Supply chain management (SCM) is a very broad term involving planning, implementing, and managing all aspects of business logistics from procurement manufacturing and resource management to collaboration and final product delivery. It’s one of those sectors where optimization is a continuous process because the circumstances seldom stay the same. That is exactly why the lean methodology suits SCM optimization so well because that’s the sector it was originally designed to optimize.
Lean as a General Principle
Although lean originated specifically in manufacturing and inventory management, its core principles have since been implemented across multiple fields. Therefore, it is more important to understand lean as a method that can be used to optimize any business process through the identification and elimination of unnecessary/wasteful steps. The planning and implementations are based on a few core principles that we will discuss next.
Define what is value exactly, in relation to the goal(s) of the concerned business process. Mostly, it’s a goal-oriented and parameter-bound description of what the intended customer wants.
Identifying the Value Stream
Go through the present set of steps in the process and identify all necessary micro processes that contribute towards attaining that predefined value. Eliminate everything else that does not add value and you will be left with only a pure map of the process’s value stream.
The identified and mapped value stream must be optimized adequately next. The goal is to create and maintain a continuous, uninterrupted workflow through gradual, incremental changes.
Just-in-time (JIT) refers to the practice of mitigating chances of waste by stocking/manufacturing/delivering exactly:
- what is needed,
- in the quantity that is needed, and
- at the time that it is needed.
Attention should be paid to assessing the process at the end of each cycle for possible improvements. If there is scope for further optimization, then it should be made incrementally and never drastically.
Note that there are several variant and derivative process optimization methods that have since branched out from the core principles of lean. Nevertheless, the principles themselves are deeply embedded in all of them.
Optimizing the SCM with Lean
By now, it should be clear how each of the principles can be used to optimize the supply chain as a whole, as well as in parts. According to one supply chain consulting St. Louis firm, Supply Velocity, the lean methodology can be used to optimize SCM in three broad steps:
- Analysis: Assessment of the current steps involved in the process that’s already in use.
- Planning: Planning a multifaceted strategy to optimize the present steps for greater efficiency at a lesser cost.
- Implementation: Implementation of the plan in gradual steps, making changes as and when necessary, in real-time.
This is a single cycle of course, which means that after the plan has been modified and implemented for one or two full cycles, it will begin anew. The present implementation will be evaluated and analyzed to find possible areas of further improvement, and a new optimization strategy will be devised before gradually implementing it. It’s a continuous cycle of sustainable optimization of all SCM processes.