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Assignment no 3


Topic: Describe various components of Lean Supply Chain

What are the benefits for an organization of implementation of
Lean SCM & what are the impediments in implementing Lean
How Value Stream mapping helps implementation of Lean?
Explain with suitable example

PRN NO: 15020448066

Lean Supply Chain Management


A systematic approach to indentifying and eliminating

waste (non-value added activities) through continuous
improvement by following the product at the pull of the
customer in pursuit of perfection

The Lean Supply Chain is a system of interconnected and

interdependent partners that operate in unison to accomplish
supply chain objectives. There should be metrics involved to
monitor these objectives to ensure success across the supply
chain. These metrics should be reviewed frequently to ensure

supply chain success. These objectives are accomplished as


Eliminate All Waste in the Supply Chain So That

Only Value Remains
Creating a smooth flow of products downstream in a lean supply
chain requires all departments and functions in the organization
to work in collaboration. In the supply chain, the seven wastes
translate to:
System complexityadditional, unnecessary, steps
and confusing processes
Lead timeexcessive wait times
Transportunnecessary movement of product
Spaceholding places for unnecessary inventory
Inventoryinactive raw, work-in-process, or finished
Human effortactivity that does not add value
Packagingcontainers that transport air or allow
Energy-(Sometimes called the eighth waste):
eliminate wasteful energy in the supply chain:
minimize electricity, gas, utilities, etc.

Consider Advancements in Technology to Improve

the Supply Chain
The following are a great list of technology investments that
should be at the top of the list in the quest for the lean supply
Workforce Management throughout the Supply
Omni-channel fulfillment, RFID,

Supply Chain Management (SCM)

systems, Electronic Data Interface (EDI),
Trading Partners Interface (TPI-Retail Value Chain
Customer Order Management,
Customer Relationship Management (CRM)/Cloud
Transportations Yard Management Systems (YMS)
to manage and track freight in the 3PLs yard
outside the warehouse dock doors,
GPS for tracking freight,
A Transportation Management System (TMS),
And any other technology that streamlines the supply chain and
improves communication and value to the customer.
To drive further value, look for technology providers in the
logistics and supply chain space who can integrate these
systems together.

Make Customer Usage Visible To All Members of

The Supply Chain
Flow in the lean supply chain begins with customer usage.
Visibility to customer usage for all supply chain partners is critical.
This sets the supply chain pace.

Reduce Lead Time

Reducing inbound and outbound transportation
logistics gets us closer to customer demand which results in
reduced reliance on forecasting, increased flexibility, and reduced
waste of overproduction. When you create youre Sales,
Inventory, Operations and Production Plan (SIOP) monthly,

or more frequently, invite your top Suppliers and Customers

to the SIOP meeting. Work in Collaboration to reduce lead times
and brainstorm how you can create a Lean Supply Chain that
brings value beyond your customers expectations.

Create a Level Flow/Level Load

Leveling the flow of material and information results in a lean
supply chain with much less waste at all critical points in the

Use Pull Systems, Like Kanban

Kanban Pull systems reduce wasteful complexity in planning
and overproduction that can occur with computer-based software
programs such as Enterprise Resource Planning (ERP) which
creates a Push system with too much wasteful inventory going
into the warehouse. Pull systems permit visual control of material
flow in the supply chain. You can also use Ship-to-Use (STU)
systems. Quality Assurance goes to your suppliers qualifies them
for their quality systems and enables them to ship to a point of
use on the production floor to avoid sitting in a warehouse as
wasteful inventory.

Increase Velocity, Throughput and Reduce


Fulfilling customer demand through delivery of smaller shipments,

more frequently increases velocity and throughput to your
customers This, in turn, helps to reduce inventories and lead
times and allows you to more easily adjust delivery to meet actual
customer need consumption.

