"Wouldn't it be great idea if we could produce the highest quality goods at the lowest possible cost? duh yeah would!!!"
--LEAN PRODUCTION FEATURES--
Whenever you hear the word 'LEAN' you know it's about 'CUTTING THE FAT' which in the business sense refers to REDUCING AVERAGE COSTS by CUTTING WASTE and INCREASING PRODUCTIVITY.
"So what is considered 'waste' in a business?"
The eight main sources of waste in industry have been identified as:
.
Use the above example to create your own slideshow (set of images) showing the 8 wastes in the context of your school. You may use a canva template for this. Once complete screenshot/insert into your Google doc.
"So what is considered 'efficiency' in a business?"
EFFICIENCY generally refer to "GETTING MORE OUTPUT FROM YOUR INPUTS", and is therefore measured by comparing the ratio of ‘inputs to outputs’.
The most common measure is PRODUCTIVITY– labour and capital – which measures OUTPUT PER UNIT OF LABOUR OR CAPITAL INPUT.
Efficiency and productivity can be increased by:
improving employees’ skill levels
improving workers’ motivation
purchasing more technologically advanced equipment
more effective management of labour and other resources.
Following on to your slides add three more, showing how efficiency and less time wasted could be achieved at your school using the 3 methods identified above. (I have done an example for you)
"The school could improve efficiency by 'improving technology', such as investing in a larger, faster photocopying machines that means teachers waste less time waiting for their printouts as well as causing other teachers to have to queue and wait"
--LEAN PRODUCTION METHODS--
After watching the video above what can you conclude about pit-stop operations in formula 1 teams over time? What do you notice about the equipment, tools, even the physique of the pit crew? How do you think these improvements came about, was it 'on the job' recommendations from actual crew or was there some boss organising it better?
'KAIZEN' 改善 is a Japanese word that means "CHANGE FOR THE BETTER" or "CONTINUOUS IMPROVEMENT" In practice, it refers to a mindset and method of making small, consistent improvements over time in work processes, systems, and habits.
Key Characteristics:
Ongoing: Improvement is continuous, not one-time.
Inclusive: Everyone—from managers to workers—is involved.
Incremental: Focuses on small changes rather than big overhauls.
Process-oriented: Looks at how things are done and finds ways to do them better.
Below are examples of Kaizen in the workplace, you will notice that they often involve organisation of space and relocation of equipment and tools.
"Is there a culture of open communication and continuous feedback within staff teams?"
"Are workers empowered to make suggestions and participate in problem-solving?"
"Does the business have systems to track, measure, and follow up on small improvements?"
"Is leadership committed to long-term, incremental change rather than quick fixes?"
"Well if the answer is 'YES!!!', then this might be appropriate for your firm to utilise KAIZEN at work."
Of course in order for these kaizen groups to operate the management must welcome this form of 'BOTTOM-UP' style communication as well as be willing to act on it.
This clearly requires a more DEMOCRATIC LEADERSHIP-STYLE that is accepting of the fact that WORKERS MAY KNOW BEST, and allows the groups REGULAR TIME to come together and discuss new ideas to improve quality. This not only speeds up the process but can motivate workers; job enrichment.
I would assume that this was similar to how the F1 teams work with engineers constatly suggesting ideas to improve pit stop times????
After watching the video above about 'Marginal gains' in British cycling you get to see how incremental improvements over time 'Added Up' and to significant long term improvements in efficiency and reduced waste just in time for the Olympics
Despite the similarities with Kaizen can you notice at least two rather large differences between the two related to 'POWER' and 'FREQUENCY'?
Let's go on a 'LEARN TO BE LEAN TOUR OF THE SCHOOL' Can you make your own Kaizen suggestion related to your school? Remember its about avoiding waste and improving productivity so if you focus on organistion and/or time saving that would be easier. Download this form and complete. ⬇️DOWNLOAD⬇️
STUCK? Consider this classic dilemma, should teachers move classrooms rather than students when lessons change? Show how this could be considered Kaizen if done correctly.
JUST-IN-TIME refers to an approach to STOCK/INVENTORY-CONTROL that requires that 'NO STOCKS ARE HELD'. In this system MATERIALS ARRIVE JUST AS THEY ARE NEEDED ON THE PRODUCTION LINE and FINISHED GOODS ARE DELIVERED AS QUICKLY AS POSSIBLE TO THE CUSTOMER.. The goal is to reduce waste, lower storage costs, and improve efficiency by only producing or ordering what is required, when it's required.
