Strategies To Run a Lean Supply Chain

Strategies To Run a Lean
Supply Chain
How principles of lean manufacturing
transfer benefits to Operations
White Paper sponsored by

Aligning Business and IT to Improve Performance
Ventana Research Headquarters Ventana Research Europe 1900 South Norfolk Street, Suite 280 2nd floor, Berkeley Square House San Mateo, CA 94403 Berkeley Square, W1J 6BD London info@ventanaresearch.com europe@ventanaresearch.com (650) 931-0880 44 (0) 20 7887 6012
© Copyright Ventana Research 2007 Do Not Redistribute Without Permission Ventana Research - Strategies to Run a Lean Supply Chain
Table of Contents
Responding to Change..............................................................................3
The Concept of "Lean"..............................................................................3
Principles of a Lean Supply Chain.............................................................4
Necessary Attributes................................................................................5 Demand Management ................................................................... 5 Process Standardization ................................................................ 5 Product Standardization ................................................................ 5 Industry Standardization ............................................................... 6 Collaboration ............................................................................... 6 Cultural Change ........................................................................... 6 Creating a Lean Supply Chain...................................................................6
About Ventana Research ..........................................................................7

© Ventana Research 2007 Page 2 Ventana Research - Strategies to Run a Lean Supply Chain
Responding to Change
In the last several years, the manufacturing sector has moved from vertically organized structures to horizontal organizations; that is, a single company no longer controls its product from, let's say, the mine to the store shelf. Instead, today's companies control only pieces of the supply chain, and the companies and divisions controlling those various components may be located just about anywhere in the world. This model enables companies to concentrate on what they do best, but as a result the supply chain has become longer and more complex. Today's supply chain includes the entire flow of product, starting with raw materials and ending at the retail outlet; it is the largest business process a company has to manage. In addition to its length, the chain has become enmeshed with production processes to the point where the line dividing manufacturing from supply chain logistics has blurred. Both of those consequences have caused companies to try to make their supply chains more efficient. Fortunately, the blurring of the line between manufacturing and supply chain logistics brings with it the opportunity to move the management concepts that produce efficient manufacturing to supply chain management. One efficient manufacturing concept stands out as most successful: the concept of "lean."
The Concept of "Lean"
But what exactly is lean? And how can it be applied to supply chain management? Most people in manufacturing are familiar with the idea. Its foundations are in the Toyota Production System (TPS), created by Toyota founder Sakichi Toyoda, his son and an engineer named Taiichi Ohno, several decades ago. Its success in turning Toyota into an industrial and automotive giant is unquestioned, and many manufacturing companies worldwide have imitated TPS. Lean production techniques have pared the cost of manufactured goods and speeded up their delivery wherever they have been used. In its simplest form, lean manufacturing means producing goods with less; it applies fewer resources without affecting the quantity or quality of the goods produced. Toyota's purpose in developing the system was the elimination of waste, and TPS is focused on seven sources of it: over-production caused by emphasis on supply rather than demand; wasted motion due to poor processes; waiting time generated by tuning the production system to the fastest rather than the slowest process; conveyance waste caus... [download for more]