Collaborate and Use Process Discipline

When all members of the lean supply chain can see if they are
operating in concert with customer need consumption, they can
more easily collaborate to identify problems, determine root
causes, and develop appropriate solutions to solve any root cause
problems. Leans Value Stream Mapping (VSM) helps break down
processes and gives you the ability to rebuild your process more
effectively. Utilize Six Sigmas DMAIC: Define Measure,
Analyze, Improve and Control to solve any problems or
roadblocks. Leans PDCA can also be used: Plan, Do, Check
and Act. Any and all members of the lean supply chain should
use these tools to solve problems and reduce costs to increase
value to the customer.

Focus on Total Cost of Fulfillment

Make decisions that will meet customer expectations at the
lowest possible total cost, no matter where they occur along the
supply chain. This means eliminating decisions that benefit only
one part of the stream at the expense of others. This can be
achieved when all partners of the lean supply chain share in
operational and financial benefits when waste is eliminated.

A lean supply chain is a great enabler for any organization

that strives to become more lean and efficient. Organizations
within a lean supply chain are able to leverage their own lean
journey more easily, delivering better customer value by
responding more efficiently, quickly, and predictably to
customer needs. That, in turn, facilitates the operation of the
lean supply chain, creating a virtuous cycle that ultimately
translates to superior financial performance for these

Advantages of lean Supply Chain

In the long term business, lean supply management can serve
and play role as a good strategy. By following lean approach, firms
can eliminate the unnecessary activities along the supply chain
and increase value to the deliverables, since lean supply concept
is focusing on optimizing the performance of supply chain process
and provide more value to the customers.
Lean supply management can integrate with both the internal and
external aspects along with the supply process. The internal
factor in supply management is focusing on the relationship
linkage, while the external aspect is considering the operations
amongst the suppliers or contractors.

Generally, there are five aspects in both internal and external

aspects, which many firms cannot fully integrate by using the
traditional supply management: product flow, information
flow, customer needs, upstream and downstream linkage,
and the cash flow. By eliminating wastes in the supply process,
firms can lower their operational cost, which results in more

efficient value-added in goods and services. Basically, most

production flow is driven with the "push system", which
tends to keep inventory in a high level in order to response to the
In lean supply management approach, it suggests companies to
use the "pull system" that helps companies map and redesign the process to response to the true drivers. Not only
the product flow becomes more liquidity, the actual demand from
the end consumers can drive the supply chain process via the
effective information flow, due to the supply process becomes
Since the lean supply management aims to minimize the number
of suppliers as low as possible; to maintain only the best
suppliers, the relationship between firms and their suppliers then
can possibly be improved effectively. Fundamentally, when the
whole supply process becomes more efficiency and effective, the
cash flow in the process then results in positive side too.

Disadvantages of Lean Supply Chain

When companies become leanness with fewer suppliers,
companies might face the problem of erupted chain, if their
suppliers meet with the severe risks. Furthermore, lean supply
management is not suitable for unpredictable market. Due to lean
supply management is focusing on optimizing the process to do
less but gain more, firms might not be able to catch the rapidly
changes on demand. That makes lean supply management do
more positive effect on the commodities rather than fashion
Moreover, firms, who use lean supply management with improper
balancing, will not success on acquiring new customers. By using
the lean supply management concept, most firm only focus on

the voice of customers (VOC), which helps firms maintain their

However, VOC does not have more powerful on expanding the
new customers. In contrast, the voice of the market (VOM) can
provide the information on market dynamic, which precisely one
of the competitive drivers that helps companies stays competitive
in market share aspect

