Tuesday, October 8, 2013

Go further from lean manufacturing: Build a Lean Supply Circle

Social and ecological supply chain
If lean manufacturing aims at bringing bigger profits for a company, then lean supply circle is to create bigger social impact. As a basic commonsense in economics, resources are limited and we have to allocate them economically. Resources are critical in supply chain management, especially for manufacturing industry.

In the foreseeable future, supply chain will not only be part of business world but also be an integrated component of the whole society. On one side, companies are increasingly aware of social responsibility and are willing to work on decreasing their carbon footprints. On the other side, people would be more opposed to resource-centered manufacturing companies. Even though the social responsibility merely derives from companies eager to build a good social image, we have to admit that they are helping to reduce carbon emission. 

Apple's Recycling program: 

Dell's Reconnect program (see video below)

Supply chain is a network
As stated in the McKinsey article Manufacturing resource productivity: “depending on where they are located on the production circle, companies should prioritize four broad areas for resource productivity: production, product design, value recovery, and supply-circle management.” If we want to minimize waste in the end, we need to be lean from the very beginning.

Toyota’s lean manufacturing system focuses on removing waste in non-value added procedures. However, in order to rule out in today’s business world, companies may adopt lean methods through the whole process, from design to delivery. After all, supply chain is not linear but a network.  Here I want to share some slides including some comprehensive charts: 

A little wrap-up
Resource optimization is the ultimate goal of lean manufacturing and frugal engineering. It seems that all of the content we have gone through in this course are coincidently related to “saving”, no matter it is time, money, human capital, or resources. Our future relies on resources we possess now, so we need to optimize every unit of resources. However, being lean does not mean being mean. A lean supply circle should be build on the basis of fulfilling demands and requirement of consumers. We can only be successful by using scientific methods and data analysis in resource optimization. 

However, is there a risk of being monopolists? If a company owns the raw material, manufactures using the material, recycles them in the end, and puts them into a new production circle, there will not be place for other participants. Even though a company may outsource waste management to another company, but the whole supply chain still seems to be more centralized and unified. 

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