Taking a Lean-thinking approach can improve your supply chain performance.
As the supply chain crisis continues with no end in sight, manufacturers are asking themselves,
“How can we get through this and continue to overcome challenges?”
Taking a Lean-thinking approach can help you work through these issues to stabilize and improve your supply-chain performance. Lean thinking is a transformational approach to making business decisions that help reduce waste and improve results.
Here are 6 Lean-thinking actions to consider taking to improve your supply chain:
- Level-load demand.
- Communicate actual demand.
- Be predictable.
- Evaluate technical requirements.
- Reduce consumption.
- Lend expertise.
Level-load demand to improve supply chain performance
To avoid whiplashing your supply chain, smooth orders to reflect your actual weekly, or even daily, needs. Steady and stable requirements enable your suppliers to plan and build consistency within operations and with their next-tier supply chain partners.
Make sure you’re accurately tracking seasonality and other predictors so you can accurately smooth orders.
Practice a key tenet of lean thinking – flow always beats batching for reducing lead time and creating predictability.
Communicate actual demand and protect your reputation
Many buyers have overwhelmed their supply chains by over ordering with the hope of getting additional capacity allocated. This strategy often backfires when orders are eventually reduced or cancelled, damaging the purchaser’s credibility.
Instead of crying wolf, be transparent with your actual needs just as you expect your customers to be with you. It will work better for everyone involved in the long run.
Be as predictable as possible
Establish long-term agreements to clarify your intent for ongoing partnerships. Declaring loyalty and mutual commitment goes a long way toward aligning priorities. Several of our clients have experienced the difference in relationships, and resulting responsiveness, as they shifted buying patterns from episodic “spot buys” to long-term agreements.
Evaluate technical requirements
Evaluate how you might substitute a similar or alternate raw material. For example, could your product’s Bill of Materials or formulation be adjusted to use slightly less of the scarce component and compensated for via increases in alternate components. Potential cost increases from alternate materials might be insignificant when compared to the gains from increasing your throughput and sales to your customers.
Evaluate if using alternate materials would improve your supply chain process.
Reduce consumption
Explore how you can use less of a purchased component and still produce to your output standards. Better yet, reduce defects and scrap in your production process. Every percent of loss avoided in your process directly correlates to a reduction in inputs needed from your supplier partners.
To do this, relentlessly evaluate your production process with the goal of eliminating waste and loss.
Lend expertise
If you have it, deploy your lean expertise to assist suppliers with breaking capacity bottlenecks and increasing their throughput. Consider how your internal problem-solving capabilities might be shared with suppliers to eliminate quality and yield losses. Team-up to address key production issues that are impacting both organizations.
If you don’t have internal Lean expertise, consider finding a Lean transformation partner who can help you succeed.
Overall, begin with a collaborative approach by asking your supplier partners “what can we do to help you help us more effectively?” Partnership, rather than transactional, activities will drive the win-win outcomes you desire. After all, your joint success is linked and mutually dependent.
To learn more about how we can help you improve supply chain performance, contact me at Jlittle5@us.ibm.com.
