Development of a Supply Chain in a Lean Manufacturing Environment
Anthony A. Noë, C.P.M., A.P.P., CIRM
Anthony A. Noë, C.P.M., A.P.P., CIRM, Corporate Supply Chain Manager, Carlisle Coatings & Waterproofing, Inc., Wylie, TX 75098, 972-429-4970, email@example.com
86th Annual International Conference Proceedings - 2001
Abstract. More and more companies, especially in the Manufacturing arena, are adopting aspects of the Lean Business style first illustrated in books about the Japanese Automotive system. These same companies then are moving into trying to overlay Supply Chain Management on top of this work method. While many aspects are complimentary, some present challenges. We will examine both during this presentation.
The Goals. First, Lean Manufacturing has as main goals:
- Focus on the Customers needs
- Build what is sold, not forecast
- Supply What is Consumed — Minimal Inventory — Kanban typical
- Simplified flow of materials and production
- Flexibility in Response and Production
Supply Chain Management also has some key goals:
- Ultimate Customer Needs Focus
- Minimize Total number of suppliers
- Maximize cost control and reduction programs
- Minimize Inventory — eliminate space and dollars commitment
The Opportunity. Today companies of all sizes are working to lower costs and improve margins. This applies to all types of organizations, public and private, foreign and domestic. Upper management of these companies are looking for stockholder benefit and investment, this has lead to more emphasis on improved margin and bottom line results. Many of these companies have recognized the cost control and reduction potential and importance of their purchasing, materials and related areas as major opportunities for improvement. This has lead these companies to look to the successes in many companies of both Lean practices and Supply Chain Management.
Lean is defined in Webster's as:
Lean (lên) adj. 1. with little flesh or fat; thin; spare. Syn. Quick, agile.
Lean Production Systems combine the best aspects of both craft and mass production techniques — the ability to design and produce a wide variety of products "customized" to specific orders and delivered in extremely short lead times.
The Machine That Changed the World
Lean Enterprise Systems use the concepts of Lean Production throughout the entire product delivery system, from supplier to end customer.
Quoted from University of Tennessee publication.
These all point to the goal of a responsive and flexible organization both from people skills but also from a manufacturing or service perspective. This organization must focus on the ultimate customers needs, wants and desires in order to direct they actions and directions with the suppliers of their materials. This requires 'systems' to collect and analyze the activities, sales, inventory, and all other actions of the company in order to communicate, with a rapid method, this data to their supplier so they can respond in kind.
If this sounds a great deal like Supply Chain Management, you are correct. The major differences we have seen while trying to over lay the two 'methods' on to our organization is that SCM focused more on the relationships with suppliers and Lean focused more on Production methods and material flow and levels.
By working with representatives of various disciplines of our company we have developed methods to make the two focuses work together to give us much lower inventory, high turns, and in many cases faster response time to the customers requirements, and all at a slightly higher final margin. This definitely requires give and take from all parties from our experience. But with upper management support and focus on the bottom line and customer service and growth the results are worth it.
- Womack, James P., James, Daniel T., Roos, Daniel, The Machine That Changed the World: The Story of Lean Production. MIT Press Paperback 1991
- Kuglin, Fred A., Customer Centered Supply Chain Management. New York: AMACOM 1998
- Bhote, Keri R., Strategic Supply Management. New York: AMACOM 1989
- Van Mieghem, Timothy, Implementing Supplier Partnerships. Englewood Cliffs, NJ: Prentice Hall 1995
- Long, Chip, Meyer, Dr. Gay, Sacred Cows Make the Best Barbecue. Seal Beach, CA, Vision+ Press 1998
- Supply Chain Yearbook 2000. Cahners 1999
Other Reference Sources:
- Lean Enterprise Forum. University of Tennessee Center for Executive Education 1999