Types of production

Lean production

Lean production is an approach to manufacturing that was developed by the Japanese car manufacturer Toyota. The main aim is to reduce waste and use fewer resources throughout the entire manufacturing process. This will allow the business to reduce the cost paid per product and have a higher rate of return on capital employed. Lean production will result in:

• Higher productivity
• Fewer defective products
• Less time between an order being placed and the product being sent out
• Higher rates of reliability

Another well-known example of lean production comes from the global furniture store Ikea. Throughout the time of the company, the founder of Ikea, Ingvar Kamprad, has instilled a culture of waste reduction. This is a central principle of the multibillion-dollar company and the owner often encourages employees to use both sides of a piece of paper before throwing it away. Mr Kamprad is also said to buy his clothes in second-hand shops and to still drive an old Volvo he has owned for many years, despite being worth an estimated £35 billion. This may seem a little unnecessary but this approach to cost control allowed Ikea to rapidly expand throughout Europe in the early 2000s while actually reducing the costs of products that were on sale by 3% each year.

Just-in-time production

The use of just-in-time production allows a business to release capital that may be tied up in stock. If a business has a huge warehouse with millions of pounds’ worth of stock, this money will be tied up and the business will not be able to use it for anything. However, if the business tries to make items as they are ordered or reduces the amount of stock that is held at any one time, it will be able to use money in other ways, such as in marketing or improving production lines. Although this is very productive for a business, it does have the drawback of not giving a fast service to customers when they order products. Waste is reduced using the just-in-time approach as money will not be wasted on unnecessary work and capital can be used in the most efficient way. Having high amounts of stock sitting in a warehouse will mean that money has been invested in production that has not yet seen a return.

Cell production

Cell production is where a business will divide the workplace into ‘cells’ that have machinery and staff that focus on one specific area of manufacturing. For example, one cell may focus on the metal parts of a product and work to complete all of the parts that are made from metal before sending the parts over to another part of the production line. This is a good method for increasing teamwork and ownership among employees and will also allow people to become specialised in one particular area.

Reliance on the workforce

Pretty much all methods of lean production rely on the workforce that are employed since it is the workforce who will be tasked with waste reduction and working efficiently. To increase motivation in waste management, a business will need to develop:

• A team spirit in the workforce so that everyone feels involved in waste reduction
• Ownership over parts of the production process and a willingness to improve constantly
• Communication among workers
• Organisation skills so that workers can plan their own schedules and solve problems in small teams