Top 6 Benefits of Lean in Supply Chain Management
Lean is a management and business philosophy that focuses on identifying and cutting waste and improving operational efficiency. First incorporated in the Toyota Production System, Lean gained popularity for eliminating waste in business processes and is now leveraged in different sectors and departments. The TPS philosophy revolves around eliminating Muda (wastes) and Mura (unevenness) to bring out the best results.
Today, Lean Kaizen practices are used in departments like sales, marketing, financing, HR, etc. Further, it is used in different industries like Construction, Education, Health, Banking, Insurance, Manufacturing, Supply Chain, etc. There have been various caste studies that have testified and solidified the success of Lean in the varied sectors and industries. There are many benefits of Lean, the two of which are waste reduction and cost savings. This blog will look at the benefits of Lean (continuous improvement) in Supply Chain Management.
Table of Contents
1. What is Lean Supply Chain Management?
2. Benefits of Lean Supply Chain Management
3. Cost Reduction
4. Improves Customer Satisfaction
5. Helps in Waste Reduction
6. Fast Lead Time
7. Increase Efficiency with Streamlined Process
8. Improve Communication & Collaboration
How can a Lean Consultant Help with Lean Supply Chain Management?
What is Lean Supply Chain Management?
The Lean Supply Chain Management (LSCM) is a methodology or a practice to manage the flow of goods or services from the source of supply to the final customer. The main focus of Lean Supply Chain Management is to remove wastes (inefficiencies and defects) in the supply chain process. Lean uses technology, data and team collaborations to highlight opportunities to remove waste and inefficiencies. There are four important elements of Lean Supply Chain Management: 1. Integration, 2. Operations, 3. Purchasing and Procurement, and 4. Distribution and Logistics.
There are certain steps involved in Lean Supply Chain Management which are as followed:
1. Creating a roadmap for Supply Chain overview.
2. Value Stream Mapping,
3. Change Management for unpredictable shifts in demand.
4. Analysing Data-based metrics
5. Defining what customer values.
Benefits of Lean Supply Chain Management
1. Cost Reduction
Lean Supply Chain Management is a cost effective exercise. Lean helps in eliminating all the mudas (waste) like overproduction, transportation, delays, inventory, motion etc. Once these 7 to 8 types of waste are eliminated from the supply chain processes, there is an automatic reduction in costs. Lean takes care of all the ‘leakages’ that might have resulted in excessive expenses. With improved business processes, businesses can trim down the waste and reduce their overall costs and improve their supply chain line.
2. Improves Customer Satisfaction
No customer likes to receive delayed orders. Lean Supply Chain Management improves customer satisfaction by speeding up the processes and putting the goods and services in customers' hands at the earliest possible time. Lean enables businesses to proactively address customer’s demand and quickly supply them with product, cutting down on delivery times. This will make customers' satisfaction rate go up and they are more likely to stick to your brand, exhibiting customer loyalty.
3. Helps in Waste Reduction
The biggest waste in the supply chain is waste of inventory and overproduction of goods. This waste requires storing (for a short period of time), before it can go for recycling or disposing. This process adds to the costs for the company. But through Lean Supply Chain Management any waste, defects, and inefficiencies which slows down the process or increase costs is identified quickly and eliminated. This leads to better handling of waste and reduction of waste in the supply chain processes.
4. Faster Lead Time
Lean Supply Chain Management helps in improving lead times. With improved visibility and quick communication allows businesses to have control over lead times. They allow you to have capacity to produce and supply goods as per the customer demand. Effective forecasting helps in removing the spikes in production demand that may increase the costs of supply chain production. Leveraging data and analytics help in making informed decisions and improved operational efficiency.
5. Increase Efficiency with Streamlined Process
Lean Supply Chain Management helps in streamlining processes. This enhances efficiencies in the supply chain. Through Lean, businesses are empowered to remove any overcomplicated steps or processes in the supply chain. This helps in cost reduction and improved processes.
6. Improve Communication & Collaboration
Lean Supply Chain Management helps companies to improve communication between cross-functional teams, suppliers, manufacturers, and customers.
How can a Lean Consultant Help with Lean Supply Chain Management?
A Lean consultant helps you understand the application and continued practices of Lean Supply Chain Management. This will enable your supply chain business to flourish and stand tall in a competitive environment. To learn more about Lean Supply Chain Management and understand its concepts and application, hire the services of a Lean consulting company.
