Lean production (LP) is the system of manufacturing management that focuses on quality enhancement and emphasizes the role of suppliers in the production efficiency increase (Key concept 2015). LP frequently includes the Just in Time (JIT) technique that implies the rapid response of suppliers and the reduction of waste (Green, Inman, Birou & Whitten 2014).
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LP may have both positive and negative effects on organizational performance. It is possible to say that the efficiency of lean systems’ implementation depends on the internal and external factors. LP methods may help to increase the organizational efficiency because the application of every production aspect that is not perceived as valuable for the consumers and is related to the resource consumption is significantly reduced or eliminated from the lean manufacturing process (Lyons, Vidamour, Jain & Sutherland 2013). However, the effectiveness of lean methods largely depends on the efficient way of thinking.
LP system is effectively implemented in Japanese organizations (Lyons et al. 2013). However, when the Western companies attempt to implement similar methods they usually fail to achieve the same success as their Japanese colleagues because they ignore the internal factors influencing lean production effectiveness, i.e. lean thinking principles. In this way, LP methods may be regarded as the secondary instruments – the products of the particular collective way of thinking and corporate culture (Lyons et al. 2013). The Japanese organizations are effective not merely because they implement particular methods but because their mode of decision-making is effective at every level of organizational functioning. And in case the leaders lack the ability to think in an efficient way, the implementation of the LP system will likely have adverse impacts on organizational performance.
The main principles of the JIT approach require the organizations to purchase only the necessary amount of stocks, and only when it is necessary. In this way, the company attempts to increase the quality of production and achieve the reduction of manufacturing defects (Yasin, Small & Wafa 2003). The major advantages of the JIT approach are the decrease of storage expenses including the rent costs, storage equipment purchase; the reduction of production cycle due to the decrease in batch size; and the rationalization of production through the supplier specialization (Green et al. 2014).
At the same time, JIT provokes some risks related to the excess expenses for transportation and supply chain arrangement, high level of dependence on suppliers and the quality of supplied goods, as well as the necessity for the constant informational flow between the buyers and suppliers (Key concept 2015). The suppliers’ failure to comply with the delivery terms may invoke significant production loss. Moreover, organizations need to enhance the inspection of the incoming product to avoid downtime and crisis situations. Nevertheless, it is possible to optimize JIT systems through the introduction of streaming motion systems for supply and production, reduction of change over time, and systematic productivity increase (Piercy & Rich 2015).
Integration of Lean Thinking Principles into Supply Chain Management
The integration of a lean approach into supply chain management may help to reduce the costs and release the financial resources associated with the storage of excess inventories. For the achievement of positive results, first of all, it is important to identify the factors limiting the effectiveness of the company’s functioning, such as the irrational allocation of resources. It can be achieved through the analysis of inventory traffic flows and the current relationship between logistics and production subsystems.
The overall logistics optimization can be realized through the restructuring of warehousing, i.e. standardization and reconfiguration of storage areas and elimination of excess inventory. It is necessary to reorganize the production lines as well: eliminate waste, optimize equipment, storage areas, and workplace layouts to reduce time costs (Lyons et al. 2013).
Moreover, LP and JIT imply long-term planning. Therefore, it is important to develop the charts for the time of product receipt and shipment according to the standards adopted in the new production system. In this way, it will be possible to optimize the inventory flows between logistics and production subsystems.
Green, K, Inman, R, Birou, L & Whitten, D 2014, ‘Total JIT (T-JIT) and its impact on supply chain competency and organizational performance’, International Journal of Production Economics, vol. 147, pp. 125-135. Web.
Key concept: developing lean operations and supply chain optimization 2015, Laureate Education, Liverpool, UK. Web.
Lyons, A, Vidamour, K, Jain, R & Sutherland, M 2013, ‘Developing an understanding of lean thinking in process industries’, Production Planning & Control, vol. 24, no. 6, pp. 475-494. Web.
Piercy, N & Rich, N 2015, ‘The relationship between lean operations and sustainable operations’, International Journal of Operations & Production Management, vol. 35, no. 2, pp. 282-315. Web.
Yasin, M, Small, M & Wafa, M 2003. ‘Organizational modifications to support JIT implementation in manufacturing and service operations’, Omega, vol. 31, no. 3, pp. 213-226. Web.