Lean supply chain management

A growing trend in the manufacturing world is the use of lean supply chain management. Manufacturers are finding that by streamlining the manufacturing process, they can bring about significant cost reduction and increased efficiency. Lean supply chain management requires businesses to examine every process in their supply chain and then identify areas that are using unnecessary resources. These resources are items that can be measured in dollars, time or raw materials. Successfully implementing lean supply chain management will improve the organization's competitiveness as well as improve their overall profitability.

You may be surprised to learn that lean supply chain management, is not exclusively for those companies who manufacture products, but by all businesses who want to streamline their processes, by eliminating waste and non-value added activities. Businesses have a number of areas in their supply chain where waste can be identified as time, costs, or inventory. In order to create a leaner supply chain, whether you are a manufacturing business or not, each area of the supply chain must be examined.

Lean supply chain management has gained the most popularity in the manufacturing area. This is due to the fact that this is where significant improvement can be achieved.Virtually every manufacturing process can be improved to reduce waste and resources, while maintaining operational performance. Businesses who have adopted lean supply chain practices will have examined each of their routings, bill of materials and equipment, to identify where improvements can be achieved.

One big area to focus lean supply chain management is in the procurement area. Most businesses have complex purchasing operations. Large businesses often have corporate purchasing groups as well as local purchasing, and this can lead to vendors being given multiple contracts, leading to variations in prices depending on location. Businesses that practice lean supply chain management will reduce their procurement function so that each vendor has one point of contact, one contract and offers, and most importantly one price for all locations. Many businesses of all types are looking to new technologies to assist them in improving procurement processes. This is especially important for manufacturers who must constantly be purchasing raw materials for production. Some of these changes include:internet based purchasing that allows purchasers to buy items, from vendor's catalogs containing company wide contract prices. In addition, changes in payment options to vendors can also streamline processes, helping to create a more lean supply chain management. Businesses that use a two-way match, which is defined as payment on receipt rather than payment on invoice, will reduce resources in their purchasing department as well as improve supplier relationship.

Another area for any business to streamline and implement lean supply chain management is in the warehouse. Warehouse processes should be closely examined to find areas of eliminating waste of resources, and non-value added steps. One very critical area that businesses should always be working on is the reduction of unnecessary inventory. The accumulation of too much inventory in turn requires resources to store and maintain it. By reducing unnecessary inventory, a business can minimize warehousing space and handling, and significantly reduce overall costs.

Transportation is another process that all businesses wanting to implement lean supply chain management, should look at. Businesses who want to implement lean processes will look to their transportation procedures to see where they can be streamlined. There are numerous times that businesses (especially manufacturers) find that their efforts to improve customer satisfaction, lead to poor shipping decisions. This can happen when orders are shipped without combining additional orders to minimize costs, or expensive shipping options are selected, because of a customer request. Most businesses often find that they are using a number of shippers unnecessarily, when they could be reducing their shipping options, and reduce overall costs.