Good way to get people involved and improve the production process

Benchmarking

 * Comparing yourself to your competitors
 * Businesses take the best players/market leader in their industry and follow that company's "best practices".
 * Firms hope to make imrpovements and enhance their own organizational practices
 * Has its limits, as not all firms have the culture established to look at weaknesses or readily accept change or criticism

Total Quality Management

 * Approach to quality enhancement that permeates the whole organization
 * Always includes quality circles and benchmarking, as well as kaizen, kanban, and andon. These tools are mutually exclusive, and firms may use a variety of tools.

Advantages

 * Can create closer working relationships with all stakeholders
 * Can motivate the workers
 * Can reduce costs (especially long-term)
 * Can improve the design and production of quality products
 * Can enhance the reputation of the company.

Disadvantages

 * Costly- especially during the short term
 * Staff may need significant changes
 * It may take time to change corporate culture
 * Can create lots of stress on formal relationships in the business
 * Difficult to maintain over long period of time.

National and International Quality Standards

 * Achieving certification in standardization can be a great boon to the business
 * International standards are set up by organizations such as:
 * International Organization for Standardization (IOS)
 * European Union (EU)
 * FDA (Food and Drug Administration
 * Problems arise as not all countries have the same or simpatico standards. However, meeting recognized standards can:
 * Enable Exports
 * Give a competitive edge
 * Save on the costs of withdrawing products