theme 4

• kaizen definition

  continuous improvement
• kaizen

  kaizen involves encouraging staff to continually find new, better ways of working, to keep quality and productivity rising regularly
• an example of kaizen

  toyota claims to have tens of thousands of new ideas each year from factory-floor workers, each one focused on making the business even better
• an advantage of kaizen

  steady progress makes it easier to adjust to rising productivity without the need for big rounds of redundancies
• disadvantage of kaizen

  the business may miss the chance to make a big leap forward, ie by rationalising production
• Just-in-time (JIT) production

  Ordering materials in small quantities but often, to arrive just in time before existing stocks run out. This means carrying zero buffer stocks
• example of JIT production

  on a motorbike production line, fresh supplies of headlights arrive just as the last one is being fitted to a bike
• an advantage of JIT production

  the elimination of buffer stock saves this drain on working capital, and forces the business and its suppliers to work with zero defects, as one faulty component can halt production if there are no spares
• a disadvantage of JIT production

  an unforeseen supply hold-up (ie serious motorway crash) may halt all production
• lean management

  lean management broadens out the original concept from manufacturing to all organisations (especially service businesses)
• an example of lean management

  the manager of an office might want to see minimum wastage of resources (ie paper, space) and would want to see time used as efficiently as possible
• an advantage of lean management

  if one bank or supermarket head office is more efficient than its rivals, it can pass on the lower costs as lower prices to customers, and perhaps gain market share
• a disadvantage of lean management

  lean can sometimes stray towards mean. a mean-spirited employer that thinks only about cost minimisation can be attractive to staff. in 2017 a ryanair problem with staff retention (pilots getting jobs elsewhere) led to widespread flight cancellations and bad publicity for the airline
• long term relationships

  lean producers want long term supplier relationships based on trust, not contracts. other products tend to get suppliers to compete for the lowest-priced quote
• example of long term relationships

  toyota UK has 260 UK-based suppliers of car components. all of these are based on long term trust - some of these relationships have been running for 30 years
• advantage of long term relationships

  long-term relationships encourage suppliers to think how to develop new, better (perhaps technically more clever) components, to help their trusted customer become more successful
• a disadvantage of long term relationships

  unit costs may be higher than rivals, especially in the short term. this can affect competitiveness
• make to order (lean production)

  only manufacture in response to a specific customer order, ie don't produce for stock/inventory
• example of make to order (lean production)

  when you order a mercedes it will come with perhaps 25 options chosen to match your wishes ie metallic blue paint. it will be personalised to you, but this also gives the company time to make to order
• advantage of make to order (lean production)

  making to order allows a business to operate with zero finished goods buffer stock
• disadvantage of make to order (lean production)

  businesses that make to order cannot respond to a customer desperate to get the product quickly
• no bulk-buying (lean production)

  lean producers buy little and often to avoid high stocks when buying in bulk
• example of no bulk-buying (lean production)

  a supermarket orders small numbers of croissants to arrive every hour.
• advantage of no bulk-buying

  goods are fresh and there's no wastage from goods going beyond their sell-by-date
• disadvantage of no bulk-buying

  removes the possibility of gaining cost advantages by bulk buying (economies of sale)
• participation (lean production)

  lean producers encourage staff to put forward ideas they have of how to make better, more innovative products
• example of participation (lean production)

  toyota (inventor of lean production) hires university graduates to work on its production lines, and encourages these talented people to explore the potential of its technology
• advantage of participation (lean production)

  putting into practice great ideas from your ship-floor staff boosts morale and motivation
• a disadvantage of participation (lean production)

  staff will get frustrated if ideas are called for but not implemented
• right first time (lean production)

  avoiding waste by working to get production right first time, rather than relying on checking systems (quality control) and re-work
• an example of right first time (lean production)

  requiring that fitters of car doors have a 100% success rate instead of needing some of the work to be re-done by quality checkers further down the production line
• advantage of right first time (lean production)

  eliminates the waste of materials and labour time involved in having to do things twice
• disadvantage of right first time

  may be too challenging for new, inexperiences staff whose quality standards are not yet high enough
• zero defects (lean production)

  faultless production standards, thereby allowing zero buffer stock within the production process
• an example of zero defects (lean production)

  if you can be confident of fault-free cup handles arriving just in time, you don't need any in stock
• advantage of zero defects (lean production)

  zero defects can help build a strong, quality reputation among cutsomers, perhaps adding value to the brand name
• disadvantage of zero defects

  achieving zero defects may be expensive in equipment and labour costs
• What is the main reason businesses exist?

  To make stuff
• What are Operational Objectives?

  Targets set for production
• How do operational objectives help a company?

  They help achieve overall objectives