Lean thinking provides principles and tools used to eliminate waste and to strive for perfection through continuous improvement. Though lean thinking was conceptualized to apply to all activities within the firm and across companies in the supply chain, usually lean is employed in operational settings within a single firm. Lean thinking in supply chain management is the use of lean principles to align activities across corporate functions within the firm and to manage business relationships with customers and suppliers. We show how lean principles and tools can be used in the context of the supply chain management framework. Also, we describe forms of waste that need to be eliminated in order to create greatest value for the end-customer.
Why Supply Chain Management?
Many companies find that effective Supply Chain Management is focused on increasing profit and market share. There are companies that minimize manufacturing costs and these are therefore the keys to SCM. The company needs a complete supply chain to find new areas to reduce costs. Rushton et al (2014) have committed themselves to improve SCM, to balance customer demand so that growth is profitable. Hugo (2018) posits that the most important aspec of SCM is that it offers better customer value and at the same time reduces costs. Hugo (2018) says the SCM aims to improve the efficiency of the product supply process, according to the customer’s latest clientele. The main objective of the efficient chain of efficiency is to meet the costs to be as low as possible. SCM aims to improve the efficiency of material raw material suppliers (Dyrud, 2016). SCM can also significantly reduce the price of the customer’s cost by reducing costs significantly. Customer value is also important to determine the type of supply chain needed to store the customer. Depending on the type of products or services offered by a customer supply chain strategy, the value of the various items of this offer of the customer is determined. SCM has a wide range of options. Jacobs and Chase (2017) say that Supply Chain Management takes into account all costs that affect the pricing and ensure that the product meets the requirements of the customer.
Supply Chain Management is an efficient and cost-effective way throughout the system. The cost-effectiveness depends on the total cost of the system, transport, and distribution, by reducing the raw material, the work process and the end of the product and the costs. The supply chain management is not only a means of reducing transport costs and reducing inventory but also of improving the system’s perspective. SCM environment theories are connected to different domains. From the theory of atomic induction theory, the generation of holistic and transversal discipline is required beyond the traditional milestones of SCM, according to Rushton et al (2014). The SCM economy, engineering, operational management, production management, and logistics must be taken into account.
SCM spreads it across all levels. Strategic strategy takes decisions in a long-term company. These include decisions about warehouses and manufacturing facilities and material flow through logistics. The level of the keyboard contains the decisions that are updated every quarter. These are purchase and production decisions, inventory policies and transport strategies, including frequencies visited by customers. The operational level takes into account daily decisions, such as schedules, lead, traces, and transportation. Most research focuses on the operational and tactical aspects of the supply chain, including customer contracting relationships (Love et al., 2004). SCM has activities to buy, sort, produce and distribute.
All these areas include other activities. All activities must be taken into account when introducing a supply chain. It is important that senior and top management companies understand the management and applicability of the supply chain. These people are the decisive company’s strategies and axes. SCM must show interest in the company and be visible to all employees of the company to provide good care and good results. The supply chain has worked in the industry for a long time and nothing needs to be taken care of by the management. Supply chains are critical dimensions. According to a survey by Price-Waterhouse Coopers, the largest 400 European companies can expect the biggest obstacle for changing European supply chain projects, according to culture and language and IT systems (Hugos, 2018). Fernie (1995) made an international SCM comparison in grocery retail. In the United States and European trade, significant differences were found in stock inventory quality in terms of SCM. It is predominant in the development of the European supply chain and the stock is reduced. The offerings of companies are at different levels of knowledge. The levels differ in different business lines and in different parts of the world. With the support of the SCM or especially the supply chain, a great example of Zara. The company is a fashion vendor and synchronized with the network of production networks with its customers’ requirements so customers can respond quickly to the changing taste of fashion consciousness (Rushton et al., 2014).
Supply chain collaboration can be defined as two or more independent firms jointly working to align their Supply chain processes so as to create value to end customers and stakeholders with greater success than acting alone (Dahlman, 2007). When chain members involve in collaboration, there can be a dilemma between accommodating decisions that take into account the interest of the Supply chain as a whole and preserving decisions in the interest of an individual firm. Companies benefit from focusing on identifying the constraint that prevents the chain members from achieving overall profitability. The constraint can be either physical or non-physical and internal or external. According to Boonjing (2015), Supply Chain Management was still in the early 2000s a very popular development area among companies.
