Lean Production
How does a business make its products using as few resources as possible? Learn lean production and just in time, why they cut storage costs and free up cash, and when the risk of holding almost no stock is worth taking.
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Cut the waste
Every business wants to make its products using as few resources as possible. LEAN PRODUCTION means making goods with as little waste as you can, while keeping quality high. This module looks at lean production and one of its main methods, just in time, and at when it is the right choice.
Just in time, defined
Four terms run through this topic. Learn them first.
Just in time or buffer stock?
A business can hold almost no stock, or keep a spare buffer just in case.
Weigh up the risk
Just in time cuts storage costs and frees up cash, but it leaves no spare stock. If a supplier is late, production can stop at once. In the exam, do not just list the benefits. JUDGE whether just in time suits the business, using how reliable its suppliers are and how steady its demand is.
Match the term
- Lean production
- Just in time
- Waste
- Buffer stock
- Making goods with the least possible waste
- Stock arrives exactly when it is needed
- A resource that is used but adds no value
- Spare stock kept just in case
What is just in time?
What does just in time mean?
- Stock arrives exactly when it is needed, so little is stored
- A large buffer of spare stock is always kept
- Products are always delivered to customers on time
- Workers always finish their shifts on time
Does just in time suit them
- A bakery that sells out daily, supplied by a mill two streets away
- A toy maker whose sales triple in December and vanish in January
- A boatyard whose parts come by sea and are delayed by bad weather
- A car plant whose suppliers deliver to a contracted timetable
- A good fit: demand is steady and the supplier is minutes away
- A poor fit on demand: the December peak needs stock held in advance
- A poor fit on supply: one delayed shipment and the work stops
- A good fit: the deliveries are contracted and arrive on time
Benefits of just in time
Which TWO of these are benefits of just in time? Choose all that apply.
- Lower storage costs
- Less money tied up in stock
- The need for larger warehouses
- Holding more spare stock just in case
Follow the cash
Put the effects of holding less stock in order, from first to last.
- The business holds less stock
- It needs less warehouse space
- Storage costs fall
- More cash is free to use elsewhere
Cutting the waste
Lean production aims to cut out all kinds of _____. One method is _____ in time, where stock arrives exactly when it is needed. This keeps _____ costs low and ties up less _____. The main risk is that it relies on a reliable _____.
Count the waste saved
A workshop used to waste 200 units of material each month. After switching to lean production it wastes only 40 units a month. How many units of waste does it remove each month?
Spot lean production
Tap the TWO statements that describe LEAN production.
- It cuts out steps and stock that add no value.
- It keeps huge stores of spare parts just in case.
- It uses just enough resources to do the job.
- It orders far more material than it will use.
Lean or wasteful?
For each choice, decide whether it makes production more lean or more wasteful.
- A bakery has flour delivered on the morning it bakes, holding almost none in store. Is this more lean or more wasteful?
- A shop orders ten years of stock at once and pays to store it in a large warehouse. Is this more lean or more wasteful?
- A factory removes a second inspection that repeats the first and finds nothing new. Is this more lean or more wasteful?
Explain and judge
A shop is deciding whether to use just in time for its stock. Explain what just in time is, and give one benefit and one risk of using it.
- Explain what just in time means
- Give one benefit of just in time
- Give one risk of just in time