How to apply lean principals to your supply chain

How to Apply Lean Principles to Your Supply Chain

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Lean principles focus on ideals such as reducing waste, maximizing value to customers, and seeking continuous improvement. Here’s how you can explore lean supply chain management and improve the chances of maximum returns on investment.

Use Forecasting to Determine Warehousing Demands

Reducing waste by focusing on lean principles can mean developing an increased understanding of customer and client needs to minimize the chances of warehouse space getting occupied by a surplus of goods.

Historical data, seasonal trends, and other indicators can help company leaders make the most of available warehousing space by filling it with the products most likely to sell quickly.

The same goes for reserving sections of warehouses for spare parts used for machines at the facility. Internet of things (IoT) sensors can give alerts before components fail. Decision-makers can look for patterns in the associated data, using it to calculate the need for certain spare parts on hand at any given time.

The 5S aspect of lean centers on keeping areas clean, uncluttered, and safe. Once you determine the space needed for unsold goods or essential supplies, consider using warehouse floor markings to keep sections well-organized and segmented by product type, frequency of access, or other intuitive designators.

Demand forecasting also becomes useful when facilities experience fluctuations throughout the year. Unutilized talent is one type of waste that lean principles seek to manage. Accurate forecasting can minimize situations of having too many or too few employees working to keep the supply chain running smoothly.

Create a Value Stream Map

A value stream map indicates all the processes required to get a product to the customer. It should ideally include supplementary information, such as the resources needed to complete a step or the associated waiting time to finish it.

You should also evaluate several factors to gauge whether a supply chain step genuinely adds value. They include:

  • Whether it creates an advantage a customer deems financially worthwhile
  • If the activity positively transforms the offered product or service
  • The likelihood of a company to provide the perk without quality issues

 

Consider the value stream map related to offering an express delivery service that promises two-day service for $6. Perhaps your company has internal data indicating that three-quarters of your existing customers would pay for the faster shipping on most orders. However, more than half of that segment said they would not pay more than $7 for it.

In that case, express shipping creates additional value that’s not beyond consumers’ budgets. The degree to which the second bullet point applies could depend on what a company sells. If it’s pet food, baby formula, or dietary supplements, customers may be more likely to see the faster shipping as a value-driven option. They can plan their ordering times, and rest assured they’ll get the products fast enough so as not to run out.

Then, the third point relies on your company consistently providing express shipping to every customer who pays for it. Suppose early data indicates that 20% of consumers in that group report that their goods arrive three days behind schedule. That’s problematic because succeeding with a lean supply chain requires customers to perceive companies and offerings as valuable.

Strive for End-to-End Visibility

Achieving full visibility of your supply chain can address numerous lean principles. It also allows anticipating and rectifying possible future breakdowns. Perhaps past issues occurred once your goods arrived in a hurricane-prone region. You can’t control the weather, but creating a contingency plan might mean shipping the products from a warehouse location that experiences severe conditions less frequently.

Getting accurate insights about what happens at every stage of the supply chain could also help you address material waste. Perhaps an investigation shows that certain boxes you started using recently are too flimsy to protect the fragile goods inside. That problem could lead to a surge in customer complaints. However, it could also convince you to change to a different box type rather than making a major investment in inadequate shipping materials.

Another advantage of improved visibility is that it can highlight process bottlenecks. Data may indicate that a certain warehouse team regularly falls short of productivity metrics due to the time required to restock their workstations with supplies. If so, autonomous mobile robots (AMR) could address that issue. If workers summon them before running out of essentials, the ‘bots can bring more and let the worker stay in place rather than retrieving the goods themselves.

Target Error-Prone Activities With Artificial Intelligence

Even the most conscientious employees sometimes make mistakes. Those blunders could result in defective goods, misdirected parcels, or late arrivals, all of which contribute to excessive waste along the supply chain.

However, artificial intelligence (AI) can slash error rates and improve overall productivity. For example, one company uses AI and computer-vision cameras in a color-coded system that tells a packer whether they moved a box to the correct pallet.

Lowering defect rates is another way to make gains with a lean supply chain. According to one statistic, faulty products cost manufacturers approximately $861 billion each year. Besides the clear financial ramifications, poor quality can tarnish a brand’s reputation.

Google recently announced a cloud-based AI tool that improves upon traditional visual inspections. One customer reported training the models with only 10-20 images of defects that the algorithms must spot. Google also says its product can locate and flag multiple flaws in one picture, then automatically trigger assembly line follow-up tasks without human input.

Treat the Lean Methodology as an Ongoing Process

Adhering to lean principles can make a supply chain more resilient, productive, and profitable. However, shifting to lean supply chain management should not happen quickly or without sufficient forethought. A smart way forward is to choose metrics and set benchmarks for meeting certain lean-related milestones. You’ll then engage in an incremental but measurable process that should pay off over time.


Emily Newton is the Editor-in-Chief of Revolutionized Magazine. She has over three years experience writing industrial topics for the manufacturing, energy, and supply chain industries.

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