Illustration By: Sanjay Dalvi
LEAN PRINCIPLES SUPPLY CHAIN MANAGEMENT
Extending the concept of ‘lean’ to the supply chain can result in dramatic financial improvements. Unlike conventional strategies, lean focusses on obtaining the highest throughput by using the least inventory and providing multiple benefits. Manufacturers thus need to build a cross-functional team to profitably build a lean supply chain network to synchronise their manufacturing operations with customer demand and produce quality products. THE mission for ‘lean and mean’ continues since 1950s. In this continuous evolving journey, it has followed the Japanese model embracing methodologies such as Total Quality Management (TQM), Kaizen, Just-in-Time (JIT) Inventory, Six Sigma, to name a few. However, the ‘lean machine’ in any factory may not necessarily satisfy the customers’ desires ie., value for money, quality of products & services, responsiveness of the suppliers and support from cradle to grave. So, what is being demanded of world-class companies in the 21st century is a delicate balance of being efficient (lean), responding rapidly to changing customer needs & market forces (agile) and producing quality products from quality processes (Six Sigma). The adoption of lean, agile and Six
Sigma concepts is generally focussed on the shop floor, but this is only the tip of the value iceberg. To reveal the hidden, but massive, value potential, it is imperative that these methodologies are extended beyond the manufacturing plant to include all critical processes within and between each stage of the supply chain network – exporter, importer, ports, freight forwarder, vendor, manufacturer, distributor, retailer and customer.
EXTENDING LEAN PRINCIPLES Extending lean manufacturing principles to the supply chain is of extreme importance. However, the extension of lean concepts across a complex supply chain network of suppliers, customers and partners can result in dramatic financial improvements
for all. Significant benefits in reduced cycle times, increased production yields and quality levels, decreased inventories, minimised waste, lowered costs and increased customer satisfaction are to be expected, which, in turn, drive increased revenue and improved operating margins. Lean supply chain operations require continual optimisation, monitoring and refinement, which cannot be accomplished without a solid IT platform. As backbones and data repositories, traditional solutions such as enterprise and supply chain planning applications can be essential for enabling a holistic and lean manufacturing operation. However, many lean purists hold that traditional IT applications such as ERP, by definition are anti-lean, using push logic to populate the manufacturing
MARCH 2011 • SMART LOGISTICS • 57