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Lean Production

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Lean SCM and Lean Manufacturing are both trying to reduce the amount of waste and the lead time.

Lean is about doing more with less: less time, inventory, space, labor, and money. Lean production / manufacturing, also known as the Toyota Production System, aims to avoid waste by making efficient use of a firm's key resources (labour, raw materials, machinery and time). Just as mass production is recognized as the production system of the 20th century, lean production is viewed as the production system of the 21st century.

Lean production elements within this approach include:

(1) Just-in-time (JIT). Components arrive just as they are needed, eliminating the need for stockpiles of parts which tie up cash that could be earning interest elsewhere. Just-in-Time (JIT) production – also called stockless production, and continuous flow manufacture – nothing is bought or produced until it is needed.

(2) Kaizen groups. Individual employees and groups are encouraged (or in some cases obliged) to contribute suggestions for productivity and quality improvements. The aim is 'continual improvement' — every employee should be constantly focused on ways of carrying out their job more effectively.

(3) Total quality management. A philosophy of zero defects is created throughout the entire organization, reducing the need for rework and cutting wastage.

(4) Cell production. Employees are grouped into teams; each team is generally assigned 'internal customers' who will demand certain levels of performance.

(5) Simultaneous(одновременный) engineering. Areas such as new product design are analyzed to assess whether time can be saved by carrying out some processes in parallel with others.

(6) Outsourcing, which is a new trend of lean manufacturing. It is contracting with another company or person to do a particular function, for example, exchange of services and payments. Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as off-shoring or offshore outsourcing. Other related terms are nearshoring, multisourcing and strategic outsourcing. Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as promotion and advertising. But some organizations outsource whole operations. The most common forms are information technology outsourcing (ITO) and business process outsourcing (BPO).

The introduction of techniques such as these has had a dramatic impact in terms of driving down costs and increasing the profits of firms in which they have been successfully implemented. However, it is possible that some lean operators may face problems coping when demand is rising rapidly because of the very streamlined (налаженный) nature of their operations. The main issues for lean management are demand volatility, complexity of supply chain management, labour turnover and other employee implications. The challenges of outsourcing, for example, become especially acute when the work is being done in a different country (offshored), since that involves language, cultural and time zone differences. Well-managed and thoughtful introduction of techniques such as kaizen, JIT and outsourcing can have a major positive impact on firms’ profitability. Even so, there are many hidden costs that may occur if lean techniques are not managed properly.

 


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