BUSS3 Chapter 15 Lean Production

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Teacher presentation AQA Unit 3

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Chapter 15 Lean Production :

Chapter 15 Lean Production Learning Objectives At the end of this chapter you will be able to Identify a range of techniques associated with lean production Understand the benefits to larger businesses of adopting lean production techniques Interpret and complete critical path networks Assess the benefits and limitations of critical path analysis Describe the effective management of other resources through methods of lean production

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Network (Critical Path) Analysis A useful tool for planning an operational project is network analysis (also called critical path analysis) It is a way of showing how a complex project can be completed in the shortest possible time It identifies the activities that must be completed on time to avoid delaying the whole project (the critical path) Management effort will then be concentrated on ensuring these key activities are completed on time This leaves greater flexibility in timing the non-critical items The objectives are to Ensure customer satisfaction through good timekeeping and Minimise the wastage of resources This will boost the profitability of the project

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Network (Critical Path) Analysis A network shows The order in which each task must be undertaken How long each stage should take The earliest date at which the later stages can start If a house building firm can predict with confidence that it will be ready to put roof beams in place 80 days after the start of the project A crane can be hired Beams can be delivered on time This minimises the costs The crane only needs to be hired for the day it is needed Cash flow is improved by delaying the arrival of materials (and therefore invoices) until they are really required

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Network (Critical Path) Analysis A network consists of two components An activity is part of a project that requires time and/or resources Waiting for delivery of parts is an activity Production is an activity These activities are shown as arrows running from left to right. Their length means nothing A node is the start or finish of an activity and is represented by a circle All network diagrams start and end on a single node Insert fig 34.1 P233

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Chocolate producer example (complete activity first) An efficient manager things about all the activities needed and puts them in the correct time sequence Once the manager has found out how long each activity is likely to take he can work backwards to find out when the work must start

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Here the work must start 70 days before 1 st February This is because the longest path through to the end of the project is 70 (14 + 28 + 21 + 7) Having drawn a network the next step is to identify more precisely the times when particular activities can or must begin and end

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To do this its is helpful to number the nodes that connect the activities It also makes it easier to follow if there is not too much writing on activities At this point we leave spaces in the notes for two more numbers

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The first number we add is the EST – the earliest start time This is the earliest time at which following activities can be started On the diagram below activities C, D and E can begin only after 14 days This is because, although A takes only four days, C, D and E need both A and B to be complete before they can be started The EST at node 2 is the longest path through to that node

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This diagram shows the complete network including all EST’s Note that the start is taken as 0 rather than 1 Therefore activities C, D and E can start on day 0 + 14 = 14 Activity F can start on 0 + 14 + 28 The earliest the project can be completed is by day 0 + 14 + 28 + 21 +7 = 70 Calculating the EST’s provides two key pieces of information The earliest date certain resources will be needed e.g. skilled workers, raw materials or machinery. This avoid tying up working capital (cash) unnecessarily The earliest completion date for the whole project (the EST on the final node)

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The next number we add in is the LFT (Latest finish time) These are recorded in the bottom right hand section of the node This shows the latest finish time of the activities before it The number 42 in node G shows that activity G must be finished by day 42 in order to give activities H and I time to be completed by day 70 The LFT’s are calculated from right to left In node 6 the LFT will be 70

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Calculating the LFTs provides 3 main pieces of information It provides the deadlines that must be met in order for the project to be completed on time It helps identify the activities that have ‘float time’ (if there is slack between the EST and the LFT Activity H can be started on day 1 and must be finished by day 63 but only takes 21 days to complete so there is no rush to complete it It identifies the critical path

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The critical path comprises the activities that take the longest to complete These are B, D, F and I These activities must not be delayed even by one day They determine the length of the whole project If there was a delay in C it would not matter as there are 28 days to complete a task that takes only 14 But D is on the critical path so this 28 day activity must be completed in no more than 28 days

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Finding the critical path allows managers to manage by exception They can focus on the important task and not spread their efforts thinly The non critical activities need far less supervision To identify the critical path the two key points are It will be on activities where the nodes show the EST and LFT to be the same It is the longest path through those nodes When we draw the network we put two short lines across the critical activities

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Evaluation Time is money Time is vital not only because it affects costs but also because it can provide a crucial marketing edge Primark’s key advantage over Next is that it is much quicker at getting catwalk fashions into high street shops Time can add value Network analysis is a valuable practical tool for taking time seriously

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Data Response Complete B3 Data response for homework To be handed in first lesson next week Next week (Wednesday and Thursday) we will be completing the operations exam question under test conditions so start to revise ‘Operations’ now!

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Continuous Improvement Kaizen is a Japanese word that means continuous improvement There are 2 main elements Most kaizen improvements are based around people and their ideas rather than investment in new technology Each change on its own may be of little importance but if hundreds of changes are made the cumulative effects can be substantial

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Continuous Improvement Insert A grade application P241

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Continuous Improvement According to the Kaizen institute the goal of any kaizen programme should be to convince all employees that they have two jobs to do Doing the job and then looking for ways to improve it The culture is based on the belief that the production line worker is the real expert The company’s greatest resource is its staff Teams work together in ‘cells’ and are responsible for the quality of work in their section The members regularly meet to discuss problems and come up with solutions Continuous improvement is better than delayed perfection – Mark Twain

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Continuous Improvement Insert A grade application P242

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Continuous Improvement Empowerment is essential to kaizen This gives the employees the right to make decisions that affect the quality of their work Once the structure is in place the improvements should keep coming In order for it to work employees must be proud to contribute their ideas The Japanese do not offer financial rewards in return Commitment is gained through motivation Creating the right culture is vital for success Be not afraid of going slowly; be only afraid of standing still – chinese proverb

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Continuous Improvement Insert A grade application P243

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Continuous Improvement Creating the right culture is very difficult Resistance can come from 2 areas Management resistance – managers with autocratic tendencies may be unwilling to give decision making authority Employee resistance – a history of bad relations can lead to resistance to change among staff Changing the culture means changing attitudes The training to do this can be very expensive and will take a long time It is not easy to prove the financial benefits of kaizen Firm’s dominated by accountants will find it difficult to win budgets If there is a way to do it better…..find it – Thomas Edison

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Continuous Improvement There are limitations to Kaizen Some managers argue that improvements fall as time goes on Initially there will be benefits as firms change the most obvious As time goes on it will be harder to find things to fix Supporters reject this and say that even the best system is capable of being improved Sometimes however radical solutions are needed to fix radical problems Times of crisis are not times for gradual continuous improvement In 2005 Motorolla’s range of Razr phones helped profits top $4.5 billion Two years later they were operating at a loss In 2008 they would make 50% of staff in their design centre redundant and may have to think about closing it permanently A former CEO of Cadbury and supporter of Kaizen was asked which management theory was overrated. He replied ‘If it ain’t broke don’t fix it. Everything can be improved’

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Complete B2 Case Study Toyota

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