A “Lean” supply chain is a supply chain optimized to deliver products quickly and with little to no waste. From Lean tools to the philosophy of continuous improvement, businesses can reduce costs by translating the principles of Lean manufacturing to the supply chain.
There are two main tenants of Lean manufacturing that can be applied to supply chain management:
Muda is described in the Toyota Production System as the Seven Wastes of Manufacturing—but these wastes can also be found in the supply chain:
- Defects: Losing time and energy due to a defective product. In the supply chain this could mean rescheduling deliveries, creating replacements, etc.
- Overprocessing: Spending more time and effort into a product than what a customer requests or is expecting.
- Transportation: Wasted time and costs when products and materials are unnecessarily moved.
- Inventory: Having too much inventory on hand will slow down operations and can tie up cash in storing excess product.
- Motion: Unnecessary movements by people resulting in wasted time and effort.
- Overproduction: Making more product than customer demand.
- Waiting/Delays: Time wasted from waiting between process steps.
In Lean, the waste created by unevenness is known as mura. Manufacturing companies typically find that the unpredictability of customer demand results in more inventory at all levels—which can really slow down the supply chain. By trying to forecast demand and keeping enough inventory for a “what-if” scenario, any changes in demand will be hard to adapt to and customers may see long delays in their orders.
Lean management strategies aren’t just for manufacturers! For any supply chain, creating a value stream map to identify areas to improve time, costs, inventory, etc. to improve. With the multitude of tools in the Lean toolbox, the philosophy can be used by any business looking to optimize processes, reduce wastes, and eliminate non-value-added activities.
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