Lean Supply Chains – Use Less Make More

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Taking a simple Sunday drive down a road through the countryside, there are many things you depend upon to get you where you’re going. Most are common to all drivers. You need good tires, windows, seats, perhaps an air conditioner, and certainly a solid body. These are the essentials that in various states of repair have little bearing on the efficient functions of the car by which it sustains forward motion. However, start talking about the engine these days and you’ll get an earful regarding notions such as fuel efficiency, pollution control efficiency, maintenance efficiency, and so forth. Indeed, it is the engine upon which all drivers depend the greatest to get them where they are going. As opposed to seats and seat condition, though, a less efficient engine simply means a less efficient car.

In this same sense, manufacturers are very dependent upon each other to be efficient in their operations-your performance is often dependent upon the performance of your upstream suppliers, while downstream your customers depend on you for their own performance levels.
It is a circuitous feeding chain that traditionally has relied up on the sustaining of on-hand inventories to keep ahead of demand. With the introduction of lean manufacturing came the elimination of large inventories and the need for greater planning of resources for production and delivery. As it concerns an entire chain of events in the manufacturing process, it would seem to be a contradiction of terms, but dependability must be based in flexibility-a dependable supplier is one that not only works well in routine and with regularity, but is also ready for change in any part of the system.

In other words, lean supply chains are made up of members who operate in efficient and continuous improvement modes and are conscious of the needs of each other.
The on-time delivery of production supplies and components at the bottom means the on-time delivery and distribution of finished goods at the top.

Today, strings of lean suppliers make efficient routes to delivery. Part of the reason for the remarkable efficiency of these chains is due to the rise of enterprise resource planning software (ERP). With ERP systems in place up and down the supply chain, automated processes are able to keep up with the speed and volume of production with reduced lead times, while reducing bottlenecks that impede on-time throughput. These automated processes depend upon the gathering of data from all aspects of the manufacturing operation and include tasks such as procurement, inventory management, cost accounting, shipping, quality, payroll (time and attendance), and just about any other area involved in manufacturing. Automating processes mean automating greater efficiencies into the system, and when the supply chain members are automated up and down the line, the line itself becomes more efficient.

Interestingly, a lean supply chain is enhanced by customers who are themselves lean-minded. A lean customer is one who not only expects and depends upon value in the products they purchase, but one who realizes the clarity and speed of their own demands to suppliers results in the delivery of what they are really looking for. They understand that continuous improvement in the supply chain will have beneficial effects upon supply quality, availability, and delivery performance. And, continuous improvement in the supply chain relies upon customers working alongside suppliers through proactive feedback.

Ultimately, lean supply chains reduce the amount of excess inventory in the chain. In order to eliminate inventory waste, the supply chain should be demand driven (i.e., just-in-time), with customers pulling inventory-not with suppliers pushing it. In such a pull system, anything that disrupts this flow must be eliminated as potential non-value added activity. Today, through the introduction of greater efficiencies into production, material/inventory is used in such a way that output is often increased while using less material stock in the process. All in all, efficiencies such as this are realized when individual members of a lean supply chain see themselves as fitting within the design of a larger manufacturing environment. In this, the idea mutual dependency becomes ever stronger.

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