Components of Lean Supply Chain

Lean Suppliers
Lean suppliers are able to respond to changes. Their prices are
generally lower due to the efficiencies of lean processes, and their
quality has improved to the point that incoming inspection at the
next link is not needed. Lean suppliers deliver on time and their
culture is one of continuous improvement.
To develop lean suppliers, organizations should include suppliers
in their value stream. They should encourage suppliers to make
the lean transformation and involve them in lean activities. This
will help them fix problems and share savings. In turn, they can
help their suppliers and set continually declining price targets and
increasing quality goals.
Lean Procurement
Some lean procurement processes are e-procurement and
automated procurement. E-procurement conducts transactions,
strategic sourcing, bidding, and reverses auctions using Webbased applications. Automated procurement uses software that
removes the human element from multiple procurement functions
and integrates with financials.
The key to lean procurement is visibility. Suppliers must be able to
see into their customers operations and customers must be
able to see into their suppliers operations. Organizations
should map the current value stream, and together create a
future value stream in the procurement process. They should
create a flow of information while establishing a pull of
information and products.

Lean Manufacturing
Lean manufacturing systems produce what the customer wants,
in the quantity the customer wants, when the customer wants it,
and with minimum resources. Lean efforts typically start in
manufacturing because they free up resources for continuous
improvement in other areas, and create a pull on the rest of the
organization. Applying lean concepts to manufacturing typically
presents the greatest opportunity for cost reduction and quality
improvement; however, many organizations have received huge
benefits from lean concepts in other functions.
Lean Warehousing
Lean warehousing means eliminating non-value added steps and
waste in product storage processes. Typical warehousing functions

Warehousing waste can be found throughout the storage
process including:
Defective products which create returns
Overproduction or over shipment of products
Excess inventories which require additional space and
reduce warehousing efficiency
Excess motion and handling

Inefficiencies and unnecessary processing steps

Transportation steps and distances
Waiting for parts, materials and information
Information processes

Each step in the warehousing process should be examined

critically to see where unnecessary, repetitive, and non-valueadded activities might be so that they may be eliminated.
Lean Transportation
Lean concepts in transportation include:
Core carrier programs
Improved transportation administrative processes and
automated functions
Optimized mode selection and pooling orders
Combined multi-stop truckloads
Cross docking
Right sizing equipment
Import/export transportation processes
Inbound transportation and backhauls
The keys to accomplishing the concepts above include mapping
the value stream, creating flow, reducing waste in processes,
eliminating non-value-added activities and using pull processes.
Lean Customers
Lean customers understand their business needs and therefore
can specify meaningful requirements. They value speed and
flexibility and expect high levels of delivery performance and
quality. Lean customers are interested in establishing effective
partnershipsthey are always seeking methods of continuous
improvement in the total supply chain to reduce costs. Lean
customers expect value from the products they purchase and
provide value to the consumers who they interact with.

Benefits of Lean Systems

Speed and Responsiveness to Customers
Lean systems allow a supply chain to not only to be more
efficient, but also faster. As the culture of lean takes over the
entire supply chain, all links increase their velocity. A culture of
rapid response and faster decisions becomes the expectation and
the norm. This does not mean that decisions are made without
careful thought. It simply means that a bias for action becomes
the new corporate culture and anything less will not be tolerated.
Slow response or no response becomes the exception, rather than
the rule.
Reduced Inventories
In the lean paradigm, inventory is considered waste. Many would
argue this point, but manufacturing can take place efficiently with
little or no raw material, work in process (WIP), or finished goods
Many companies today produce directly into trailers and maintain
no other finished goods inventory. All quality inspections and
checks are performed within the process, rather than after
production is complete. In this true make-to-order scenario, all
goods are shipped directly to the next link in the supply chain
when the trailer is full, and overproduction is not possible and
cannot be tolerated. No space is designated to store finished
goods. The system is not designed to carry them.

