In the global marketplace, delivering goods and services is a complex, challenging proposition. Natural disasters, unstable world economies and unpredictable political landscapes require a new breed of supply chain professional who can manage these interwoven obstacles.
Kettering University Online’s Master of Supply Chain Management program offers students the theoretical and practical expertise necessary to navigate these complexities and find solutions.
In the mid-20th century, Toyota pioneered a new way to think about manufacturing that would forever change the way companies think about their products, processes and customers. The basic philosophy of "lean" is the consistent striving toward the elimination of waste while ensuring continuous quality of products and services through an uninterrupted flow of work within organizational processes.
Those working in the automotive, manufacturing or processing industries are likely familiar with the concept of incorporating lean principles and techniques into their supply chain operations. Lean techniques are broadly applicable and can be incredibly useful for any supply chain manager. Two particular lean concepts easily adaptable to managing a supply chain are flow and waste.
A Lean Flow
In lean thinking, one key to eliminating waste is making sure that the product or service has a complete and uninterrupted flow. Carefully designed flow across all parts of a supply chain will minimize waste and increase value to the customer. “Good flow describes a system where work moves through steadily and predictably, whereas bad flow describes a system where work stops and starts frequently. A consistent flow of work is essential for faster and more reliable delivery, bringing greater value to your customers, team and organization” (Leankit, 2018).
The following are examples of a breakdown of flow in a supply chain:
- Proctor & Gamble experienced erratic shifts in ordering for a popular brand of diapers because the distributors’ orders showed more variability than that of sales. (Daniloupv, 2017).
- A Sony plan to launch PlayStation 2 during a Christmas season was foiled because of an oil tanker that became stuck in the Suez Canal, blocking the ships sailing from China that were transporting the PlayStation consoles (Orton-Jones, 2017).
These examples illustrate how important it is for supply chain managers to ensure that all types of flow work in harmony so that they can increase their odds of delivering goods and services. Although it is important to note that in the case of Sony, an external, not internal, event caused the disruption of flow. Successful supply chain professionals should have risk mitigation strategies in place for just such occasions.
The Lean philosophy identifies seven forms of waste: inventory, motion, over-processing, overproduction, waiting, transportation and defects. Waste in time and transportation can cripple any supply chain.
Following are some examples of how wasting time happens within a supply chain:
- The time delay between the arrival of a trailer for pickup and the loading of the trailer
- Shipments of products aren't sent early enough to be loaded onto a truck for delivery
- Excess time between receipt of customer order information and fulfilling the order
- Drivers who linger too long at delivery sites
“Inefficiencies and waste of transportation are rooted in the poor utilization of equipment, operators, and a host of other limited resources found in the transportation operations” (LeanCor, 2018, paragraph 4).
Transportation waste can take many forms:
- Excessively moving products from one place to another
- Inefficiently maintaining vehicles results in delivery drivers being delayed because their trailer breaks down
- Sending multiple less than truckload shipments in the same direction at the same time
- Poor and circuitous route planning
Interrupted flows and mounting waste do not add value to the customer. They require corrective action and detrimentally affect overall business performance. One of the first things a supply chain professional can do when implementing the lean philosophy is identify all of the potential areas for potential flow interruptions and waste.
After identifying these areas, supply chain managers can implement best practices designed to make operational activities run smoothly.
It is worth noting that implementing the lean philosophy requires that employees are well-suited to their assigned tasks. Supply chain managers can have Lean principles, practices and processes in place, but if the right employees are not implementing those processes, the company’s lean transformation initiative, and ultimate success, is jeopardized. Becoming lean can boost a supply chain to the next level of performance but only if paired with employees who are well trained and well informed.
Blanchard, D. (2017, June 19). Top 25 supply chains of 2017. Retrieved from http://www.industryweek.com/supply-chain/top-25-supply-chains-2017/galle...
LeanCor. (2018). The power of consolidation. Retrieved from https://leancor.com/blog/the-power-of-consolidation/
Leankit. (2018). 7 lean metrics to improve flow. Retrieved from https://leankit.com/learn/kanban/lean-flow-metrics/
Orton-Jones, C. (2017, February 23). 10 supply chain disasters. Retrieved from https://www.raconteur.net/business/10-supply-chain-disasters
Proadmin. (2016). 3 true stories of supply chain management disasters and how to avoid them. Retrieved from http://www.maxqtech.com/3-true-stories-of-supply-chain-management-disasters-and-how-to-avoid-them/