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Lean Supply Chain & Logistics Management

Updated: Apr 3

Muda: Japanese term for waste

Lean Thinking derived from Japanese Production Principles
Lean Supply Chain & Logistics Management derived from Japanese Production Principles

The concept of ‘lean thinking’ has been applied in many organisations, with the aim of identifying potential wasteful areas and then to eliminate or minimise these. Originating in the Japanese automotive industry as an alternative to mass production methods, the concept of lean thinking has now been adopted in other sectors including supply chain operations.


The concept in a lean production environment is based on the principle that the resources should be reduced, i.e. using less of everything in the process. In Womack et al. (1990), it is reported that the International Vehicle Programme (IMVP) set itself to:


…half the human effort in the factory, halving the production space, the investment in tools, and the engineering period required to produce the products.


The term ‘lean thinking’ refers to elimination of waste or ‘muda’—the Japanese word for waste. Using lean thinking, we can ensure that the end product or service is not loaded with unnecessary costs of wasteful processes in the supply chain. We need to understand the nature of waste in our organisation and the supply chain network; these have been identified as follows:


over production: this occurs when goods a produced in large quantities, or, as Harrison & van Hoek (2005) state, ‘too early or just in case’; when we over-produce or deliver we create problems for the supply chain, as this increases costs.


unnecessary transportation: there are times when products which are finished or semi-finished are moved unnecessarily within our premises without really adding any value. Such movements are wasteful due to double-handling, and may actually cause damage. Process layout should consider linking up processes to reduce this type of waste.


unnecessary motions: at times, we waste valuable time and effort moving from one place to the other in pursuit of our tasks. This could be the tools and equipment used for an activity or production process.

There is also another aspect of the need to obtain signatures for documents during a process, such as by taking a store requisition for signature.


excess inventory: inventory is necessary only in certain cases. There are cases when inventory becomes a waste because it has accumulated as a result of disruption to the smooth flows. It has also been argued that inventory is a symptom of the way in which a business or supply chain is operated.


reworks/rejects: any form of rework or reject is wasteful—both in terms of money and time. Usually associated with poor quality, rejects and reworks can be minimised within a total quality management approach to operations.


waiting time: unnecessary waiting for materials or a service during supply chain activities is wasteful to all.


inappropriate processes: some processes are inappropriate for a particular product or service provision. Whenever these inappropriate processes are used, there is bound to be waste created—either through excess resources required or excess or unused capacity.


Lean Supply Chain & Logistics Management


Vitasek, et al (2005) identified six attributes that characterise a lean supply chain as follows:


Demand management capability – using the concept of lean thinking, product or services should be pulled by actual demand rather than being pushed into the market. This can be seen and achieved through recent technology e.g. EPOS that gives real time data upstream to all partners of the chain.


Elimination of waste – is a key threat of lean supply chains. Waste has been identified and discussed in an earlier section but can also include information waste. Redundant or unnecessary data collected for no reason is waste, especially if you consider this from the point of information flows within the supply chain.

If supply chains focus more on waste reduction, this appeals more to the customer and suppliers than costs. All partners in the chain are more likely to be willing to modify processes that produce waste. As noted earlier, waste has manifested itself in inventories within supply chains.


Process and product standardisation: A supply chain can only be lean if processes up and down the pipeline are standardised to enable a smooth flow of both information and materials. This then requires the removal of any barriers or inhibitors that may cause ‘roadblocks’ against the supply chain flows. The traditional vertical thinking should change towards a horizontal perspective where, as a manager, you should look across traditional boundaries to integrate activities into this value stream flow of goods and services.


Industry standards adoption: The above process would normally permeate beyond organisations into overall industry and a good example has been the consumer electronics standards e.g. the pin arrangement for various components and parts from various suppliers that can be interchanged without any complications.


Cultural change: There is a need for some clear road maps that include communication lines all about change. Acceptance and implementation of these concepts depend on successfully managing cultural change during implementation and training and appropriate leadership style become essential.


Cross-enterprise collaboration: – It is through collaboration between all supply chain partners that customer value can be maximised. It may be necessary to set up and form some cross functional teams to ensure success in this regard.


Lean Supply and Inventory Management


The Japanese lean production principles gained impetus not only in the developed economies but also in developing economies such as Brazil, India and South Africa. Originating from problems associated with mass production, lean management in supply chain & logistics aims to eliminate inventory by making each process produce only what the next process requires and at the time that it is needed.


Lean thinking principles have created opportunities for organisations to compete on the international market.


Five principles have been identified as follows:

  1. Value – this identifies the needs of the customer from the customer’s perspective.

  2. Value Streams – from this perspective it is possible to identify value streams, by mapping to identify value adding (VA) and non-value

  3. adding (NVA) activities eliminating unnecessary NVA activities.

  4. Flows – this ensures that material and information flow unhindered with minimum inventories being held along the stream.

  5. Pull - this requires that products should not be made and stocked but only made when an order has been received.

  6. Perfection – this highlights the principle of continuous improvement within the supply chain.


 

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