The Value of Lean Supply Chain Management

WS_LEAN__73830.1333638587.1000.1000Lean Supply Chain Management

Companies are beginning to understand the volatility and risk associated changes within the supply chain. Lean supply chain looks to reduce waste and inventory levels so that the volatility and risk is minimized with shorter lead time(s). As companies have sourced suppliers further and further from operations, there has been an increase in lead time and inventory trapped within the supply chain, as this happens, the bull whip affect occurs. The bull whip affect occurs when a change happens further up the supply chain but doesn’t immediately impact partners down stream due to the length of lead times. As these changes occur the effects aren’t immediately felt or captured therefore firms can’t react (or proactively) to counter these changes. As the lean supply chain culture is implemented and practiced these changes can be determined in real time and even prevented if the proper processes and measures are in place.

Changes in the Landscape

Recent challenges in the international shipping industry have put more stresses onto the supply chain network as a whole. As West Coast port labor talks were at a stall, containers were moved at a slower rate, increasing the lead time within the supply chain. To offset some of these issues, firms were ordering product sooner than needed and adding even more inventory into the supply chain. This added further congestion issues and as port labor negotiations were resumed and resolved, operations began to catch back up to normal levels of service, reducing the back log of containers. As these containers then delivered to the customer, there was an influx (push) from the ports causing containers to not be unloaded immediately and potentially delaying customer delivery by several days to several weeks. Lean supply chain principles dictate that product should be pulled from the vendor/supplier when needed (true customer demand) rather than pushed from the vendor to potentially counteract other problems within the supply chain. As problems are documented and solved utilizing an appropriate problem solving method, firms can understand true demand and plan around those priorities, rather than being dictated by current constraints outside of their control. These changes cannot be made overnight but can be methodically practiced and approached and lead time can be reduced incrementally to alleviate some of theses stresses. As lead time is reduced firms can be closer to the customer (in lead time) and can react appropriately to disruptions within the supply chain.

Positive Outlook

The good news is that these types of issues can be avoided if the proper mechanisms are in place. Lean supply chain management is not only a tool to help reduce inventory levels and remove wastes but also lean supply chain management is a cultural shift that focuses on problem solving across the entire supply chain (organization). This allows firms to look at their supply chain as a system of different moving parts rather than independent silos that do not affect each other. Lean supply chain principles empower the operational level employee to problem solve, update processes, and remove waste from their day-to-day work while working toward the direction of the firm. As lean supply chain management is embraced from top to bottom in a firm, the supply issues can be targeted and reduced (removed) when the proper problem solving approaches are utilized. What recent changes in your industry have shown you that lean supply chain management is valuable?

Posted by LeanCor Supply Chain Group

LeanCor Supply Chain Group is a trusted supply chain partner that specializes in lean principles to deliver operational improvement. LeanCor’s three integrated divisions – LeanCor Training and Education, LeanCor Consulting, and LeanCor Logistics – help organizations eliminate waste, drive down costs, and build a culture of continuous improvement.

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