Leveraging Economies of Scale to Benefit the Company

concept of leveraging economies of scale

Since time is money, mass production requires the use of larger quantities of raw materials.

While this may decrease manufacturing costs, it is actually a problem for production efficiency and lower per-unit costs. In the hands of an unqualified individual, large production volumes that reach a saturation point can lead to bottlenecking, equipment failure, inventory or labor deficiencies. Problems that can result from bottlenecking can include labor shortages due to staffing issues, product recalls due to quality issues, and extended lead times to produce finished goods.

The human error that causes mistakes in business can also have an effect on the production process. Human error, of course, is something to be avoided when possible, but there is the potential for errors in manufacturing to occur. An effective management system can be used to avoid problems by addressing areas of weakness.

Lean Manufacturing has proven to be the best management system used by businesses throughout the world. There are many benefits to using the methodology to manage a business. These benefits include:

Improved communication and joint decision making between business and those who work within the business.

There are opportunities for a wide range of joint ventures

The first step in Lean is gathering data about the operations and processes of the business. A good strategy is to combine information about operations with data from financial reports to provide a unified view of how the business operates.

Improved flexibility is provided by having control over the implementation of changes. These changes are often implemented as part of a full-scale, integrated manufacturing process where material costs and production throughput are adjusting together to minimize disruptions and make the most of capital, human and material resources.

The ability to focus on any one customer base while still maintaining flexibility allows for maximum returns on investment and improved revenue. The increased income generated by customers gives companies a competitive advantage and enables them to pay for better methods of manufacturing.

Optimization is achieved through cross-training employees in various departments, such as the data room, plant floor, and the data warehouse. Training and data training are both critical to a smooth operation. Each department or group should have training that matches the needs of that department or group.

This allows the key decisions to be made for the mass production processes and ensures the right information is given to workers. The use of formal training ensures that individuals are exposed to knowledge that is most relevant and necessary for the success of the business.

Information management is vital in all business activities. Employees should be involved in the generation of data and the distribution of that data. Furthermore, effective data collection and analysis must be a standard feature of all projects.

Information management also involves systems integration. Integrating different systems into a continuous improvement effort can improve overall efficiency and profitability.