O PERATIONAL S TRATEGIES O PERATIONAL S TRATEGIES : L EAN P RODUCTION “Do not wait; the time will never be just right” Napoleon Hill “The clock not the steam engine is the key machine of the modern industrial age.” Lewis Mumford BUSS3.15 Lean Production

O PERATIONAL S TRATEGIES : L EAN P RODUCTION I N THIS TOPIC YOU WILL LEARN ABOUT : The effective management of time Assessing the value of critical path analysis The effective management of other resources through methods of lean production BUSS3.15 Lean Production You will need access to the internet to view this clip

LEAN PRODUCTION Lean Production techniques are working practices derived from Japan that focus on cutting waste whilst maintaining, or improving, quality. These, include: Time Based Management Just-In-Time (JIT) Production Kaizen (Continuous Improvement) - - Watch this video on the ‘Toyota Way’ looking at Lean - Production at the Japanese company BUSS3.15 Lean Production

THE EFFECTIVE MANAGEMENT OF TIME Time Based Management is the effective management of resources to ensure that unproductive time is eliminated from the production process. This will involve the use of a variety of Operations Management systems including Just In Time, CAD/CAM and Critical Path Analysis. Flexibility is crucial so that firms can alter the production process to meet changes in demand. If successful then firms will have: Reduced lead times and faster response to changes in the market Less wastage through increased efficiency Faster development time for new products BUSS3.15 Lean Production

JUST IN TIME PRODUCTION Just-In-Time (JIT) Production is a technique used to minimise stock holdings at each stage of the production process. BUSS3.15 Lean Production Work-in-progress Raw materials Finished product Why might a firm wish to hold stock in each of these forms?

JUST IN TIME PRODUCTION BUSS3.15 Lean Production The benefits of using JIT are: Less costs in holding stock Less working capital required Less obsolete/ruined stock Lower associated costs e.g. security and insurance Avoids having unsold stock The disadvantages include: Little room for error Very reliant on suppliers Unexpected orders harder to meet High initial set up costs Complex systems have to be put in place and understood

KAIZEN (CONTINUOUS IMPROVEMENT) Kaizen is a system that concentrates on small, but frequent, improvements in every aspect of the production process. All members of the workforce will be involved – improvements can take place at any level of the hierarchy. This requires a highly motivated and committed workforce and is a vital component of Total Quality Management in order to improve the quality of the production process. BUSS3.15 Lean Production

CRITICAL PATH ANALYSIS Critical Path Analysis is a technique used to identify the order in which all tasks need to be completed when planning a project. The critical path is the set of activities that will lengthen the duration of the project if delayed. BUSS3.15 Lean Production

CRITICAL PATH ANALYSIS A B F G H C D E KEY: Node number EST LFT BUSS3.15 Lean Production

CRITICAL PATH ANALYSIS – THE RULES Each line represents an activity Lines should not cross ESTs are calculated from left to right LFTs are calculated from right to left For ESTs add up the length of all of the activities to calculate the correct EST figure for each node If more than one activity precedes a node the highest figure becomes an EST For LFTs take away the length of all of the activities to calculate the correct LFT figure for each node If more than one activity precedes a node the lowest figure becomes an LFT BUSS3.15 Lean Production

CRITICAL PATH ANALYSIS – THE RULES The first node will always have an EST and LFT of zero. The final node will always have an EST and LFT that is the same figure A node preceding an activity that is on the critical path will always have an EST and LFT that is the same The critical path are those activities that must be completed on time if the whole activity is not to be delayed. These are identified by putting a line through the activity. Non-critical activities are those which are not on the critical path. There is some leeway (spare time) to complete the activities. These activities are said to have float time. The total float is the individual float times added together. It can be found using the following formula: LFT – duration (time of activity) – EST Candidates will be expected to fill in ESTs and LFTs on a partially completed network diagram. BUSS3.15 Lean Production

ACTIVITY - CRITICAL PATH ANALYSIS A B F G H C D E Fill in the empty ESTs and LFTs on this diagram. Show the critical path by putting a line through each activity. BUSS3.15 Lean Production

ACTIVITY - CRITICAL PATH ANALYSIS A B F G H C D E BUSS3.15 Lean Production

ADVANTAGES OF CPA Identifies the critical activities Shortens the overall time of a project Improves focus on project Greater Productive efficiency Allows for just in time DISADVANTAGES OF CPA Is only a starting point for a successful project Relies on estimations Does not take into account external influences Large projects can be too complex for CPA CRITICAL PATH ANALYSIS BUSS3.15 Lean Production

A CTIVITY L EAN P RODUCTION EmployeesMachineryStockFinance Time based management Just in Time production Kaizen Critical Path Analysis BUSS3.15 Lean Production Print out the table below on A4 paper. In pairs complete the table to show how each method of lean production will impact upon other resources.