Monday, February 13, 2012

Lean Thinking For Supply Chain

This week our focus, among other things, in on Lean Thinking in Supply Chain. As the name implies, it is a mind-set — a way of viewing the world. Lean is about focus, removing waste, and increasing customer value. Lean is about smooth process flows, doing only those activities that add customer value and eliminating activities that don’t.
I found an article that talks about some of the components involved in Lean Supply Chains. It helps to better understand the various aspects of a supply chain that can be tweaked to reduce wastage and improve customer value.

Components of the Lean Supply Chain

Lean Suppliers
Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiencies of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean suppliers deliver on time and their culture is one of continuous improvement.
To develop lean suppliers, organizations should include suppliers in their value stream. They should encourage suppliers to make the lean transformation and involve them in lean activities. This will help them fix problems and share savings. In turn, they can help their suppliers and set continually declining price targets and increasing quality goals.

Lean Procurement
Some lean procurement processes are e-procurement and automated procurement. E-procurement conducts transactions, strategic sourcing, bidding, and reverse auctions using Web-based applications. Automated procurement uses software that removes the human element from multiple procurement functions and integrates with financials.
The key to lean procurement is visibility. Suppliers must be able to "see" into their customers' operations and customers must be able to "see" into their suppliers' operations. Organizations should map the current value stream, and together create a future value stream in the procurement process. They should create a flow of information while establishing a pull of information and products.

Lean Manufacturing
Lean manufacturing systems produce what the customer wants, in the quantity the customer wants, when the customer wants it, and with minimum resources. Lean efforts typically start in manufacturing because they free up resources for continuous improvement in other areas, and create a pull on the rest of the organization. Applying lean concepts to manufacturing typically presents the greatest opportunity for cost reduction and quality improvement; however, many organizations have received huge benefits from lean concepts in other functions.

Lean Warehousing
Lean warehousing means eliminating non-value added steps and waste in product storage processes. Typical warehousing functions are:
Warehousing waste can be found throughout the storage process including:
Defective products which create returns
Overproduction or over shipment of products
Excess inventories which require additional space and reduce warehousing efficiency
Excess motion and handling
Inefficiencies and unnecessary processing steps
Transportation steps and distances
Waiting for parts, materials and information
Information processes
Each step in the warehousing process should be examined critically to see where unnecessary, repetitive, and non-value-added activities might be so that they may be eliminated.

Lean Transportation
Lean concepts in transportation include:
Core carrier programs
Improved transportation administrative processes and automated functions
Optimized mode selection and pooling orders
Combined multi-stop truckloads
Right sizing equipment
Import/export transportation processes
Inbound transportation and backhauls
The keys to accomplishing the concepts above include mapping the value stream, creating flow, reducing waste in processes, eliminating non-value-added activities and using pull processes.

Lean Customers
Lean customers understand their business needs and therefore can specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance and quality. Lean customers are interested in establishing effective partnerships—they are always seeking methods of continuous improvement in the total supply chain to reduce costs. Lean customers expect value from the products they purchase and provide value to the consumers who they interact with.

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