University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

389

Pages:

2
Author:

stud_ice13

Key Lean Principles 1. Value Streams: o Purpose: Lean businesses identify and streamline "value streams," which include all processes needed to deliver value to customers. Instead of standard production, lean manufacturing organizes processes into smaller, product-specific streams. o Example: A food processor with separate value streams for trail mix, energy bars, and drinks ensures all activities for each product type happen within its value stream, enhancing efficiency and reducing waste. 2. Pull Production: o Definition: Unlike traditional "push" production, which is based on forecasts and leads to excess inventory, pull production is demanddriven. Production begins only after receiving a customer order, producing items "just-in-time" to fulfill demand. o Benefits: Pull production reduces storage costs, risk of overproduction, and obsolescence, and improves the ability to provide customized products in smaller batches. It also helps reduce cycle time and setup time, allowing quicker response to customer needs. 3. Zero Waste and Zero Defects: o Objective: Lean businesses aim to eliminate waste and defects. Workers can stop production to address quality issues immediately, reducing scrap, rework, and warranty costs. o Result: This leads to lower production costs, enhanced product quality, and higher customer satisfaction. Supporting Lean Concepts • • • Cycle Time: This is the total time taken from starting production to finishing a product. Lean practices aim to minimize cycle time by reducing non-value-added activities like inspection, waiting, and movement, focusing instead on efficient process time. Setup Time: Lean businesses strive to reduce setup times, allowing for smaller batch production and faster transitions, directly supporting pull production. Inventory Management: Lean businesses view inventory as waste and use a just-in-time system to minimize it, reducing costs and allowing a quicker response to customer needs. Lean Applications in Different Sectors 1. Manufacturing: Nike adopted lean by reorganizing its processes, reducing costs, and increasing quality through systematic production changes. 2. Retail and Service: o o Amazon: Applies lean principles in fulfillment by using machines for repetitive tasks and reserving human input for complex jobs, reducing errors and defects. Taco Bell: Streamlined its operations by focusing on food assembly rather than processing, reducing inventory and improving service speed and quality. Supply Chain Management in Lean Business Supply chain management is vital for lean businesses, ensuring that materials arrive just-in-time for production. This requires close collaboration with suppliers and strategic planning to align with production schedules, maintaining efficiency and reducing waste. Lean vs. Traditional Manufacturing: Summary Lean businesses focus on: • • • Reducing batch sizes and inventory levels. Minimizing cycle and setup times. Increasing responsiveness to customer orders (pull production). In contrast, traditional businesses typically: • • Operate on sales forecasts (push production). Produce in large batches, which can increase inventory and inspection needs, risking overproduction or obsolescence. Lean manufacturing aims to maximize efficiency and customer satisfaction by focusing on waste reduction, flexible production, and quality control throughout the process.