Lean Supply Chain
A lean supply chain denotes the restructuring of the supply chain to realize maximum value with the deployment of minimum resources. It is essentially an approach to continuously improving operations to increase value while reducing waste. The concept of lean management became popular after its development and application by Toyota’s production, which set the stage for its global success after the world war. The basic principles driving the lean supply chain are value identification, production flow, minimum inventory, waste reduction, and customer satisfaction. An explication of the above principles will lay the groundwork for understanding the concept of a lean supply chain.
Principles of the Lean Supply Chain
To begin with, value identification is of monumental importance in the supply chain and the overall achievement of a lean system. Value denotes a service or product’s worth that is worth obtaining. A company needs to establish value through its products or services, which is a crucial first step in creating a lean supply chain. As regards the principle of production flow, it asserts that processes need to be in continuous operation and simultaneously as smooth as possible. Achieving flow may entail various activities, including restructuring processes, developing a multi-purpose team, inculcating diverse skills-sets in employees, and simplifying processes.
Minimum inventory is another equally important principle in achieving a lean supply chain. This principle emphasizes eliminating extra inventory intended for future use and partially finished goods. Instead, firms should shift to acquiring and producing necessary stocks at the right time and in exact quantities. Achieving a lean supply chain equally relies on an emphasis on customer satisfaction. It is crucial to align supply chain activities with the creation of value that ensures high customer satisfaction. Therefore, organizations need to focus only on activities that bring customer satisfaction instead of other unnecessary activities.
Finally, waste reduction is another critical practice of the lean supply chain. Attainment of waste reduction encompasses the combined application of all four steps mentioned above. These entail keeping necessary stocks, creating production flow, identifying value, and customer satisfaction. The joint application of the above helps attain a lean supply chain as the steps jointly gear towards supply chain efficiency and reduction of waste. Therefore, as the above explanations show, the concept of lean supply chain concerns itself with the reorganization of supply chain operations to attain efficiency or continuous improvement and the use of fewer resources.
Limitations of a Lean Supply Chain
Following the success that TPS (Toyota Production System) attained from applying the lean system, many firms jumped on the wave of the lean philosophy. However, the system could not guarantee success for other firms as it did for TPS. After all, the lean system also suffers several limitations, as revealed in the following explication.
In brief, the limitations of a lean supply chain include the emphasis on perfection, needing a significant amount of time, employee dissatisfaction, and being costly to implement.
>> Perfection of the lean system
One of the major highlights of the lean system that is itself a problem is an emphasis on having exact quantities of items. The lean system requires having essential inventory and finished products. It is one of the disadvantages of the approach since perfection is very challenging. A mismatch of quantities will arise at one point, and the company may be unable to restock or produce immediately. This would lead to missed opportunities. Regrettably, the lean system emphasizes maintaining necessary quantities of parts, which is a major limitation.
>> Requires a significant amount of time
The lean system is additionally flawed, as it needs investing a significant amount of time in implementation. Companies need to create a significant amount of time in advance and develop plans to integrate the lean system. Implementing the system will require working with teams for long periods, teaching and ensuring they understand and apply the system. Teams will also need to have regular sessions reviewing their efforts, new goals, and discussing possible issues that may arise.
>> Potential for employee disgruntlement
The lean approach creates an environment that could potentially cultivate worker frustration. The use of a lean system pushes employees to perform better, and this could cause a strain on them. This can potentially reduce employees’ enthusiasm and set the stage for the destabilization of the management. As a result, employees may post a decline in performance than previous times.
>> Expensive to implement
Shifting from a different production system to a lean manufacturing system may require huge additional capital. A lean system of production emphasizes continuous improvement and waste reduction. Resultantly, firms will need to perform changes in varying magnitudes. This can be a hindrance as the process might be capital intensive. Additionally, employees will require new training to adapt to the new production methods. Firms may also need to bring new managers on board to implement the system and acquire new machinery. In essence, shifting to the lean system may pose a hindrance due to high additional costs.