Implementation in the Lean Supply Chain

CaptureBy: David Sherman, Lean Supply Chain Operations Manager at LeanCor

Many companies today are working to begin or have already began their learn journey. Before companies can begin their lean journey, they must first have a plan in place that gives them guidance toward their goals. Oftentimes companies embarking on their lean journey struggle with implementation roadblocks due to this error and oversight. Understanding the current state and the future state goal is critical to being able to find the current gaps and approach the steps using a stabilized plan. This implementation plan must include clear vision from the top down and include each department respectively as this cultural shift encompasses the entire business rather than one or two functions.

Step by Step

  1. To begin the lean journey a company must follow an easy five step plan to gain momentum. Firstly, a company needs to garner a better understanding of true customer demand by making customer consumption visible. Understanding customer consumption allows for proper planning of materials, transportation, production etc. When forecasting is used, the chance that the forecast is inaccurate it very high. Producing what the customer orders rather than guessing what they may order in the future will help reduce the waste of overproduction.
  2. Secondly, facilitate flow in the supply chain. Reduce lead-time and increase speed throughout the supply chain. This is accomplished by shipping smaller amounts of product, more frequently. While transportation costs may increase slightly in the beginning, other costs will decrease as lead time is reduced such as: holding cost, handling cost and obsolescence.
  3. The third step to implementing lead in the supply chain is to level the volume flow of information and materials throughout the entire supply chain network. This is done through the utilization of pull systems. A pull system is used to trigger an order to replace a customer sold item. This can even be done automatically from the POS to ensure real time demand. This practice eliminates the need to forecast potential demand and order quantities of materials based on these forecasts (which are inherently incorrect upon inception). Unlevel flow of material and information can increase lead times and also add waste into processes such as overtime, rework etc.
  4. The fourth step in the process is to promote collaboration and involve everyone in the problem solving culture needed for lean implementations to be successful. Once a department or group understands the systems aspect of the business, it will be more likely they will involve the appropriate parties outside of their function to make decisions. This will allow for the business to be more successful in the long run as silos are broken down internally. When each employee is empowered to solve problems in their own work, there will be significant change for the better in the workplace. Teaching employees the power of proper problem solving will be key to helping them solve their own problems.
  5. The fifth and final step for lean supply chain implementation is the step where the focus must be on total cost of fulfillment. The purpose is to optimize total cost. For example, consider a company that purchases a large volume of materials due to economies of scale. While the unit cost is low, the decision to buy it in bulk may actually turn out to be very costly in future as this would include storage costs, movement of items, obsolescence and eventually even recycling/destruction of the materials.

Understanding the steps before a lean supply chain implementation is undertaken is key in the success of the implementation. Companies must understand the current state and future state vision to help them define the gaps and then put a plan in place to close those gaps.

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