Contrary to what many business leaders think, supply chain management using lean is not just for companies that manufacture products, but can be used by any business that seeks to streamline its processes through the elimination of waste and activities which add no value to the customer.
Companies have many areas within the supply chain in which waste can be identified in the form of time, inventory or costs. If a supply chain is to be made leaner, a company needs to look at each part of its supply chain, specifically focusing on the following areas:
When a company stocks too much or too little of a particular item, it can be detrimental to its supply chain. In this case, the company’s service parts supply is more prevalent than its current supply chain. Optimization of inventory is dependent on precise and accurate forcasting of needed items. Lean supply chains require that extensive evaluation and quick identification of sudden market changes are carried out to ensure that shipping, manufaturing or other parts of the supply chain are not adversely affected.
As connectivity becomes more widespread, especially with the use of mobile devices, consumers now believe that their voice is powerful, and use this power to demand instant gratification. Clearly, it is not possible to offer products instantly, so the best a company can do is to ensure that all orders are processed quickly, without errors and sent using the fastest means of transport available. Lean supply chains go a step further and combine different methods of transport that allow companies to not only gain a competitive advantage, but also satisfy the needs of the consumer as soon as possible.
Customization is one of the trickiest aspects of setting up a lean supply chain. This is because, for most people, it would seem more appropriate to view customization as having disparate ERP systems to cater to each distributor, supplier and retailer in the supply chain. In reality, customization is a reference to how unique processes are implemented across the entire supply chain to offer customers what they need.
In addition, any increase in the individual businesses within the chain results in the need to manufacture – and repair – a more diverse range of products. A lean service parts supply chain is able to adapt and build customized parts to fill the growing demand.
Sustainability is a key characteristic of a lean supply chain. The supply of fossil fuel left on our planet is finite, which means that supply chains have to find ways to utilize renewable sources of energy. The renewable energy used is dependent on geographic location and how it relates to the supply chain’s underlying aspects. In addition, many governments are now enacting strict environmental and sustainability law and regulations as a way of pushing manufacturers towards the use of renewable forms of energy in the years to come.
Although there are skeptics who think that it is not possible for industry to move to renewable energy, a case in point is the decline in use of incandescent lightbulbs. The process began in manufacturing, and eventually trickled down to homes. Renewable energy will take the same course, and a lean supply chain should anticipate this and prepare for it.
Compliance and Visibility
Perhaps the most significant characteristic of a lean supply chain is its unwavering focus on maintenance of compliance and visibility. When we talk about compliance, we refer to adherence to the applicable local, state or federal regulations that relate to supply chain entities. Lean supply chains feature end-to-end visibility, which allows people to see into the entire process, eliminating potential compliance issues. In essence, this kind of visibility provides a means of self-assessment and a way to monitor the supply chain, leading to greater compliance.
In lean supply chain management, it is necessary for businesses to carefully examine each process within the supply chain in order to isolate areas that waste any resources that can be measured in time, money or raw materials. As a result, the company’s competitiveness will improve and profits will rise.