Copyright © Daniel Cullinane CPA.
Lean manufacturing is a principle or philosophy that many businesses follow in order to create efficiency and maximize profit. In lean manufacturing, all of the efforts of the company are directed toward the end goal of making a product that the customer will value and buy. Spending or focusing energy in any other area is considered wasteful in this model. To be as lean as possible, companies can follow the five P's model sometimes used in the manufacturing sector, which refers to the first letter of the five principles of the model.
Purpose is the first of the five P's of lean manufacturing. Companies must decide the purpose for which they are creating their project. Profit is one motive, but only one among many. Some companies may develop products or services with a philanthropic purpose, while yet others may simply develop products that solve a pressing need or problem.
The process by which a business goes about reaching the customer and producing the product is the second of the five P's. The process generally refers to the way that a business conducts itself in relation to the customer and its day-to-day internal operations. How a company markets, for instance, will determine how effective it is in reaching the intended target market.
Closely tied to the purpose of the product are the people who comprise the third of the five P's. The people for whom the product will be created and who will benefit from it are those at the heart of this concern. People comprise the target market of a manufacturer because without these people, there would be no need for the product in the first place.
The platform upon which a company carries out its process is the fourth of the five P's. This refers primarily to the various tools and technologies that a company has at its disposal. For instance, a company that has a specific manufacturing technique that sets it apart from its competitors will use that as part of its manufacturing platform. Other technologies such as software, databases and computer networks may also comprise part of this platform.
Performance is the final aspect of this manufacturing approach. Performance refers to the way in which the company assesses its ability to fulfill the original purpose. Companies will generally apply some standard of measure to determine whether they are successful and whether changes need to be implemented.
Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778