MEPOL is a statewide sponsored program of the University of Louisiana at Lafayette
By Jason Bruderlin
Lean manufacturing is a revolutionary philosophy which has the potential to transform every aspect of your business. If you know about lean, you've probably heard about reducing all kinds of waste on the factory floor or having kaizen events targeted towards improving manufacturing processes. What you may not know is that lean philosophy can be applied to other parts of your operations as well. Even for firms with a "leaned out" factory floor, the supply chain is ripe with opportunities to get rid of waste and make processes more efficient.
To explore how lean applies to supply chains, we spoke with Dr. Ik-Whan Kwon, a Professor of Decision Sciences and Management Information Systems and a Director of the Center for Supply Chain Management Studies at St. Louis University in Missouri and an expert on lean supply chain management.
Kwon believes that, true to the lean spirit, the fundamental goal of a lean supply chain is to reduce waste. The biggest waste in supply chains, he argues, is in inventory: assets just sitting in warehouses, tying up valuable resources and worst of all, not creating value for the customer. This is not to say that simply reducing inventory will transform your supply chain into a lean supply chain; in fact, that approach would reflect a too narrow view of what lean manufacturing means. The idea is that inefficiencies and waste in the supply chain and in the manufacturing processes of suppliers must be eliminated to allow the supply chain to be more responsive to customer demand, and this in turn will allow for reductions in inventory. The best way to do this is to create a more equal relationship between suppliers and buyers-a partnership between companies with the same long-term interests. In a lean supply chain, the buyer invests monetary and intellectual resources in the supplier.
For example, a car company will usually give its pool of suppliers blueprints for a part, and the supplier that can manufacture that part the cheapest at a given level of quality is selected. Suppliers, experts in their field, have little opportunity to suggest improvement because they have no information about the rest of the vehicle. Due to the fickle nature of their relationship with the buyer, vendors must maintain a large inventory to ensure there will be no delays which might cause the buyer to cancel the contract. There is little or no collaboration and no mutual assistance and no improvement happening in this system.
In a lean system, according to Kwon, the vendors are treated as long-term partners in the enterprise. The supply chain is not my supply chain"-it is our supply chain. The buyer will give the supplier a set of specifications and the supplier will design the part. The buyer will share information about the larger product with the vendor, and encourage vendors to work with each other to produce a better product more efficiently. The key, however, is that the buyer invests resources, and more importantly, knowledge, in the suppliers to help them become lean. In this way, both firms can collaborate and reduce inventory and other types of waste in the supply chain.
One of the only businesses in the world to fully implement a lean supply chain is Toyota, where lean manufacturing was pioneered, and it has made them extremely successful. Toyota has achieved its success in part because it has applied lean principles to its entire supply chain; Toyota realizes that small-to-medium-size suppliers are crucial parts of the supply chain and integral to any large assembly firm. It is in the interest of larger firms to start treating suppliers as long-term partners in the enterprise by helping them become lean, to reduce waste by sharing information and resources and encouraging them to improve designs and processes. Whether they will hear and act on this message remains to be seen.
This article was provided by allbusiness.com 