Lean Manufacturing Dissertation - 7975 Words

Lean Manufacturing (Dissertation Sample) Content: Lean ManufacturingThe Relationship Between Lean Manufacturing, Activity Based Costing (ABC) and Financial Performance in World-Class Manufacturing Organizations. Students NameCourse TitleInstructors NameDateAcknowledgementsMention people who have helped you in the course of working on this dissertation. Insert as appropriate, a statement to the effect that you acknowledge the universitys non-plagiarism policy. Also, state that the dissertation is your original work. Mention contributions that did not originate from you e.g. something written by your professor but you chose to adopt it.Signature DateTable of Contents TOC \o "1-3" \h \z \u  HYPERLINK \l "_Toc392330280"
ABSTRACT  PAGEREF _Toc392330280 \h
7 HYPERLINK \l "_Toc392330281"
1. INTRODUCTION  PAGEREF _Toc392330281 \h
8 HYPERLINK \l "_Toc392330287"
1.1 Background  PAGEREF _Toc392330287 \h
9 HYPERLINK \l "_Toc392330288"
1.2 Objectives  PAGEREF _Toc392330288 \h
12 HYPERLI NK \l "_Toc392330289"
1.3 Research Questions  PAGEREF _Toc392330289 \h
12 HYPERLINK \l "_Toc392330290"
2. LITERATURE REVIEW  PAGEREF _Toc392330290 \h
13 HYPERLINK \l "_Toc392330293"
3. METHODOLOGIES  PAGEREF _Toc392330293 \h
18 HYPERLINK \l "_Toc392330295"
3.1 Research  PAGEREF _Toc392330295 \h
18 HYPERLINK \l "_Toc392330296"
3.2 Questionnaires What they are  PAGEREF _Toc392330296 \h
20 HYPERLINK \l "_Toc392330297"
3.3 Validity of the questionnaire  PAGEREF _Toc392330297 \h
21 HYPERLINK \l "_Toc392330298"
4. LEAN MANUFACTURING  PAGEREF _Toc392330298 \h
22 HYPERLINK \l "_Toc392330299"
4.1 The history of Lean Manufacturing  PAGEREF _Toc392330299 \h
22 HYPERLINK \l "_Toc392330300"
4.2 The principles of lean concept  PAGEREF _Toc392330300 \h
23 HYPERLINK \l "_Toc392330301"
4.3 Muda, Muri and Mura  PAGEREF _Toc392330301 \h
25 HYPERLINK \l "_Toc392330302"
4.4 The Ideal Lean Enterprise  PAGEREF _Toc39233030 2 \h
27 HYPERLINK \l "_Toc392330303"
5. THE TECHNIQUES AND TOOLS OF LEAN PRODUCTION  PAGEREF _Toc392330303 \h
28 HYPERLINK \l "_Toc392330304"
5.1 5S System  PAGEREF _Toc392330304 \h
28 HYPERLINK \l "_Toc392330305"
5.1.1 Brief History  PAGEREF _Toc392330305 \h
28 HYPERLINK \l "_Toc392330306"
5.1.2 Implementing 5S  PAGEREF _Toc392330306 \h
30 HYPERLINK \l "_Toc392330307"
5.1.3 The 5S system in greater detail  PAGEREF _Toc392330307 \h
31 HYPERLINK \l "_Toc392330308"
5.2 Just-in-Time technique  PAGEREF _Toc392330308 \h
33 HYPERLINK \l "_Toc392330309"
5.2.1 History of JIT manufacturing  PAGEREF _Toc392330309 \h
33 HYPERLINK \l "_Toc392330310"
5.2.2 Challenges faced in JIT implementation  PAGEREF _Toc392330310 \h
34 HYPERLINK \l "_Toc392330311"
5.3 Kaizen  PAGEREF _Toc392330311 \h
35 HYPERLINK \l "_Toc392330312"
5.4 Kanban  PAGEREF _Toc392330312 \h
36 HYPERLINK \l "_Toc392330314"
5.4.1 Single and double kanban systems  PAGEREF _Toc392330314 \h
37 HYPERLINK \l "_Toc392330317"
References  PAGEREF _Toc392330317 \h
39 HYPERLINK \l "_Toc392330329"
Annexure  PAGEREF _Toc392330329 \h
41ABSTRACTLean manufacturing is the ability to produce goods against a background of changing conditions. These changes are unpredictable and constant. The aim is to be responsive to changing customer needs. This model operates on the strength of principles that help improve quality, increase productivity and shorten lead time. Ultimately, the goal is to reduce wastage through kaizen or change. In the end, the end consumer gets a product that is free from defects, at the right time and in required quantities.Activity based costing (ABC) is, according to CIMA, an approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs. Resources are assigned to activities, and activities to cost objects based on consumption estimates. The latter utilise cost drivers to attach activity costs to outputs. In this methodology, an organization identifies its activities and assigns costs to them which are then added to other resources resulting in the total consumption per product. This costing approach involves adding more overheads (indirect costs) into direct costs. Examples of indirect costs include salaries to office and management staff.This paper looks at how lean manufacturing can be implemented under the activity based costing methodology and how doing so leads to an improvement in financial performance and cost control. Of particular interest, are the challenges faced by organizations in their quest to implement lean production policies and activity based cost management.Keywords: Lean Manufacturing, Activity Based Cost, Cost Control, Management Control, Lean Accounting, Financial Performance, Manufacturing Companies/organizationsINTRODUCTIONManufacturing