From the customer’s point-of-view, the supply chain is all the value-creating steps or elements required to fulfill their demand for a product or service.

Thus the supply chain is very explicitly a system level approach to viewing a single firm as part of an extended enterprise whose beginning point is the customer and whose end point is raw material suppliers. This approach provides companies with the opportunities to optimize their performance to the end customer by optimizing their own internal operations, and by examining and improving the performance of the whole supply chain. This includes the supply base that includes your company’s direct suppliers. For most companies this includes distribution channels and logistics providers.

Supply Chain Integration

Supply chain integration are practices employed by your organization that lead to operating with better overall cost effectiveness, higher quality, and quicker market response. You will achieve this through analysis and planning for supply chain selection and shaping of the relationships and business practices throughout the supply chain to achieve these operational results.

It provides companies with a well-orchestrated developmental path to address the primary stumbling block(s), with good metrics and business practices.

Secondly, Lean Manufacturing takes a look at the performance of your workforce preparing them for multi-skilled, team-based, cross-functional practices.

Third, Lean Manufacturing uses analytical tools to assure that your company understands its value flows, reducing non-value-added work, and eliminating waste, concentrating on important issues in the supply chain. It takes a look at your business processes, manufacturing processes, Technical processes, and information technology.

Fourth, lean manufacturing takes a look at implementing practices that provide ongoing, systematic program coordination, review, and course corrections leading you to operational results that support the overall success of the organization.

Lean Manufacturing Drivers

Supply chain management has become an important management focus because many crucial elements of any company’s success reside in the supply chain.

1. Cost – the average purchased material content for manufacturers is now 60%. For high technology firms the portion reaches 85% to 90%. This means that the largest elements of cost for your firm are in the supply chain.

2. Quality – building and delivering high quality products and services are substantially dependent on the quality level of the inputs from supply chain performance.

3. Market Responsiveness – reducing cycle times for both existing products and development of new products is highly dependent on supply chain performance.

4. Technology – except for a firm’s core, strategic technologies, access to materials and process technology is gained through the supply chain.

Other trends are strongly influencing the importance of supply chain management:

1. Outsourcing – firms continue to focus their resources on core business processes and technologies where they feel their central value to their customers reside. This means that there is ongoing effort to outsource many activities to the supply chain.

2. Information Technology – the continuing improvements in the cost and ease of computing and communications coupled with the rapid emergence of Internet technologies is creating new opportunities for companies to manage and work with their supply chains.

3. The Lean Enterprise – the maturing of this new practice, based largely on the Toyota Production System, is an additional driver because of its focus on waste avoidance, continuous improvement, and cycle reduction time. ie: five second changeovers, suppliers as full partners in the supply chain, etc.

4. New Product Development – this key process is increasing focusing attention on the role of the supply chain because of the portion of the outsourced cost and the increasing design input and control by the supply chain over materials and process technologies.

Sample Process: Kaizen Event

Consists of three (3) to five (5) days of focused team activity, and generally proceeds as follows:

Day 1 – Study Existing Conditions

Document Production History
Determine Future Requirements
Obtain Actual Production Data
Document Existing Layout
Process Flow Chart
Document Existing Work In Progress (WIP)
Calculate Time Required to Perform Each Process Task

Day 2 – Develop Kaizen Plan

The team will use the data generated on Day 1 to develop and test different production scenarios. Then they will formalize the Kaizen plan for their assigned areas.

Day 3 – Implement Kaizen Plan

Teams will work on the implementation of the Kaizen plans developed on Day 2.

Day 4- Make Corrections

After implementation on Day 3, the team will observe the operation and make adjustments/corrections as necessary. The team will evaluate and document the performance improvements.

Day 5- Report to Management

The team will present the condition before the Kaizen, the changes made and the results achieved after the Kaizen to the company management.

Please contact us about conducting a Lean Assessment or Kaizen Event at your organization.

In Japanese
Kai = Change Zen = Good