Lean production in service and manufacuring organisations

by The Times 100 on Monday 29th March, 2010

Lean production methods are traditionally thought of as being used in manufacturing organisations. Portakabin for example, the international modular building supplier, uses lean production approach to minimise waste and inefficiency. However, a lean approach can also be adopted by service organisations to maximise the use of available resources through waste reduction. The Legal Service Commission is a public sector organisation that provides legal services to a large number of people on low incomes in the UK. It has implemented a range of lean initiatives to ensure it cuts down on wasteful expenditure through the use of improved information systems and processes. Both manufacturing and service sectors can benefit from 'lean production'. Whereas Portakabin may reduce waste through clever design, material re-use and improved recycling; the Legal Service commission reduces waste through a reduction in unnecessary correspondence, the use of electronic forms and simplified procedures for clients.

It has now been suggested that a lean approach to other public sector organisations may help the government to avoid the need for raising taxes too much by cutting waste instead. Edward Leigh, the chairman of the public account committee, has said that there are opportunities for waste reduction across the public sector, in particular in the areas of benefits, defence and health. Chancellor Alistair Darling announced £11 billion of efficiency savings this week. (The Sunday Times 28th March 2010)

Questions

  1. Define lean production.
  2. Explain what is meant by Total Quality Management.
  3. Compare and contrast the lean methods used by manufacturing organisations like Portakabin with those used in the service organisations like Legal Services Commission.
  4. Analyse the impacts on customers of firms adopting a lean approach.

Answers to questions

  1. Define lean production -Lean production is an approach to business operations which seeks to minimise waste and inefficiency.
  2. Explain what is meant by Total Quality Management Total quality management (TQM) is a management system designed to eliminate defects and meets customer requirements first time every time. Unlike quality control methods which can result in high levels of waste, TQM minimises waste by making sure every worker is responsible for quality.
  3. Compare and contrast the lean methods used by manufacturing organisations like Portakabin with those used in the service organisations like Legal Services Commission Similarities: TQM and other quality assurance methods can be used in manufacturing and service organisations, Continuous improvement can be adopted in both types of organisations to develop a culture of raising performance, Lean methods can help to cut unnecessary activities in any type of firm, thereby reducing the time wasted. Differences: Just in time methods are more likely to be used in manufacturing organisations to reduce the costs of holding stocks and the space needed to store them. In service organisations, space savings may only be made from the electronic storage of data instead of paper based systems. Lean methods can be used within Portakabin to reduce material waste and increase recycling during manufacture. In LSC, material waste savings are likely to be limited to saving paper
  4. Analyse the impacts on customers of firms adopting a lean approach – Customer benefit from shorter lead times and quicker service, Customers may get better customer service and better quality products, A reduction is waste may be passed on to customers as lower prices, Businesses can concentrate of meeting customer needs.

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