Cost Efficiency Indicators of Lean Production Instruments

Abstract

Currently lean production techniques and tools penetrate into the industrial enterprises: System 5S, Continuous Flow, Gemba (“the actual place”), Kanban (“Pulling System), KPI, Key indicators, etc. The article is aimed to analyse the experience of implementing lean production instruments on the example of large industrial enterprises. The main goal of lean production is reduction of wastes which do not add value to the product. Implementation of the lean production technologies has costs of introduction that means need of assessment of cost efficiency of projects on implementation of lean production technologies. At the same time, it is important to develop instriments for making decision on expediency of introduction of lean production tools at preliminary stages. Two main tools are offered in this article. The first is an indicator of cost efficiency of introduction of lean production instruments. This indicator shows that the project will be effective if gain of the outputs exceeds the costs of introduction. The second one is a method of calculation of the maximum costs of introduction of lean production tools when the project is effective. The developed instruments were approved on the example of introduction of lean production instruments in Kalashnikov Concern and JSC Elecond which are two large scaled machine-building enterprises. The results of approbation demonstrate the practical importance of the carried-out research.

Manufacturing enterprise management concept focused on maximum customer engagement

“…To eliminate losses, as well as to prevent their occurrence within the framework of lean production, many methods have been developed for the rational organization of production activities. Let's consider the most important ones, the use of which is a prerequisite for the successful implementation of a program for the implementation of lean manufacturing [11].…”

“…A situation in which supply exceeds demand leads to a forced fall in the market price of goods and services, and, as a consequence, to a fall in the company's profits. The only way to avoid falling profits in such conditions is to reduce production costs, since prices for raw materials and resources are also determined by the market situation [10][11][12].…”