Applying one-piece flow and pull systems can reduce WIP

dramatically. A Kanban or visual signal for more goods to be
moved forward to the next process can accomplish this
procedure. Although the ultimate goal is to eliminate WIP, minimal
WIP is normally the result. The elimination of bottlenecks is one
goal of a lean supply chain, but a bottleneck will always exist to
some degree. As a result, WIP must always exist in front of a
bottleneck or the bottleneck operation will be starved and will

Raw material inventory is a different matter. Although the leanest

organizations have arranged just in time deliveries to support
manufacturing, this approach requires the absolute highest
degree of competency and coordination within the supply chain.
Reduced Costs
Traditional mass production tries to minimize unit costs by
increasing total production over the life cycle of the product. High
development costs are the result of this model. To recover the
enormous development and initial capital costs sunk into the
product before it was produced, mass producers forecast and run
long production cycles for each SKU. Consumer preferences and
variety suffer in this scenario. Costs still need to be minimized,
but not at the expense of what more sophisticated consumers
now demand.
Improved Customer Satisfaction
Lean promotes minimizing new product development time and
expense. This delivers the product to market faster, making it
easier to incorporate current requirements into the product. Lean
also promotes the use of less capital-intensive machines, tools,
and fixtures, which results in more flexibility and less initial cost
to recover. As a result, product life cycles may be shorter and

product developments incorporated in newer versions of the

product more frequently. Profitability does not suffer and brand
loyalty is increased, as customers prefer to buy products and
services from a perceived innovator.
Supply Chain as a Competitive Weapon
A strong supply chain enables the member companies to align
themselves with each other and to coordinate their continuous
improvement efforts. This synthesis enables even small firms to
participate in the results of lean efforts. Competitive advantage
and leadership in the global marketplace can only be gained by
applying lean principles to the supply chain. Thought,
commitment, planning, collaboration, and a path forward are

Impediments in implementing Lean SCM

Misunderstanding of Lean:
Some companies have looked at Lean as merely a cost reduction
hatchet, not a method for serving customers and removing waste.
This can lead to a Lean facade that on the surface uses some
of the tools of Lean, but does not really embrace its core
philosophies. It can also lead to cost shifting tactics that
simply move inventory or other operating costs to trading
partners, which can reduce internal costs in the short term but do
nothing for total supply chain costs in the longer term.
Lack of Broad Organizational Involvement:
Lean initiatives are sometimes made the province of a small
group of Lean specialists, with little support from top
management, and little real understanding from shop floor
personnel and other managers even as they are trained and

encouraged by this small group. Lean develops no real roots in

the corporate culture.
Conflicts with Other Initiatives:
In some companies, other improvement methodologies, such as
Six Sigma, Total Quality Management, etc., can create internal
conflicts with Lean initiatives, and even lead to competing
camps that differ over which methodology should be used
Conflicts with ERP Implementations:
While some ERP providers provide very strong support for Lean
manufacturing techniques, many companies have also found it
difficult to fine tune Lean programs with the simultaneous
implementation of a major ERP system. There is just too much to
do, and corporate IT managers implementing ERP may not well
understand Lean concepts. Lean and Lean -focused ERP
implementations can do very well together today, but it takes
solid planning.

Demand Volatility:
Many companies have also found their Lean strategies thwarted
by the increasing volatile demand environment, and increasingly
complex mix in product portfolio. Supply chain complexity has
many costs, and one of them is making Lean techniques more
difficult to adopt Cleanly.
Disparate Manufacturing Environments:
Lean has been challenged to work well in some complex
manufacturing environments. Ditto with how to translate Lean
principles into process or hybrid manufacturing industries. Most
industries are also struggling with rapidly shrinking product

lifecycles and the need for many new product introductions. The
need to get fast cycle products to market can often trump the
perceived need to operate on Lean principles.
Mediocre Consultants:
A huge consulting industry has developed around Lean, and
spawned a virtual army of boutique Lean consulting firms. Almost
every company uses consultants of some kind at least early in its
Lean journey, and many for longer periods after that. As with any
profession, there are good and not so good Lean consultants, and
no easy process for separating the two. Some know Lean theory
well, but arent able to teach it nearly as well as they can do it
themselves. Many Lean projects have stalled because consultants
couldnt move the project in the right way.
Lack of Staying Power:
All these factors combine to make it challenging for some
companies to get Lean right from the outset. Add to that the
manufacturing cost pressures mentioned above, and if a Lean
initiative actually sends costs going in the wrong direction at the
start, companies frequently cancel the program rather than fixing
what went wrong with a proven methodology .

