The trend of lean methods and practices has been evolving for the past few decades, and they help companies to improve their SC processes. The objective of many SC managers is to develop a system that has the capability to deal with various types of challenges. Today, we’ll discuss lean strategy in supply chain; its key elements; benefits, and advantages.
What is Lean Strategy in Supply Chain?
A lean strategy in supply chain is the process of conducting SC operations at the optimum level. It consists of supplying goods and services to the end consumers in the following ways;
- Most efficient manner
- Limiting the waste and cost
- Flexible enough to deal with unexpected delays
- Cutting down all the SC unnecessary costs
- Not spending product profitability in the warehouse or inventory
- Finishing unnecessary operational expenses like fuel consumption
In short, the focus of lean strategy in supply chain is removing all the non-value added time that would resultantly decrease the lead time at various stages of the SC process; ranging from sourcing raw material from the supplier, production, and then delivering it to the end consumers.
Elements of Lean Strategy in SCM
Let’s discuss the four main elements of lean strategy in supply chain management are as follows;
Procurement & Purchasing
Procurement and purchasing is the method of sourcing, finding, analyzing, and connecting with suppliers to provide you with raw materials for production. It plays a key role in the lean method of SC by making sure to utilize the right amount of resources at the right time for the right department in the right place. However, it develops a relationship with suppliers and recognizes the needed quality and quantity.
The purchasing team makes sure that the production unit has got all the necessary supplies, tools, equipment, and raw material to produce the final product. Procurement plays a key role in the supply chain, and it helps you in the following ways;
- Correcting purchasing pattern
- Making sure to deliver the unavailable material timely
- Avoid Delays in productions and manufacturing processes
- Gathering inventory or WIP material
The focus of lean practice is to achieve the following;
- Maintaining the balance between supply and demand,
- Coordination with suppliers
- Establishing long-term relationships with suppliers and vendors
- Finding the low-cost supplier
Developing and maintaining a strong SCM strategy is significant for the efficiency and productivity of your organization. Daily operations are the structure of the production processes where you perform most of the work. However, they are significant for the lean SCM evaluation processes and make sure that everything is performing smoothly. Business forecasting would help you to predict what, how much, and when you need it.
Logistics & Distribution
The closing of the SCM process is when you deliver the final product to the end consumer. The logistics and distribution network are the blood veins supplying goods and services by what and when needed it. However, when it comes to distributing products and services, then you need a well-developed logistic and distribution network. The network clarifies all the communication lines among all the stakeholders to distribute the product to the end consumers. Lean SCM benefits you in the following ways;
- Decreasing lead time
- Simple distribution network
- Removing non-value-added waste like travel and waiting time
- Limited working capital and small warehouses
Integration is the process of managing information and communication among various stakeholders in the SCM network. It offers you effective and timely interaction among various stakeholders in the SC network. However, the focus of SCM is to deliver all the messages across the SC network. Integrating SC requires you to employ technological tools, it would allow you to connect and deal with various SC stakeholders. Some of the main responsibilities of integration SCM are as follows;
- Assigning tasks
- Timely completing them across the production process
- Establishing collaboration and coordination among various departments
- Decreasing mistakes and errors to save time, resources, and money
- Demand planning with ERP tool
Benefits & Advantages of Lean Strategy in SCM
Some of the main benefits and advantages of lean strategy in supply chain management are as follows;
The lean approach allows you to remove all the irrelevant steps and makes the product easily accessible to the customers. It amplifies the customers’ satisfaction level and allows them to become repeat customers.
The growth of SC network makes you involve various third-party supplies and vendors, and it would complicate your SC processes. The monitoring and evaluation would result in the form of creating duplication, now-defunct steps, and inefficient.
Production & Manufacturing
Production process analysis would help you to recognize the main areas that need improvement. It results in the form of limited returned goods, waste, and production defects. However, it allows companies to gain a competitive edge by developing superior-quality products.
The lean approach helps you to recognize the weak areas that need improvement. While doing so, it helps you to recognize the material that needs recycling, because some materials are recyclable. Ultimately, it decreases waste.
The lean approach helps you to achieve efficiency in various production, operation, warehousing, and inventory management processes. When it decreases expenses and costs from various areas, then it amplifies profitability.
Conclusion: Lean Strategy in Supply Chain
After an in-depth study of lean strategy in supply chain; we have realized that the lean approach allows you to achieve efficiency and profitability. If you are learning about the lean strategic approach in SCM, then you should keep in mind the abovementioned elements and benefits.
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