Lean production
Lean production is an operating philosophy that maximises customer value while systematically eliminating waste — overproduction, waiting, defects, excess inventory, and unnecessary motion — from every process step.
See it move
A components workshop holds 5,000 units of work-in-progress at €10 each, tying up €50,000 in idle cash. After redesigning its layout and pulling parts through in smaller batches, work-in-progress falls to 1,200 units worth €12,000. The change frees €38,000 in cash without any new investment, purely by removing the waste of excess inventory that lean production targets.
Check yourself
A factory holds 8,000 units of work-in-progress at a cost of €15 per unit. After adopting lean production methods, work-in-progress falls to 3,000 units at the same unit cost. How much cash does the reduction in work-in-progress free up?