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In today's global manufacturing environment where customers are requiring manufacturers to do more and more with less and less, Lean manufacturing is emerging as a mantra; something that has implications for the entire product value stream and moves well beyond the Just-In-Time (JIT) method of parts stocking. In theory, Lean manufacturing is an overarching philosophy of eliminating waste at every juncture where it occurs across the entire value stream. In practice, Lean manufacturing principles are optimized through the supply chain.
Lean is a proactive approach to manufacturing that focuses on eliminating waste and providing value to the customer by identifying and producing products the customer wants. Lean processes enable customer demand to pull production, rather than the manufacturer dictating to the customer the products the customer needs, or allowing the manufacturer to push products to the customer. A value stream pulled by customer demand is proactive and based on current market conditions. It is much more responsive to customer needs than a pull system based on forecast.
Supporting the Value Stream Through the Supply Chain
Each product that is manufactured, from cars to kitchen tables, has its own product-specific value stream. It begins with identifying what is of value to the customer, setting a target price for the finished item, and flows backward from that point taking into account all the elements that will realize value for the customer throughout the manufacturing process. The value stream includes the sets of activities required to ultimately place the product in the hands of the consumer from concept to design, raw materials to production, and launch to delivery and includes the information flow for each stage. The value stream needs to be defined for each specific manufactured product, whether mass-produced or make-to-order, prior to initiating production. As the value stream is defined, the supply chain is formed in such a way as to optimize the goals of the value stream. It is important for manufacturers to focus on the technology utilized to manage the supply chain to ensure complete support of the product value stream.
The supply chain, which is comprised of the sequence of processes involved in the production and distribution of a particular commodity, supports the value stream by optimizing the efficiency of its elements. ERP systems should be selected with an eye to the entire value stream, not just the supply chain, and be capable of supporting the activities that take the product from concept to design, through production and ultimately into the hands of the consumer. By employing an ERP system that has the capability to communicate both within the four walls of the factory as well as externally to the customer's entire supply base, the manufacturer can eliminate waste from the supply chain and also from the entire value stream. ERP systems should Important elements of the Lean enterprise include: be selected with an
- Planned procurement processes to eliminate unnecessary stock purchases eye to the entire
- Just-In-Time stock delivery as close to the point-of-use and time-of-use as possible
- Planning and scheduling approaches that minimize throughput times and inventory value stream not by the reduction of waiting time
- Optimized process scheduling to minimize buffer stock
- Faster tool changes and more flexible assembly lines for better matched batch sizes
- Configure-to-order or late configuration to minimize finished goods holding chain... just the supply that can flow continuously
- Elimination of business processes that add no value to the consumer
- Automated reporting and triggering to monitor the business in real time.
A common thread among these items is practices that save time and expense, and improve processes; all elements that eliminate waste across the value stream. To further define waste, it is simply empty time spent waiting, redundant work, unnecessary tasks and inefficient processes. To eliminate it, however, requires a comprehensive approach to supply chain management in which the capabilities of ERP systems, including MRP, are maximized to create efficiencies.
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