Deliver the highest quality product at the lowest possible price with Lean Supply Chain

A lean business aims to deliver the highest quality product at the lowest possible price, which means using few resources as effectively as possible to bring that product to market. Any part of the process that doesn’t actively and directly contribute to that goal is considered waste.

Many points in the supply chain benefit from the lean technique of poka-yoke. This is a mistake-proofing procedure that prevents human error by making it impossible for a task to be done incorrectly. Digitization of the supply chain aids poka-yoka by reducing errors, streamlining the process, and enabling a collaborative framework for resolving issues as they arise. The result is a higher quality product, fewer supply-chain disruptions, quicker resolutions, and improved customer delivery and satisfaction.

The lean principle of 5S also reduces errors by eliminating the wastes that can cause them. The 5S method stands for sort, set in order, shine, standardize, and sustain. Digitizing the supply chain can support a clean, safe, efficient, and uncluttered environment that reduces the odds of human error.

Lean eliminates activities that don’t add value to the customer, and it can help supply chains function more efficiently. Lean targets the greatest sources of waste:

Inventory excess: Building up a greater inventory than customers demand based on speculative forecasting. This results in high inventory costs.

Transportation: Moving materials around more than needed causes increased logistical costs and delivery time.

Poor distribution-facility layout: Causes additional work that adds no value to the product. Lean simplifies distribution to make the supply chain operate more efficiently.

Inefficient pricing: Minimizes profits and revenue while maintaining inventory levels that aren’t needed. It also moves products at rates that hamper the revenue stream.

Poor forecasting and planning across all constituents: Lean and Six Sigma can help coordinate the production plan with the integrated business plan to optimize optimal sales and operations.

Increased revenue: Organizations that use lean and Six Sigma to make their supply chains more efficient provide a consistent service level to their customers.

Reducing the eight potential wastes that can affect a supply chain is a central objective of the lean methodology. The wastes are defects, overproduction, waiting, underutilized talent, transportation, inventory, motion, and extra processing. Perhaps more important is how supply chain analysts determine what is truly wasteful and unnecessary to the process. To do this, lean businesses focus on one variable: whether a process adds value to the customer.