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  • Lean Supply Chain Origins 3

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    Keviii
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    High manufacturing costs, including high labor costs, machinery breakdowns, and overtime, led to reduced profit margins. Excess inventory of raw materials and finished goods also caused cash flow problems. Additionally, disorganization on the shop floor resulted in delays, safety hazards, and lost orders to competitors who offered lower prices or brought new products to market faster. Lean supply principles evolved from mass production to address these issues through more efficient processes.

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    High manufacturing costs, including high labor costs, machinery breakdowns, and overtime, led to reduced profit margins. Excess inventory of raw materials and finished goods also caused cash flow problems. Additionally, disorganization on the shop floor resulted in delays, safety hazards, and lost orders to competitors who offered lower prices or brought new products to market faster. Lean supply principles evolved from mass production to address these issues through more efficient processes.

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    2 views3 pages

    Lean Supply Chain Origins 3

    Uploaded by

    Keviii
    High manufacturing costs, including high labor costs, machinery breakdowns, and overtime, led to reduced profit margins. Excess inventory of raw materials and finished goods also caused cash flow problems. Additionally, disorganization on the shop floor resulted in delays, safety hazards, and lost orders to competitors who offered lower prices or brought new products to market faster. Lean supply principles evolved from mass production to address these issues through more efficient processes.

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    of 3

    3.

    High manufacturing cost and reduction in


    profit margins.
    a. High labour cost (low productivity,
    increased downtime, batch manufacturing,
    high set-up time, insufficient training).
    b. Increase in overhead costs (machinery
    breakdown, increase in consumables and
    tools etc.)
    c. Overtime
    d. Poor yield due to re-work/rejection.
    4. High inventory of raw materials/FG (cash flow
    problems, poor storage, delays to unload, poor
    identification, wrong stocks)
    5. Fire fighting on the shop floor (chaos on shop
    floor – searching for tools, materials,
    maintenance, dirty shop floor, machines broken,
    poor lighting and safety hazards).
    6. Order lost to competitor on price
    7. High customer complaints/returns
    8. Competitor bringing new products
    faster
    B - Lean Supply Principles
    First need to understand Mass Production
    because Lean Production evolved from Mass
    Production – where the beneficial and cost-
    effective areas of both Craft and Mass Production
    gave rise to Lean Production.

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