For companies who desire optimum productivity, conventional supply chain methods may not fit the bill. Typical supply chains are often less efficient as lean supply chains, and as a result, numerous organizations around the world are implementing lean strategies.
Lean supply chains focus on eliminating waste and strengthening processes that work. In other words, when using lean supply chains, companies eliminate activities that are unnecessary or ineffective.
These lean supply chains have gained popularity all over the world and are prevalent in a variety of sectors, including business administration, healthcare and government. In order to apply changes to their supply chains, businesses must analyze a variety of essential elements, including procurement, lean manufacturing, warehousing, and transportation.
Businesses often have complicated purchasing procedures which can result in waste. Many times, companies will have both corporate and lower level purchasing groups. Such divided purchasing groups can cause confusion and waste a lot of time and resources.
Moreover, the purchasing process is often repeated when both the corporate and local level is involved, and vendors may give different information to the purchasing groups. In fact, vendors sometimes offer different prices to the corporate and local levels if their locations are different. In short, multiple purchasing groups can be costly and inefficient. To implement lean supply chain management, use only one purchasing group so that vendors reach one contact; this also helps ensure that vendors offer one contract and one price for all locations.
Manufacturing is another area for organizations to reduce waste. They can do so by emphasizing quality in their companies’ policies. Lean manufacturing businesses focus on eliminating defects and unnecessary procedures. But they must do so while maintaining performance goals.
Products with better quality will have a lower return rate; thus companies will need fewer resources for returns and customer complaints. In order to begin lean manufacturing, businesses should examine all of their routings, bills of material, and equipment to determine what changes need to be made.
Organizations can also reduce waste in their warehouses. To do so, they first need to survey their usual warehouse procedures to see what areas need improvement. For instance, having a large inventory may be a mistake, since storing resources can cost a lot. Decreasing the size of inventories can help to cut down the price of warehouse space. Smaller inventories also mean less time spent handling products.
Businesses with lean supply chains will often focus on improving their transportation procedures and costs. When customer orders are not combined with additional orders, organizations are spending excess money on shipping. Also, if a company has too many shipping options, customers could be making unnecessarily expensive selections. This can rack up big costs for companies, so those with lean supply chains aim to reduce the unnecessary movement of merchandise.
The Kenco Example
Cutting out waste and increasing efficiency are key goals for companies with lean supply chains. These methods can help businesses flourish; consider the Kenco Group, a Chattanooga-based firm recently examined in an Inbound Logistics article. Kenco implemented exceptional lean business in their production lines, yet they had an extremely inefficient inventory storeroom. Nothing was in logical order, and far too many packages had to be shipped at an expedite rate. Jason Minghini, Kenco’s vice president of best practices, knew some changes needed to be made.
To fix warehouse issues, Kenco implemented the same lean strategies as they used on their production line. The result? Kenco achieved additional uptime on their production line, decreased reliance on expedited freight, and an increased number of on-time deliveries. By applying lean supply chain methods, Kenco earned higher customer approval. This demonstrates that organizations with lean supply chains are able work efficiently, leading to better output and more satisfied customers.
This is a guest post by Dean Vella who writes on behalf of the Bisk Education – a facilitator of online education. If you’re interested in sharing your knowledge with Procurement Sense readers please contact us.