Lean Management Approach
In modern day world, organizations are facing a myriad of challenges. They are facing increasing and continually changing demands by customers, keen and knowledgeable competitors who seize every opportunity that comes their way, and a reduction of the resource base owing to increase spending. Most organizations, therefore, are seeking to increase customer satisfaction, reduce operational costs of doing business, and change their research strategy to improve their know-how on new trends in the market as a way of grasping a competitive edge among their competitors. Companies are engaging the lean supply chain management as a way of achieving their goals. As such, through the approach they can provide the right product, while at its right condition, in the right quantity, and at the right time and place.
Description of Lean Supply Chain Management
The lean supply chain management is a management approach that makes it possible for production and subsequent planning along the supply chain. As a result, it eliminates any drawbacks that would otherwise characterize the supply chain as in the case of the traditional type of supply chain. The approach seeks to plan and inculcate new operations that will ensure success. In so doing, the approach eliminates an organization's dependency on forecasting supplies and the complexity it entails. Instead, an organization will be required to plan and, as a result will achieve more than they would have achieved if they forecasted. Additionally, the approach seeks to bring simple techniques in supplies and management as well as consumption-driven manufacturing. Lean management eliminates instances where an organization requires pressuring suppliers to reduce prices, it eliminates the use of "batch and queue" method in managing inventory, and instances where an organization is forced to hold inventory in the semi-finished product status all of which cause missed opportunities for identifying wastes and adding value.
Potential Effects of LSCM
The Lean Supply Chain Management (LSCM) approach leads to several effects in the firm. To begin with, due to the planning process involved, a company will reduce the number of suppliers that they have for each commodity that they regularly purchase. The approach will bring about the concept of vetting and which will lead to one or a few suppliers. Additionally, a company will look into the finer details of the company that they intend to keep as their supplier. They (the company) will look for details about corporate culture, growth plans, and technology and check if they tally with its own. A supplier whose detail will be similar with that of the company will then be taken up and upheld as the supplier. The aim of this will be to maintain a cordial relationship that will be defined by similar principles. Further, a company will identify and keep supplier partners because of the future growth of the company.
Undoubtedly, after applying the lean supply management, the company will spare room for discussions where it will be able to understand quality, cost, and technical issues about the supplier's product hence be in a position to make informed decisions. The company will receive cost details early in advance and avoid duplication of efforts that in most cases occur. Additionally, it will put in place systems that will assist in quantifying the cost of poor quality and any other challenges that occur during supplies such as transport issues. Finally, the management approach will place the supplier at a position where they will actively work towards pleasing the company.
Risks of LSCM
Though the lean supply chain management approach will bring several benefits to a firm as stated above, it will also cause various risks. A company will be restricted regarding flexibility since dual sourcing of commodities will be minimized. As a result, a single supplier that a firm will settle on might end up manipulating it for their selfish gains. As a firm incorporates this approach, it will likely become overexposed because of the collaboration. It will be difficult for an organization to change suppliers since they will be locked in. In that way, the company might end up suffering. In a case of small businesses, they will end up diverting resources from their primary operation into the supply chain. In the long run, they will risk business failure. The approach comes with hidden costs that are the business enterprise is not stable; it might end up overspending.
Solutions to Problems in Supply Chain Management
In eliminating any problems that come with inventory management and profitability as well as a company's supply chain management, the key elements of a lean supply chain management approach should be applied. To begin with, a detrimental supply chain should be improved through the ‘Cyclic planning with Rhythm wheels' approach. The approach incorporates the act of cyclic planning which means a plan that leads to the other. It borrows from the layman cycling f a bicycle where one progressively advances from one point to another. Through such kind of planning, a company will effectively control its supply chain. Cyclic planning will allow an organization to plan for all its products while, at the same time, it will also plan for its capacity load. As such, it will avoid any instances of costly excess production.
In the same light, use of rhythm wheels means that an organization will continuously repeat its production sequence while utilizing its assets and any factored-in operation in the most cost effective way. Therefore, using the lesson borrowed from rhythm wheels an organization will arrange its different products in the production line and them produce only the required amount and at the lowest cost. It will be in a position to determine the production load of each production machine hence reducing chances of wasted supplies or surplus production. Further, it will enable timing of production such that products will only be produced when they are needed. Therefore, when cyclic planning is embraced with rhythm wheels, then the organization will reduce its inventory and production costs. As such, the company will maximize profits, effectively manage its inventory and man its supply chain.
As a way of addressing the problem, a company will also require to carry our end-to-end synchronization of the supply chain. The synchronization will ensure alignment of goods with the market and maintain a cost-effective production. The process will entail a careful alignment of different times in the different rhythm wheels. Such a move will ensure that instances of idle time or starvation will be eliminated. As such, a company will produce consistently depending on the plan developed and periods of a dry spell where the company will have nothing to offer to its customers will be eliminated. The company will hence be maximizing on the profit margins while at the same time putting its production at maximum production.
Consequently, end-to-end synchronization of the supply chain will require the company to align its production and inventory planning to the supply chain. In this case, the volume of products produces and the time in which they are produced will be dictated by the supply chain. The rhythm wheels will be set at a specific number of cycle times as dictated by the supply chain. Therefore, a company will be in a better position to maximize its profits and even overturn any negative profit-making trend they might have had. Additionally, it will effectively carry out inventory planning and management. Finally, any negative effects on the supply chain will be minimized.
Another way to address effects of a poor supply chain management approach will be to embrace variability management on both the capacity and inventory sides. When many organizations are faced with fluctuations in demand, they end up adjusting their production plans. While the capital costs will continue to rise, production costs will rise, the cost of maintaining excess capacity will also rise, and the company will incur overtime costs through the workforce. The solution to such a company will embrace the Lean Supply Chain Management Planning process as a way of managing the experienced variability.
Through the use of the lean supply chain management, the company will adjust the number of cycles in the production process hence regulating the amount of products released from the process. Additionally, the capacity of production will also be addressed as a way of countering any production peaks that may result. In volatile environments, the company will require checking its production plans alongside the inventory targets. As such, using this management approach will determine the amount produced through the regulation of the number of production cycles, determine production amounts as well as time in the most cost effective way. Therefore, through variability management, a company will enhance profits, solve any chain production problems and effectively carry out inventory planning.
The lean supply chain management approach is the method used to manage and guide production with a consideration of the supply chain. The approach increases openness in management where the potential supplier shares crucial details about the product and their operations leading to informed decision concerning the type of supplier, the cost of goods, and the quality of goods. However, it leads to open-book running of a business which may over-expose its operation and limit small firm’s continuity as they will divert funds into management of supply chain. The approach addresses problems in supply chain, profitability, and inventory by embracing cyclic planning through rhythm wheels, synchronization of supply chain, and variability management of both the inventory and capacity sides.