On my weekday walk to the school bus I am always forced onto the road by this inconsiderate @#$, who delivers the raw materials to this restaurant daily. If you see any similar deliveries can you take a quick picture and send to me to upload tks.
You may think that JIT is only suitable for goods that require freshness however one of the most famous practitioners are in fact TOYOTA who have their own unique 'Toyota Production System (TPS)' which is built partly on JIT (Link HERE). Please read the article and
CRADLE TO CRADLE DESIGN (C2C) is a SUSTAINABLE DESIGN PHILOSOPHY that aims to create products and systems that are regenerative, not just less harmful. Instead of a traditional "cradle to grave" model (where a product is used and then discarded), C2C designs products so materials can be reused endlessly—like nature's cycles.
🌱 Key Features of Cradle to Cradle Design:
Material Reuse (Circularity):
Products are made from materials that can be fully recycled, reused, or composted—becoming raw material for new products.
Use of Safe & Healthy Materials:
Non-toxic, biodegradable, and environmentally safe materials are prioritized.
Renewable Energy Use:
The production process uses renewable energy (solar, wind, etc.) to reduce carbon footprint.
Water Stewardship:
Water is treated as a precious resource; systems are designed to clean and reuse water.
Social Fairness:
Ethical labor practices and positive impacts on workers and communities are embedded in the design process.
🌍 Real-World Examples:
Interface Carpets:
They produce modular carpets using recycled materials and take back old tiles for reuse.
Herman Miller (Mirra Chair):
Designed to be 94% recyclable, made using non-toxic materials and disassemblable parts.
Ecover Cleaning Products:
Uses biodegradable ingredients and recyclable packaging made from sugarcane-based plastics.
Nike's Reuse-A-Shoe Program:
Old athletic shoes are ground up and used to create materials for playgrounds and sports courts.
💼 Benefits to Businesses:
Brand Image & Customer Loyalty:
Companies seen as eco-conscious attract environmentally aware consumers and employees.
Cost Savings:
Using recycled materials and designing for reuse can lower raw material costs over time.
Regulatory Advantage:
Staying ahead of environmental laws and standards protects against fines and future compliance costs.
Innovation & Market Differentiation:
Sustainable design opens up new product markets and opportunities for innovation.
Long-Term Resilience:
Reduces dependence on finite resources and builds a more sustainable supply chain.
Cradle to cradle is a sustainable form of manufacturing. QS seeks to create manufacturing principles that attempt to use production techniques that are efficient but also sustainable and waste free. Two features of using cradle to cradle with reference to QS are as follows:
As its name suggests, QS will design and produce its air conditioners in such a way that most, if not all, of the materials used are recyclable. These materials (like glass, metal, plastic) that form parts of the air conditioners will be recyclable and used again for the production of future models. This will minimise waste.
Cradle to cradle manufacturing with also allow QS to reuse some of the ready components of the old air conditions in the new models instead of disposing of those parts. QS might have to offer some financial incentives for the customers to return their old/outdated air conditioners.
The air conditioners will also be built with biodegradable materials if QS cannot recycle the materials: for example, the carton for packaging of the air conditioners. This aspect will allow QS to reduce the environmental impact of its air conditioners.
Accept any other relevant examples and explanation.
Application here is very difficult – all of the stimulus info is about KA and gives no real links to QS – hence I believe to avoid generic responses, candidates should at least make reference to ‘air-conditioners” ie if responses just refer to QS and this could be replaced with any other company – then this is generic and only [1].
Mark as 2 + 2.
Award [1] for each relevant feature explained and [1] for appropriate application to the organization/type of products to a maximum of [2].
[2] cannot be awarded for the difference if the response lacks either explanation and / or application.
For example:
For an identification or a description of a feature with or without application [1].
For explanation of a feature with no application [1].
For explanation of a feature and application [2].
QUALITY means HOW GOOD SOMETHING IS IN YOUR OPINION? DID IT MEET YOUR OWN EXPECTATIONS? — and that opinion depends on what you expected it to do. Quality is not the same for everyone. It’s BASED ON YOUR PREFERENCES, past EXPERIENCES, what you’ve seen in ADS, and what you’ve come to believe about BRANDS and PRICES. We don’t always judge quality in a logical way — we often use mental shortcuts, like thinking expensive things must be better or famous brands must be more reliable thinking "You pay for what you get".
"In the end, something feels like “quality” if it does what you hoped or expected it would do, right?"
Clearly THE HIGHER THE QUALITY, THE...
...GREATER CUSTOMER LOYALTY.
