5.3 Lean production and quality management questions for IB Business Management

Vyom Devices Pvt Ltd (VD) assembles smartphones in Noida, India, for Indian and African brands. Last year its cost of sales was ₹2 920 million and its average stock of components was ₹365 million. VD plans to introduce just-in-time (JIT) stock control, with suppliers delivering components twice a day. It expects average stock to fall to ₹146 million with no change in cost of sales.

Ayo Pads

Ayo Pads (AP) is a social enterprise in Gulu, northern Uganda, founded in 2019 by Grace Akello. Many girls in rural northern Uganda miss school during menstruation because disposable pads are too expensive. AP employs 24 women, most of them single mothers, who cut and sew washable cloth pads that last about a year. AP sells packs of four pads to families and small shops, and to non-governmental organizations (NGOs) that give them to schoolgirls. All surpluses are reinvested.

Resource 1: Extract from a regional newspaper article

“Before Ayo Pads came to our school, some girls missed five days of school every month,” says head teacher Santa Lamwaka. Attendance among older girls has risen noticeably. But not all is well: several parents say the stitching on some pads came apart after a few washes, and one shop owner has stopped stocking them.

Resource 2: AP production data, 2025

Resource 3: Email from an international NGO to Grace Akello

We would like to buy 200 000 packs a year for schools across northern Uganda from 2027. However, our donors require all suppliers to hold the national quality certification mark for sanitary products and to keep their defect rate below 2 %. Please let us know whether AP can meet these conditions by the end of 2026.

Resource 4: Social media post by Okello Denis, a local tailor

Ayo Pads does great work, but their machines are old and nobody checks the seams. I could train their team in proper stitching techniques for a small fee. #GuluMade

Resource 5: Information on certification

Gaining the national certification mark costs about UGX 25 million, including product testing and an audit of the production process. Producers must show documented quality procedures at every stage of production. Certification is reviewed every year.

Taichung Precision Gears (TPG)

Taichung Precision Gears (TPG) is a private limited company in Taichung, Taiwan, that makes gear sets and chain rings for e-bike assemblers in Germany and the Netherlands. Its 320 employees work in two shifts. Until 2024 TPG held about six weeks of steel and aluminium stock, bought in bulk from three large mills.

In January 2025 the operations director, Lin Mei-hua, introduced just-in-time (JIT) stock control as part of a move to lean production. TPG now orders materials daily from a single local supplier, Feng Metals, which delivers twice a day. Half of the old warehouse has been turned into a new machining cell.

Some of TPG’s customers have complained about late deliveries in 2025. In August a fire at Feng Metals stopped deliveries for four days. Lin argues that the problems are “teething troubles” and that JIT has already paid for itself.

Information on TPG’s operations before and after the introduction of JIT is shown in Table 1.

Table 1: Operations data for TPG, 2024 and 2025

NT$ = New Taiwan dollars

Blanco Sur Lavandería (BSL)

Read the resources and answer the questions that follow.

Blanco Sur Lavandería S.L. (BSL) is a social enterprise in Seville, Spain, founded in 2009 by Carmen Lozano, whose son has Down syndrome. It is registered as a special employment centre*: 48 of its 64 employees have intellectual disabilities. BSL washes, irons and folds sheets, towels and tablecloths for hotels and restaurants in Seville. Each employee works with the support of trained supervisors, and many have been with BSL for more than ten years. BSL’s mission is “quality work, quality lives”.

* special employment centre: in Spain, a business where at least 70 % of workers have a disability; the state pays part of their wages.

Image: a bright laundry room where a young man with Down syndrome folds a white hotel towel into a perfect square, checking it against a picture card on the wall; behind him, colour-coded trolleys stacked with linen. Logo: “Blanco Sur – limpio, preciso, nuestro” (clean, precise, ours).

Resource 1 – News article from *Sevilla Empresa Semanal*

Laundry with a mission bids for the big league

Seville’s hotel boom has created demand for industrial laundries. BSL has a loyal base of small hotels, but it now has the chance to win a contract from Hoteles Giraldilla, a chain with nine hotels in the city. The chain demands certification to the ISO 9001 quality management standard within a year, a defect rate below 1 % and two deliveries a day, timed to each hotel’s check-out.

