Principles and Purpose
In past decades the asking price for products made by a company has been calculated by adding up all the costs and then adding a percentage of profit. This is called cost plus and products would be sold on a ‘take it or leave it’ basis. This was fine when there was little or no competition and customers struggled to find alternatives.
Now the power has shifted to the customer. As manufacturing has become globalised, the increased competition for sales means the customer can dictate the price they are willing to pay. This is called cost down. If companies still want to make a profit they need to reduce costs. Without profits there is no money to reinvest in product development, new products and improved facilities.
We commonly see businesses utilise, or develop a production system, to encompass the key messages and approaches to be used to to improve business performance. We will cover some of these key approaches throughout your training programme.
Please complete the quiz below on Lean Principles and Purpose.