...LESS SPENT ON COMPENSATION, REPLACING DEFECTIVE PRODUCTS.
...LONGER LIFE CYCLES.
...LESS ADVERTISING NEEDED.
...HIGHER THE PRICE CAN BE CHARGED.
QUALITY CONTROL ('QC') refers to the INSPECTION (Usually by a dedicated inspection team) of a COMPLETED PRODUCT ('PRODUCT ORIENTATED') OR SERVICE. in order to DETECT and FIX DEFECTS, this typically occurs AFTER PRODUCTION and is therefore considered a REACTIVE method.
QUALITY ASSURANCE ('QA') refers to the INSPECTION (Usually by everyone throughout the stages of production) of a PRODUCTION PROCESS ('PROCESS ORIENTATED') in order to PREVENT DEFECTS FROM OCCURING, this typically occurs BEFORE PRODUCTION AT EACH STAGE and is therefore considered a PROACTIVE method FOCUSING ON PREVENTION over INSPECTION
QC: A teacher checks students’ essays AFTER submission and marks spelling or grammar mistakes. Some students are asked to rewrite parts of their work. This is QC because the quality is checked AFTER the "product" (essay) is finished, and errors are corrected.
QC: AFTER students complete a lab experiment, the teacher checks each lab report for accuracy and flags incorrect results or missing steps. Checking AFTER the task is done.
QA: BEFORE students write an essay, the teacher gives a clear rubric, example essays, and writing workshops to help students understand expectations. This is QA because it focuses on getting it right BEFORE through preparation and guidance.
QA: BEFORE a lab experiment, the teacher demonstrates the experiment, provides safety instructions, and gives students a checklist to follow during the experiment. Ensuring correctness from the beginning.
Inspecting for quality Traditionally, quality has been checked by inspecting products at the end of the production process. Some checking might take place at different stages of the process, but the emphasis was on the quality of the finished article. Quality inspection is expensive –
qualified engineers have to be used – and such checks can involve
damaging the product, e.g., dropping computers to see if they still
work afterwards. As a result, a sampling process must be used and
this cannot guarantee that every product is of the appropriate
quality. When quality checks are used during the production
process, then statistical techniques are used to record and
respond to results.
Weaknesses of inspecting for quality
The key point about inspected quality is that it involves a group of quality-control inspectors who check the work of workers. There are several problems with this approach:
• It is looking for problems and is, therefore, negative in its culture. It can cause resentment among workers, as inspectors believe that they have been ‘successful’ when they find faults. In addition the workers are likely to look upon the inspectors as management employees who are there just to check on output and to find problems with the work. Workers may consider it satisfying to get a faulty product passed by the team of inspectors.
• The job of inspection can be tedious, so inspectors become demotivated and may not carry out their tasks efficiently.
• If checking takes place only at specific points in the production process, then faulty products may pass through several production stages before being picked up. This could lead to a lot of time being spent finding the source of the fault between the quality checkpoints.
• The main drawback is that it removes workers’ responsibility for quality. The inspectors have full authority for checking products so the workers will not see quality as their responsibility and will not feel that it is part of their task to ensure that it is maintained. Ultimately, this lack of responsibility is demotivating and will result in lower-quality output.
Quality assurance has the following claimed advantages over quality-control systems based on final inspection:
• It makes everyone responsible for quality – this can be a form of job enrichment.
• Self-checking and making efforts to improve quality increase motivation.
• The system can be used to ‘trace back’ quality problems to the stage of the production process where a problem might have been occurring.
• It reduces the need for expensive final inspection and correction or reworking of faulty products.
Unlike QC, QA is better...
✅It MAKES EVERYONE RESPONSIBLE for QUALITY– this can be a form of JOB ENRICHMENT.
✅Self-checking and making efforts to improve quality INCREASES MOTIVATION.
✅EASIER TO 'TRACE BACK' QUALITY PROBLEMS TO THE SPECIFIC STAGE of the production process where a problem might have been occurring.
It REDUCES THE NEED FOR EXPENSIVE INSPECTION + CORRECTION or reworking of faulty products.
Inspecting for quality Traditionally, quality has been checked by inspecting products at the end of the production process. Some checking might take place at different stages of the process, but the emphasis was on the quality of the finished article. Quality inspection is expensive –
qualified engineers have to be used – and such checks can involve
damaging the product, e.g., dropping computers to see if they still
work afterwards. As a result, a sampling process must be used and
this cannot guarantee that every product is of the appropriate
quality. When quality checks are used during the production
process, then statistical techniques are used to record and
respond to results.
