Accelerating Supply Chain Velocity

A guide to understanding and pursuing an agile, nimble supply chain


1. Application of Process Kaizen Tools — "Lean" is about the reduction of waste found anywhere in the supply chain. Wastes can occur not only in inventory and processes, but also in time and motion, and even in digital waste. Understanding "waste" enables the pursuit of that which adds value. Supply chains can add value by removing redundancies, reducing lead times, optimizing the value stream, producing to customer demand and activating continuous improvement. The toolbox of Lean methods includes the"5S" system of improvement, single minute exchange of dies (SMED)/quick changeover, process flow analysis, total productive maintenance (TPM), and Six Sigma and statistical methods.

2. Process Standardization — Lean, high-velocity supply chains seek to identify opportunities for the application of process kaizens to ensure the continuous elimination of waste and the removal of all barriers to the smooth flow of goods and information. Process standardization should be applied to every repeatable process, including productive processes, product/service delivery and inventory management. Standardization enables companies to effectively apply kaizen methods to any process and track, measure and demonstrate the effects of the kaizen initiative. Standardization also enables identification of all inhibitors of flow, such as batch and queue processing, unnecessary transportation, and product storage.

3. Channel Partnership — The effective use of channel suppliers stands at the core of the lean, high-velocity supply chain. The role of suppliers is to fill company productivity gaps by providing non-core strategic and operational competencies that reduce manufacturing, distribution and service costs, improve flexibility, keep companies focused on core competencies, provide access to global networks and superior technology, improve quality and service, reduce capital investment and increase cash flow.

4. Demand Management — Twenty-first century supply chains have found that "push" systems are incapable of operating in an era of high-velocity response. Lean supply chains are responding to this challenge by designing "demand pull" systems that trigger supply commencing at the point of sale, and then pulling the requirement from upstream delivery nodes point-by-point all the way back to the producer. The goal is to provide advanced warning of demand and the channel's collective ability to respond effectively. Effective demand management increases velocity by reducing channel uncertainty, variability in fulfillment processes and supply lead time, and by linking channel partners together into networks capable of responding to the emerging marketplace demands.

5. Lean Implementation — Extending Lean to the entire supply chain requires a concise implementation plan. A carefully designed plan begins with value stream mapping and proceeds through core competency definition and plan composition. Detailed planning will ensure effective execution of supplier management, channel value stream mapping and the use of process kaizen improvement events. Finally, even after successes are scored, implementers should enable what will be a perpetual step — continuous Lean value chain improvement.

6. Strong Communication — The lean supply chain requires all channel constituents to work together as a "virtual enterprise" to ensure the highest value to the customer. Perhaps the most important driver of the lean supply chain is the ability of the channel's kaizen leaders to integrate into a single vision the different network partners' perceptions of what constitutes the value stream. Unification of purpose and Lean mechanics rests on two elements: the creation of an effective Lean supply chain management team and agreement on toolsets.

Today's best supply chains relentlessly pursue the above six Lean competencies. Effective execution enables companies to realize three essential success factors. To begin with, application of kaizen tools and process/industry standardization enable lean companies to effectively pursue waste reduction at all supply chain levels. Closely integrated supply chain partnerships and the development of technology tools providing real-time information keep all supply network nodes focused squarely on how to continuously build and sustain a high-velocity stream of value to the customer. And finally, well-designed lean supply chain implementation projects and the capability to broaden and enrich cross-channel communications concerning quality, change management, collaboration opportunities and joint metrics will enable supply chains to maintain a focus on continuous improvement as they drive toward network competitiveness and profitability.

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