5.2.2 - Lean production, JIT and Kaizen

Using resources effectively

Lean production seeks to use resources effectively by removing activities that create waste rather than value for customers.

Resources include materials, workers' time, equipment, energy, space and money. Waste includes defective items, unnecessary movement, waiting for materials and producing inventory that customers do not need. Removing waste can lower cost per saleable unit and make deliveries faster or more reliable.

In an illustrative small Kenyan juice business, workers walk across the room repeatedly to collect bottles. Moving clean bottles safely closer to the filling station reduces unnecessary movement. Workers can spend more time filling bottles without adding hours. In an illustrative large appliance factory in Türkiye, preventing incorrect component fitting reduces scrap and the need to repair finished appliances. Both changes improve the use of resources even though the businesses differ greatly in size.

Efficiency does not mean blindly cutting every resource. Reducing maintenance may cause breakdowns, and removing quality checks without preventing defects may send faulty goods to customers. Effective use means obtaining useful output of the required quality from resources, taking costs and risks into account. Saving material is of little benefit if an inferior product drives customers away.

Just-in-time and Kaizen are two ways to support lean production. JIT focuses on the timing and quantity of inventory; Kaizen focuses on ongoing small improvements to work. Neither automatically fixes every source of waste.

Just-in-time inventory

Just-in-time arranges for materials or components to arrive when they are needed rather than being held in large inventories.

In an illustrative bakery in Jordan, flour arrives in frequent quantities matched to the production schedule. Less flour waits in storage, so the bakery needs less storage space and has less cash tied up in unused inventory. With fresh ingredients, closer matching to demand can also reduce spoilage. A large electronics manufacturer can similarly arrange component deliveries to match its assembly schedule.

The saving depends on reliable suppliers, suitable delivery times, accurate inventory information and realistic demand forecasts. Supplies must arrive in the correct quantity and quality. If components arrive on time but are faulty, low buffer inventory may leave the business with no usable replacement. Production stages must also be coordinated so one stage does not use materials faster than they are supplied.

Low inventory creates a risk. A disrupted road, delayed import or failed supplier can stop production quickly, causing idle workers, late customer orders and lost sales. Unexpected demand may exceed the supplies available. Frequent smaller deliveries may cost more per unit, and smaller orders may lose bulk-buying discounts. These additional costs can offset storage savings.

JIT does not mean a business literally holds no inventory or has eliminated uncertainty. Managers may keep a limited buffer inventory, meaning extra supplies held against disruption, for important items. The appropriate amount depends on lead times, perishability and the consequence of running out. A fresh-food business may gain strongly from avoiding spoilage, while a producer using a unique imported part may place more weight on continuity.

A stockout is a shortage of required inventory; in production, it can prevent completion of an order rather than merely leave a shelf empty.