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Negative effects of business expansion in manufacturing

Ghibson Hudson
Hi all, 


I recently attended an IET lecture on Lean Manufacturing and I am writing a brief report on it to share among my team. One of the things I'd like to address when supplying a justification for a lean approach is the negative effects of business expansion within a manufacturing and production context. I understand what some of the most common issues are: compromising product quality with an increasing output, loss of control i.e. more layers of delegation and management, increased capital requirements (more staff, facilities, equipment etc.). What other effects arise as a result of business growth? Thanks


- Ghibson
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    Hi Ghibson.


    I have found that when business expand, especially when this expansion is rapid, they struggle to cope.

    Throughput and productivity go down, WIP and inventory goes up.


    Now if that expansion is only temporary followed by a return to normal operating, then business (management) may not see the need in changing and improving.

    However, if that expansion is continued then the WIP & inventory growth will be very problematic in terms of fulfilling orders and getting paid (Working Capital Excellence).


    This will have a detrimental effect on the business operations, as they take more people on to progress work, productivity keeps declining and inventory will keep building....


    Ok, so I have painted an apocalyptic future (in business terms), but you can see that whilst not being lean may not kill a company, it certainly doesn't do it any good.


    There is a great book, The Goal by Eliyahu M. Goldratt, which explains this in great detail.
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  • 0
    Hi Ghibson.


    I have found that when business expand, especially when this expansion is rapid, they struggle to cope.

    Throughput and productivity go down, WIP and inventory goes up.


    Now if that expansion is only temporary followed by a return to normal operating, then business (management) may not see the need in changing and improving.

    However, if that expansion is continued then the WIP & inventory growth will be very problematic in terms of fulfilling orders and getting paid (Working Capital Excellence).


    This will have a detrimental effect on the business operations, as they take more people on to progress work, productivity keeps declining and inventory will keep building....


    Ok, so I have painted an apocalyptic future (in business terms), but you can see that whilst not being lean may not kill a company, it certainly doesn't do it any good.


    There is a great book, The Goal by Eliyahu M. Goldratt, which explains this in great detail.
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