Impact of Lean Manufacturing
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The Impact of Lean Manufacturing on Inventories and Inventory Management
Introduction:
Lean manufacturing, together with different terms like JIT, zero inventory, total quality management, and search for excellence, is used to identify the process of improving manufacturing productivity with emphasis on high quality and low cost. It is amazing to us, with the acceptance and success of lean manufacturing principles in modern manufacturing, how many people, including some financial officers, do not see the causal relationship between implementation of lean manufacturing and significant inventory reduction. While working on an AFE for new equipment, I even had a CFO say to me, This inventory reduction savings is fluff, but you can include it anyway. He really didnt believe the company would see significant inventory reduction figures. In this article, I will focus on the inventory relationship to lean manufacturing principles through the following case study.
A CASE STUDY
This case study has been generalized somewhat to protect the competitiveness of the subject. We have experienced these results with literally hundreds of clients over the years.
To demonstrate the impact on inventory, we will focus on a supplier of a component part to the aircraft industry. When this business began more than three decades ago, they had only a few customers and just a few high-volume part numbers. In response to these requirements, they built a facility with high-volume, dedicated machines and utilized a batch process mode...