Lean production, known also as lean manufacturing, was developed in Japanese automotive factories decades ago and has since spread to many manufacturing industries and firms worldwide. Lean essentially means manufacturing without waste and many companies have used it to dramatically improve their production times and processes. Lean production also has its shortcomings, although the benefits of lean production often outweigh its disadvantages.
Advantage: Less Infrastructure
A manufacturer implementing lean production only uses the building space, equipment, tools, supplies and manpower necessary to meet near-term inventory demand from buyers. In contrast to mass production facilities, a building used with a lean production strategy doesn't have any wasted space. Only the room necessary to meet demand is required. Similarly, the business doesn't need unused equipment and tools sitting around. Labor shifts are also scheduled to ensure workers don't stand around without work to do.
Advantage: Limited Waste
The goal of limited waste is a key focus of lean manufacturing relative to mass production. Companies don't want excess inventory sitting around waiting for customers to want it. This approach eliminates dated or obsolete inventory and the risk that certain items perish or expire. Eliminating waste is cost-effective. It is not necessary to have space or people to manage the extra inventory until it is purchased.
Advantage: Strong Customer Relationships
Lean production is an efficient approach to customer relationships. Unlike mass production, which attempts to meet the needs of all customers when demand occurs, lean production involves meeting the needs of loyal customers on a scheduled or predictable basis. Keeping your best customers happy and in good supply contributes to limited waste, while ensuring that your cash cow customers feel important to your business. It is also easier to customize products or flex production processes when you cater to select buyers.
Disadvantage: Equipment or Labor Failure
One of the central disadvantages of lean production is that you have little margin for error. If equipment breaks down or you need more-than-projected labor for certain processes, you may fall behind and lose your optimized efficiency advantages. In a mass production plant, workers simply slide over to another piece of equipment if something quits working. In a lean production facility, there aren't a lot of extra equipment and tools around.
Disadvantage: Missed Deliveries
Directly tied to the lack of flexibility or margin for error is the potential for missed delivery deadlines. Breakdowns can cause you to harm your primary customer relationships if you don't deliver as promised. Your wholesale or retail buyers need goods by deadlines to meet the demand from their customers. If you consistently fail to provide timely shipments, buyers look for suppliers that can. Sometimes, you don't even get a second chance on a major miss.