Supply Chain Management (SCM), driver or barrier? Part 2 of 3

As we have seen in this article, there are so many factors outside each company that affects, more or less, the operations in their supply chains. But now, let’s take a look about the methodologies that can be used to help us react faster and smoother in the companies we work. First, in this paper, we will check Lean Thinking.

Lean thinking

I know, you must know it, have heard before at school or work. But is basic to remember this concept.

The Toyota Production System, also called Just in Time (JIT), it has been called Lean Thinking. In one idea, avoid waste by all means, it refers to any human activity which absorbs resources but creates no value. In order to convert waste to value, we adopt lean thinking.

Lean operations supply the customer with exactly what the customer wants, when the customer wants it, without waste, through continuous improvement, this is JIT. They are classified in 7 types of waste:

1. Over production. To produce sooner, faster or in greater quantities than the customer needs. 
2. Waiting time. People or parts that wait for a work cycle to be completed.
3. Transportation time. Unnecessary movement of people or parts between processes.
4. Over inventory. Raw material, WIP or finished goods which do not have added value.
5. Over Motion. Unnecessary movement of people, parts or machines within a process.
6. Over processing. Processing beyond the standard required by the customer.
7. Defective product (Rework). Non right first time. Repetition or correction of a process.

In other words, to use lean thinking, first it is necessary to specify the value of the product or service from the end customer perspective. Then to minimize delays, inventories, defects and downtime thru the supply network. And finally to schedule, produce and deliver based on customer orders not forecasts.

Yeah! Sure, it sounds so easy, isn´t it?

However, let´s face it. Lean thinking fails principally for two reasons.

1. The first one is that companies have to ensure that problems in quality issues will not reduce inventory and lead times. If the company cannot get to zero defects and zero breakdowns, they will not get into lean manufacturing.
2. The second one is related to companies’ management. If top management loses interest in the program, then middle management will also, and through all the employees down to shop floor staff.

In terms of global recession, lean thinking was a driver because it generated benefits by reducing stock and now companies have a chance to redesign their systems to know when a customer wants a product, then to deliver it without adding stock investment cost and finally by performing accurate forecasts of demand to reduce costs and improve efficiency. 

However, the barrier in lean supply chains is that if variability of unknown customer demands is not reduced from the process, it will be difficult to add value at each step of the supply chain process. 

During a global recession customer demand is difficult to predict due to the uncertainty in the global market and the lack of stable business environments. So, Lean Thinking works best in high volume, low variety and predictable environments. 

See you in the next paper. In the meantime, take care and keep walking on my friend.

j.maldonado.gtz@gmail.com

Jorge Maldonado. Egresado de la Universidad Autónoma de Nuevo León como Ingeniero Administrador de Sistemas. Cuenta con una Maestría en International Logistics and Supply Chain Management en la Universidad de Glamorgan South Wales en Reino Unido. Profesionalmente se ha desarrollado en empresas de manufactura y tecnologías de información.