Table 1: Defect rates (items returned for re-washing or re-folding)

Resource 2 – Social media posts from Lucía, sister of a BSL employee

My brother Pablo has worked at Blanco Sur for 12 years. He takes the bus alone, earns his own salary and is so proud when he tells us “the hotel guests sleep in sheets I folded”. This job is his life. [1/2]

He says the bosses are stressed about a big new hotel contract and there is talk of machines. Please don’t replace people like Pablo – he is the best folder in Seville! [2/2]

Resource 3 – Internal email from Carmen Lozano to BSL’s managers

From: Carmen Lozano, Founder and Managing Director

To: Managers

Subject: Quality and the Giraldilla contract

Giraldilla would send us 180 000 items a month at €0.38 per item. Our variable cost is about €0.26 per item. Re-washing a defective item costs us €0.45, and Giraldilla would charge a penalty of €0.80 for every defective item above 1 %. If we do not reach ISO 9001 within 12 months, the contract ends.

Options: an ISO 9001 consultant and certification (€18 000); an automatic folding machine (€95 000), which would remove most folding errors but would change the work of 10 folders; weekly quality circles of 30 minutes in every team; and better picture-based work instructions.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – Analysis of BSL’s defects, 2025

BSL processed 410 000 items a month in 2025.

Resource 5 – Survey of BSL employees (58 replies)

Resource 6 – Interview with Javier, a BSL supervisor

“Our people are very consistent once they have learned a task properly – often more careful than other workers. Most mistakes happen when routines change or instructions are unclear: a new type of towel, a rush order, a different count for each hotel. Stains are a different problem: our oldest washing machine is 15 years old. If we give people clear visual standards and let them help design the process, the defect rate will fall.”

Huong Giang Garments, a clothing manufacturer in Da Nang, Vietnam, asks each of its 450 machinists to suggest at least one small improvement to their workstation every week. Supervisors test the best ideas the same day, a practice the company calls kaizen.

Define the term kaizen.

Dasi Banchan (DB)

Read the resources and answer the questions that follow.

Dasi Banchan (DB) is a certified social enterprise in Gwangmyeong, near Seoul, South Korea, founded in 2017 by Kim Soo-jin, a social worker. Dasi means “again”. DB employs 38 people, most of them North Korean defectors and women over 60, who find it hard to get jobs. They make banchan – the small side dishes served with every Korean meal – and kimchi, which DB delivers in weekly subscription boxes to households and supplies to school canteens. DB prepares everything in its own kitchen, from washing and salting whole cabbages to packing.

Image: an open delivery box with six small glass containers of colourful side dishes – spinach, bean sprouts, braised potatoes, cucumber kimchi, anchovies and cabbage kimchi – and a handwritten card signed “Mrs Park”. Logo: “Dasi Banchan – a fresh start at every meal”.

Resource 1 – News article from *Korea Social Economy Times*

Side-dish kitchen serves up second chances

Ready-made banchan are now bought by millions of busy Korean households, and big food companies dominate the market with factory-made products. DB competes on taste and its story. Rising cabbage prices and strict food-safety inspections have squeezed margins across the industry. A national convenience-store chain is looking for “social value” kimchi to sell in its stores.

Table 1: DB production, 2025

Resource 2 – Social media posts from a subscriber

Our DB box is the best part of Monday. Mrs Park’s braised potatoes taste exactly like my late mother’s. Knowing the money helps defectors start a new life makes it even better. [1/2]

Last month two dishes were sold out and replaced with “substitutes”, and the box came a day late. Hope they’re not getting too big for their kitchen! [2/2]

Resource 3 – Internal email from Lee Jun-ho, operations manager, to Kim Soo-jin

From: Lee Jun-ho, Operations Manager

To: Kim Soo-jin, CEO

Subject: Capacity, waste and the cabbage question

Some thoughts before the board meeting:

1. Make or buy salted cabbage. We salt about 180 000 kg of cabbage a year. Doing it ourselves costs KRW 72 million a year in fixed costs (six preparation workers and equipment) plus KRW 1 900 per kg. A factory would supply ready-salted cabbage at KRW 2 400 per kg. Buying would free floor space but the six preparation jobs would go.

2. Convenience-store kimchi. The chain would take kimchi packs equal to about 12 000 boxes a month, all year round, at a lower margin than subscriptions.

3. Waste. We buy vegetables in large weekly loads in case prices rise; 9 % is thrown away. A farmers’ co-operative offers daily deliveries, but at prices about 4 % higher.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – Interview with Park Mi-young, aged 67, a DB cook

“I came from the North with nothing. Here I am the expert – the young ones ask me how to salt cabbage properly. Salting is hard work, but it is the heart of kimchi; factory cabbage is too soft. If we stop doing it, what will people like me do? We can work faster, though, if the kitchen is better organized. We walk back and forth all day.”

Resource 5 – Survey of DB subscribers (430 replies)

Resource 6 – Benchmark data from a food-industry consultant