The importance is especially significant in the area of the high tech industry. To set up an excellent Supply chain strategy requires high knowledge in the SCM area. Profit maximization, maximum competitive advantage, select service level, and minimal asset deployment is part of the strategy to set up in the Supply chain definition by Boonjing et al (2015). Christopher (2016) posits that the whole purpose of logistics strategy is to provide customers with the level and quality of service that they require and do so at less cost to the total Supply chain. There are a lot of factors to consider when deciding how to set up a Supply chain. Christopher (2016) mention:
• Number of suppliers
• A number of sub-suppliers. Module suppliers or many sub-suppliers
• Distance to supplier
• Size of supplier
• Co-operation with the supplier
• Direct shipments
• Storage location local, regional or central
• 3PL (third-party logistics) distributors (provides logistics services to other companies)
• A number of distribution alternatives.
The Concepts of Value and Waste
Value, relative to deficits, is defined as something the customer is willing to pay. Value-added activities turn content and information into something the customer wants. Non-value-added activities consume resources and do not directly contribute to the conclusion the customer wants. Therefore, waste is defined as something that does not add value from the customer’s point of view. Examples of processing waste are defective products, overproduction, supplies, over-handling, processing, transportation and waiting.
Consider the example that is not produced about flights to the Bahamas. The value-adding part of this process is the flight itself. The non-value-added parties to this process are running out of airport, parking at the airport, walking to the terminal and checking in, waiting in line at check-in, doing a security check and so on. It is important to understand the difference between value and waste and value adding and non value adding processes to understand lean. Sometimes it is not easy to discern the difference when looking at an entire supply chain. The best way is to look at things in the supply chain and apply lean thinking to each and decide how to link processes to reduce waste (Hugos,2018).
Lean principles emphasize value creation with:
• Specify values from the end customer perspective
• System value determination by:
Identify all the steps required to create value
Mapping the flow value
Challenge each step by asking why five times
• To coordinate values, create steps so that they appear in quick succession.
• Create a stream of qualified, available, and satisfying processes.
• Design customer content, parts, products and information.
• Continuously add to reduce and eliminate waste
The value stream consists of the value-added projects needed to design, order, and deliver goods, from idea to phrase, from order to delivery, and from raw material to customers. To develop a value stream card for a product, select a product family and collect process information. Then you map the steps in sequence and according to the flow of information; This is called the current state map. The current state map provides a clear picture of the process steps and the current process information flow. Then search the map for opportunities for improvement using the lean terms and create a future map. This will show insight into the process or supply chain you are creating. This future state map helps you see the roadmap for moving from the current state to the future state (Jacobs and Chase, 2017).
Mapping the value of the feed to the supply chain is a similar process. However, the current state of the card contains product flow, shipping links, bugs and delivery time, and steps and information flow. After creating the current supply chain state map, supply chain partners should review it for bottlenecks, waste, and process improvements. They must use what they discover to create a future supply chain map. Alternatively, you can create a condition map that gives you an idea of what the supply chain would look like if all components were fully integrated. This is really a rights card for the supply chain process.
Here’s how it works: The current map may indicate that flows within the facility are well defined, but inter-facility transfer methods create excess inventory and are not economical. The current state map can also show weaknesses in the flow of information that do not add value to the process. The map in the future should create a flow between installations, equalize torque within each installation, and eliminate waste. The method of smoothing the trailer could be to establish frequent cargo flights or milk jams. Information flow can be improved by creating a web history to enable real-time information flow across all supply chains as demand changes. The ideal maps of this supply chain can have a tightly packed value system with transport and short transport.
The waste reduction process begins with the question “What can we do to improve?” Some answers may include:
• Stop defective products from their source
• Merge processes or change the physical relationship of process components
• Remove excess material handling or costly treatment steps
• Remove or reduce meaningless processes
• Reduce lead time for items, orders, other people or information
In a production environment, this waste reduction benefits from shorter production times, lower labor costs, better product quality, space savings, reduced inventory and faster customer response. When waste is reduced or eliminated through the supply chain, overall time is improved, labor and personnel costs are reduced, product quality and delivery is improved, supplies are reduced and customer lead time is reduced. reduced. The net effect is that all supply chains are more efficient and responsive to customer needs.
Lean Component Supply Chain
Lean suppliers can respond to change. Their prices are generally lower due to the efficiency of gradient processes and their quality has improved as no further inspection is required at the next link. Lean suppliers deliver on time and their culture is constantly improving. To develop supplier deficits, organizations must include suppliers in their value. They should encourage suppliers to make a lean transformation and engage in leaner activities. This will help them solve problems and share savings. On the other hand, they can help their suppliers set lower and lower price targets and increase quality targets.
Some simple buying processes include electronic buying and car buying. E-business bidding deals, strategic sources, bids and reverse auctions with local applications. Automated acquisition uses software that removes the human element from many acquisition operations and gets into financial trouble. The key to lean shopping is visibility. Suppliers must be able to “manipulate” their customers ‘operations and customers must “see” their suppliers’ operations. Organizations must map the current value stream and create future value streams in the procurement process. They must create an information flow as they receive information and products.