Weaknesses of inspecting for quality
The key point about inspected quality is that it involves a group of quality-control inspectors who check the work of workers. There are several problems with this approach:
• It is looking for problems and is, therefore, negative in its culture. It can cause resentment among workers, as inspectors believe that they have been ‘successful’ when they find faults. In addition the workers are likely to look upon the inspectors as management employees who are there just to check on output and to find problems with the work. Workers may consider it satisfying to get a faulty product passed by the team of inspectors.
• The job of inspection can be tedious, so inspectors become demotivated and may not carry out their tasks efficiently.
• If checking takes place only at specific points in the production process, then faulty products may pass through several production stages before being picked up. This could lead to a lot of time being spent finding the source of the fault between the quality checkpoints.
• The main drawback is that it removes workers’ responsibility for quality. The inspectors have full authority for checking products so the workers will not see quality as their responsibility and will not feel that it is part of their task to ensure that it is maintained. Ultimately, this lack of responsibility is demotivating and will result in lower-quality output.
Quality assurance has the following claimed advantages over quality-control systems based on final inspection:
• It makes everyone responsible for quality – this can be a form of job enrichment.
• Self-checking and making efforts to improve quality increase motivation.
• The system can be used to ‘trace back’ quality problems to the stage of the production process where a problem might have been occurring.
• It reduces the need for expensive final inspection and correction or reworking of faulty products.
Unlike QC, QA is better...
✅It MAKES EVERYONE RESPONSIBLE for QUALITY– this can be a form of JOB ENRICHMENT.
✅Self-checking and making efforts to improve quality INCREASES MOTIVATION.
✅EASIER TO 'TRACE BACK' QUALITY PROBLEMS TO THE SPECIFIC STAGE of the production process where a problem might have been occurring.
It REDUCES THE NEED FOR EXPENSIVE INSPECTION + CORRECTION or reworking of faulty products.
Explain why typical assessments in the HIGH SCHOOL nearly always incorporate elements of quality control and assurance. Also explain how teachers us QA to 'hopefully' reduce the need for QC, resulting in less time wasted marking and writing comments.
A QUALITY CIRCLE is a SMALL GROUP OF EMPLOYEES FROM THE SAME WORK AREA WHO MEET REGULARLY to identify, analyze, and solve work-related problems. The goal is to improve quality, productivity, and the working environment through collaboration and suggestions from the people closest to the process.
BENCHMARKING is the process of COMPARING A BUSINESS'S PROCESSES, PERFORMANCE, OR PRODUCTS TO THE BEST PRACTICES IN THE INDUSTRY /OR/ MKT LEADERS.. The goal is TO IDENTIFY GAPS, learn from others, and improve efficiency, quality, and competitiveness.
TOTAL QUALITY MANAGEMENT (TQM) is a CONTINUOUS, organization-wide (All staff involved) APPROACH/STRATEGY to IMPROVING THE QUALITY of products, services, and processes EMPHASIZING PREVENTION OVER INSPECTION and involves every department and employee in quality improvement efforts, to ensure the customer experience.
"Hay 'continuous improvement' and 'prevention over inspection' sound familiar?" Yes1 you are right! TQM utilizes elements of the KAIZEN methodology and a QUALITY ASSURANCE system.
TQM and Kaizen: TQM incorporates Kaizen (continuous improvement) as a core principle. Kaizen focuses on making small, incremental changes regularly, often led by employees at all levels. In TQM, this mindset helps foster a culture of ongoing improvement and shared responsibility.
TQM and Quality Assurance (QA): TQM includes Quality Assurance, which ensures that processes are designed to prevent defects rather than just detect them. QA under TQM involves setting standards, training staff, and using systematic checks to maintain consistent quality.
Kaizen and Quality Assurance: Kaizen supports QA by constantly improving the processes that ensure quality. It helps reduce variability, waste, and errors, which aligns with QA’s goal of preventing defects and maintaining high standards.
--SIDE-BY-SIDE--
Brew & Bean Coffee Shop - A Lean Wake-Up Call
Brew & Bean is a locally owned coffee shop located near a busy business district. The shop has been operating for three years and has developed a loyal customer base. However, recently it has faced several operational issues that are starting to affect its reputation and profitability. The owner, Lisa, is passionate about coffee but has no formal background in operations management. She wants to continue growing the business but is unsure how to resolve the recurring inefficiencies.