concerns, in their quest to produce goods profitably are in a continuous search for ways of utilizing the available resources as efficiently as possible. They optimize their utilization of time, money, factory space and manpower. Most cost improvement techniques in use today were developed eons ago, and specifically, during the manufacturing era. In modern times, these methodologies have had considerable success albeit with challenges. Activity based cost stresses on the need for doing things right. Management teams reckon that doing so reduces wastage. Lean manufacturing is a production tool that lays emphasis on following a flow process while removing waste. A lot of research has been done in this area. Nonetheless, it is interesting to note that lean manufacturing can be integrated with other management systems such as activity based costing. The objectives of this research are among others:To gain a comprehensive understanding of the principles behind lean manufacturing and activity based costing.To define world class manufacturing, t he principles behind it and how companies pursuing this model manage to control costs and achieve improved financial reporting statuses.To find and define the relationship between lean manufacturing and activity based costing.To establish the effect of implementing lean manufacturing and activity based costing. Further, to assess its impact on cost control and financial performance.BackgroundLean manufacturing is a way through which firms produce goods by eliminating waste. It also involves the use of flow processing as compared to queuing or batching. The process is also referred to as lean production and was designed by Toyota Motor Corporation. The management process in use today is, therefore derived from the initial Toyota Production System also abbreviated as TPS. This and other techniques had their origin in the Manufacturing era. In this context, firm, company or organization refers to private businesses, government agencies or not-for-profit organizations.Irrespective of th e type of business entity under review, it is evident that companies have been investing in resources meant to improve their activities, provide quality products and make profits. Behind all these activities is the intention by management teams to attain efficiency. While these methodologies have worked with a considerable amount of success, there have been a series of challenges too. When Toyota was developing lean production, it borrowed heavily from lessons learnt in textile factories where broken threads meant that entire cloth production processes had to grind to a halt.Lean philosophy focuses on reducing seven wastages as proposed by Toyotas former chief Engineer, Taichi Ohno. In his opinion, once these waste areas were controlled, it would result in improved customer value. Toyota grew from a little known company to be the largest automaker in the world. This steady growth has had researchers and students alike developing a keen interest on how Toyotas achievements came about . Lean manufacturing has therefore been credited with:Improving an organizations productivityIncreased share of the marketReduction of labor costsElimination of processes that add little or no value to the finished productIn essence, the lean manufacturing philosophy has helped achieve more productivity under constraints such as space, money and time. Apart from Toyota Motor Corporation, the philosophy has worked well in other places worldwide.Activity based costing, abbreviated as ABC. According to Hansen and Mowen (2007), the main objective of activity based costing is to manage activities to reduce costs and improve customer value (48). From a manufacturing point of view, the focus is always to improve efficiency which leads to low production costs. At the same time, while the management is implementing this costing methodology, the other bottom line should be to improve customer value. An organizations management can choose the type of products the company will produce. Moreover , managers identify the most appropriate activities that would be necessary for the efficient manufacturing of those products. The overall aim of activity based cost accounting systems is to trace over-allocation of resources. It should be remembered, at this juncture, that activity based costing (ABC) attaches cost to activities not products. Hansen and Mowen further argue that it is the management of activities and not that of costs that leads to successful cost control in advanced manufacturing environments. From the point of view of this dissertation, such environments are duplicated in world class manufacturing organizations. This, therefore, ties...