Lean production systems produce what the customer wants, how much they want, when they want it, and with minimal resources. Lean effort often begins in production because they release resources for continuous improvement in other areas and create energy for the rest of the business. Applying production deficit terms is often the greatest opportunity to reduce costs and improve quality; however, many organizations have reaped huge benefits with scarce terms in other actions.
Advantages of Lean Systems
Speed and responsiveness to customers
Lean systems not only make the supply chain more efficient, but also faster. When culture takes over the entire supply chain, all links increase their speed. A culture of quick response and faster decisions will be hope and the norm. This does not mean that decisions are made without careful thought. It simply means that the “action bias” will be the new corporate culture let alone tolerated. Slow or unanswered answers will be the exception, not the rule.
In a more narrow ideology, inventory is considered wasteful. Many want to argue, but production can take place efficiently with little or no raw material processed or processed from finished products. Many companies today manufacture direct trailers and do not maintain any other inventory of finished goods. All quality control and control is performed within the process rather than the completion of production. In this actual order scenario, all products are shipped directly to the next link in the supply chain when the trailer is full and overproduction is not possible and cannot be tolerated. No space is specified to store the final product. The system was not designed to load them. Using flow and towing systems at the same time can significantly reduce WIP. This kanban or suggestion that more products will be passed on in the next process can perform this method. Although the ultimate goal is to eliminate WIP, minimal WIP is often the result. Bottleneck elimination is a goal of supply chain slanting, but the bottleneck will always exist to some extent. As a result, WIP must always be in front of the bottleneck or the bottleneck operation will be hungry and will stop. Supply of raw materials is another matter. While the nearest agencies have made the right time to support production, this approach requires the purest competence and coordination within the supply chain.
Traditional mass production attempts to minimize unit costs by increasing total production over the life of the product. High development costs are the result of this model. To recover from the tremendous development and initial capital costs sunk into the product before they are manufactured, predict mass production and run a long production cycle for each SKU. Consumer choice and variety are suffering in this scenario. Costs still need to be minimized, but not at the expense of today’s most sophisticated consumers.
Greater customer satisfaction
Lean helps minimize the time and cost of product development. This delivers the product to market faster, making it easier to incorporate current requirements into the product. Lean also promotes the use of less capital-efficient machines, appliances and utensils, which provides greater flexibility and lower initial recovery costs. As a result, product life may be shorter and product development is more often incorporated into newer versions of the product. Profitability is not hurting and brand loyalty is increasing as customers prefer to buy products and services from a sensible entrepreneur (Hugos, 2018).
Supply Chain as a Competitive Weapon
A strong supply chain allows member companies to coordinate with each other and continually coordinate their progress. This training enables even small businesses to participate in the results of loss-making efforts. Competitive advantage and leadership in the international market can only be achieved by applying deficient supply chain principles. It takes thinking, commitment, planning, collaboration and the way forward.
Ahead of supply chain slant
Lean is a collaborative process of survival and success. Stocks wishing to grow and continue to improve should be scarce. Deficient concepts require a stance toward continuous improvement with action bias. The term deficit applies to all aspects of the supply chain, including support divisions such as product development, quality, human resources, marketing, finance, purchasing, and distribution. The challenge is to get all of these areas out of their traditional silos and make them work together to reduce waste and create flow. Duplication and lack of proper and timely communication are frequent in this traditional organization. A slender supply chain is proactive and estimates the unexpected, finding all resources for efficiency. A drop in demand can be addressed without cancellation or significant productive action.
Tilting other areas is a greater challenge than in manufacturing. Managers and workers adopt changes that make their lives less complicated and more successful. In the hierarchy of support areas, it is more difficult for people to understand how slender they can benefit them. The answer is simple: What benefits the organization as a whole benefits the supply chain.
Because the Internet offers us unprecedented opportunities to share information and do business with the supply chain, companies must have a sense of the urgency of using smart ideas. But all members of the chain must be in the same field, and the slender idea is to bring everyone new levels of efficiency and effectiveness. Supply chain leaders should not be late – action is urgently needed now to implement supply chain deficit ideas.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Jacobs, F.R. and Chase, R.B., 2017. Operations and supply chain management: The core. McGraw-Hill/Irwin.
Rushton, A., Croucher, P., and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Boonjing, V., Chanvarasuth, P. and Lertwongsatien, C., 2015. An Impact of Supply Chain Management Components on Firm Performance. In Proceedings of the 6th International Conference on Engineering, Project and Production Management (pp. 555-565).