Currently Brew & Bean orders supplies (milk, pastries, coffee beans) in bulk once a week. Lisa believes ordering large quantities reduces costs through bulk discounts. However, nearly 20% of the milk goes out of date before being used, and unsold pastries are thrown away daily. The back storage area is cluttered, making it difficult for staff to access needed items quickly. In addition Baristas use different methods to prepare drinks - some eyeball milk measurements, others use different beans for espresso depending on what's easiest to reach. There's no formal recipe or service checklist. This results in drinks that vary in strength, taste, and presentation - leading to growing customer dissatisfaction.
Furthermore between 8:00 and 9:00 a.m., orders surge and the current layout of the coffee-making station requires baristas to move constantly between the fridge, grinder, and sink, which slows them down. Staff feel stressed and unmotivated during these rush hours, and customer complaints about long wait times are rising. Finally there's no formal system for tracking customer complaints or staff feedback. Equipment like the secondary espresso machine often malfunctions but remains unfixed for weeks. Staff have ideas for improvement, such as rearranging the workspace or using digital order displays, but they feel their input is ignored.
Lisa's Solution is to Implement Lean Production methods so after attending a local business workshop, Lisa decides to trial Lean Production techniques to improve efficiency and quality. She focuses on three key areas: Just-in-Time (JIT) inventory, Kaizen, and Total Quality Management (TQM).
TASK:
Firstly COPY & PASTE the case study into your digital notebook, and IDENTIFY all her current issues by changing their colour to RED (One issue has been highlighted for you)
Then apply you understanding of the three lean methods mentioned above to the coffee shop (Not sure of the difference? Refer to the 'main objective' in the table above), use practical examples to solve AT LEAST ONE ISSUE PER METHOD. I have done the JIT issue/method for you below:
"For the milk and pastry spoilage issue I would suggest she could use JIT inventory control which refers to an inventory management system, that involves keeping barely any stock and only ordering just enough so as to limit waste, as such she should be partnering up with a local supplier for smaller, more frequent deliveries of milk, pastries, and beans (every 2–3 days), this may cost more per unit than buying in bulk, overall she will save money as she won't be wasting as much by throwing away any leftovers, however these more frequent orders would increase admin time which means she has less time serving customers also if etc...."
✅ LOWER COSTS: Cuts waste (e.g. overproduction, waiting time), reducing overhead for example Toyota reduces inventory costs using just-in-time (JIT) systems
✅ FASTER PRODUCTION: Streamlined workflows increase speed for example Dell assembles custom PCs quickly using lean methods
✅ HIGHER PRODUCTIVITY: Employees focus on value-adding tasks for example Amazon uses lean logistics for fast order fulfillment
⚠️ MORE PRESSURE ON STAFF: Employees may feel stress from constant efficiency demands and this can result in staff burnout if workload is not balanced
⚠️ RISK OF 'STOCKOUTS' (Opposite of 'stockpile'): JIT systems mean low stock levels as such any supply delays can halt production such as a delayed shipment of car parts can shut down car assembly
✅ Better Quality Products: Everyone works to reduce defects and improve standards Honda uses TQM to maintain high safety and performance standards
✅ Higher Customer Satisfaction: Fewer complaints and returns lead to customer loyalty Ritz-Carlton empowers staff to fix customer issues immediately
✅ Stronger Employee Morale: Staff feel valued and responsible for quality Quality circles in companies like Sony improve engagement
⚠️ Training Costs: Requires ongoing investment in staff training
⚠️ Slower Implementation: Cultural changes take time to spread throughout the organization.
30.7 National and international quality
standards
Quality standards aim to give stakeholders a form of assessing the product quality, performance or behaviour of businesses. Each country has its own standards organisations but increasingly international standards are becoming more significant as they aim to achieve consistency between national standards. The most important international standards body is the International Organization for Standardization (ISO).
The ISO is the world’s largest developer of voluntary international standards. International standards give state-of-the-art specifications for products, services and good practice, helping to make industry more efficient and effective. These standards have been developed through global agreement and they help to break down barriers to international trade.
Founded in 1947, the ISO has published more than 19,500 international standards covering almost all aspects of technology and business. From food safety to computers, and agriculture to healthcare, ISO international standards impact on business activity and customer satisfaction.
ISO 9000
This award is given to firms that can demonstrate that they have a quality-assurance system in place that allows for quality to be regularly measured and for corrective action to be taken if quality falls below these levels. This award does not prove that every good produced or service provided by the business is of good quality. It is an indication that a business has a system of quality in place that has relevant targets set and activities ready to deal with a quality problem.
To obtain the ISO 9000 certificate the firm has to demonstrate that it has:
• employee training and appraisal methods
• methods for checking on suppliers
• quality standards in all areas of the business
• procedures for dealing with defective products and quality failures
• after-sales service.
The benefits for a business of being forced to establish a quality assurance framework and to have this monitored externally are clear. However, there are drawbacks such as costs of preparing for inspection and bureaucratic form-filling to gain the certificate.
ISO 9000 is one of a series of international guidelines for quality
assurance. ISO 9000 relates specifically to the criteria that need to
be met during the manufacturing process. It is not a guarantee of
good quality, however.
CONTINUOUS IMPROVEMENT (aka 'KAIZEN' 改善) refers to a method to achieve lean production that occurs when you give ON-THE-JOB WORKERS/STAFF-TEAMS. (Rather than just managers who may think only they 'know best' or that one-off investments in training, motivation and technology are the only means to improve efficiency) ...the opportunity to 'CONTINUOUSLY' suggest improvements to the way things are done, allowing for GRADUAL IMPROVEMENTS in productivity and reduced wastage over time.
This makes sense in that on-the-job workers that perform the actual production tasks are more likely to know how to improve either quality or productivity than a manager with, perhaps, no hands-on experience.
"Can a supplier be delayed or even out of stock?"
"Must the supplier be willing and able to supply any amount at any time?"
"Can a worker make mistakes and waste precious materials?"
"Can a worker produce more than is demanded and build up stocks?"
The answer is no, for JIT to be effective the worker must be multiskilled so that they only make products that are ordered (so no stock-piling) and they get things right the first time, regardless of the task s ono material is wasted.
Why skilled workers matter in JIT: If you are going to have no stocks then mistakes that waste materials is very problematic, so when product lines change, workers may need to switch jobs, handle machines, or support different parts of the production line on short notice and with low-skilled workers mistakes will inevitably happen and material will be wasted which is "NO-NO!" for JIT as no backup stock exists, so workers need to get things right the first time, and hence must be multiskilled.
If JIT ISo work effectively
• Firstly the Relationships with suppliers have to be excellent. "WHY?"
Suppliers must be prepared and able to supply at very short notice – short lead time. Suppliers have to see that being reliable and consistent is of great long-term benefit to them as well as the business adopting JIT. This often means that a firm will have only one, or at most two, suppliers for each component, so that a relationship of mutual benefit can be built up.
Production staff must be multi-skilled and prepared to change jobs at short notice. There is no point in a worker continuing to produce the same item all the time if this leads to stocks building up. Each worker must be able to switch to making different items at very short notice so that no excess supplies of any one product are made. For example, if a worker in a clothing factory usually makes men’s denim jeans, but demand is falling, then the worker should be able to switch to making other garments that are still in demand.
Equipment and machinery must be flexible. Old-fashioned manufacturing equipment tended to be designed to produce one range of very similar products. It might have taken days to adapt it to making other types of products. This equipment would be most unsuitable for JIT-based systems. The machinery would have to produce large batches of one type of component before being converted to making another item. Stocks of each item produced would be needed to cop e with demand while it was producing other goods. Modern, computer-controlled equipment is much more flexible and adaptable – often able to be changed with no more than a different software program. In this way, very small batches of each item can be produced, which keeps stock levels to an absolute minimum. However, such equipment is expensive and, as a result, JIT may not be so appropriate for small or under-financed firms.
Accurate demand forecasts will make JIT a much more successful policy. If it is very difficult for a firm to predict likely future sales levels, then keeping zero stocks of materials, parts and finished goods could be a very risky strategy. Demand forecasts can be converted into production schedules that allow calculation of the precise number of components of each type needed over a certain time period.
The latest IT equipment will allow JIT to be more successful. Accurate data-based records of sales, sales trends, reorder levels and so on will allow very low or zero stocks to be held. Similarly, if contact with suppliers can be set up with the latest electronic data exchanges, then automatic and immediate ordering can take place, when it is recorded that more components will shortly be required.
Excellent employer–employee relationships are essential for JIT to operate smoothly. Any industrial-relations problem could lead to a break in supplies and the entire production system could grind to a halt. It is no coincidence that many of the businesses that have adopted JIT in Japan and in Europe have a no-strike deal with the major trade unions.
Quality must be everyone’s priority. As there are no spare stocks to fall back on, it is essential that each component and product must be right first time. Any poor-quality goods that cannot be used will mean that a customer will not receive goods on time.
The advantages and disadvantages of JIT are summarised in Table 30.1.