Other Impediments include:

Lack of resource availability (time, expertise,
Cultural Differences
Lack of Clear communication
Lack of top management support for change
Lack of interest in and commitment to lean

Value Stream Mapping (VSM):

Special type of flow chart that uses symbols known as "the

language of Lean" to depict and improve the flow of
inventory and 2 information.
Provide optimum value to the customer through a
complete value creation process with minimum waste in:
Design (concept to customer)
Build (order to delivery)
Sustain (in-use through life
cycle to service)

It helps you visualize more than just the single-process level, i.e.
assembly, welding, etc., in production. You can see the flow.
It helps you see more than waste. Mapping helps you see the
sources of waste in your value stream.
It provides a common language for talking about manufacturing
It makes decisions about the flow apparent, so you can discuss
them. Otherwise, many details and decisions on your shop floor
just happen by default.
It ties together lean concepts and techniques, which help you,
avoid cherry picking.
It forms the basis of an implementation plan. By helping you
design how the whole door-to-door flow should operate a
missing piece in so many lean efforts value stream maps
become a blueprint for lean implementation. Imagine trying to
build a house without a blueprint!
It shows the linkage between the information flow and the
material flow. No other tool does this.

It is much more useful than quantitative tools and layout

diagrams that produce a tally of non-value-added steps, lead
time, distance traveled, the amount of inventory, and so on.
Value-stream mapping is a qualitative tool by which you describe
in detail how your facility should operate in order to create flow.
Numbers are good for creating a sense of urgency or as
before/after measures. Value-stream mapping is good for
describing what you are actually going to do to affect those





Process Box
Indicates basic production process
One box for each major material flow, not for each processing

Data Box
The Data Box stores process information
Cycle Time (C/T). Rate at which a part or product is completed
by a process.
Changeover Time (C/O). Amount of time to switch from one
product type to another.
Uptime. Measure of machine use (100% = Always running).

Every Part Every (EPE). Measure of batch sizes and changeover

Available Work Time. Per shift of a process (in seconds, minus
break, meeting, and cleanup times.)
Quality Level. % First time yield.
Number of Operators. Required personnel for a process.

Inventory Triangle and Push Movement Arrow

An Inventory Triangle captures the location and amount of
A striped arrow indicates a Push movement of inventory according
to a predefined schedule.

Lead Time Bars

Lead time indicates total time for a process or series of process.
Production/Manufacturing Lead Time (MLT). Lead time through
entire production.
Process Lead Time. Lead time though each process, including
time in inventory. Calculated as inventory quantity divided by
daily customer requirement.
Processing Time = Value Added Time. Actual time spent
processing the part or product.

Mapping Methodology

Focus on a product family within single plant.

Seek leadership from the value stream manager.
Go and see. Conduct door-to-door process walk.
Work backwards, starting at the shipping door.
Capture and quantify basic operations involved.
Encourage participation of all stakeholders.

Use pencil & paper rather than CAD

Investigation Etiquette

Get management approval

Communicate to all areas before visit
Make introductions when you get there
Remember, the workers are the experts for their tasks!
Respect peoples work space
Explain your purpose

Strategies for Process Improvement

#1: Produce to your Takt Time.
#2: Develop continuous flow where possible
to reduce inventory. Eliminate isolated
islands of production.
#3: Use supermarkets to control production
where continuous flow does not extend
upstream (often outside the plant).
#4: Try to send customer schedule to only
one production process (pacemaker).
#5: Load-level production at pacemaker.
#6: Release/withdraw small, consistent
increments of work to pacemaker (pitch).


Synchronizes pace of production to match pace of sales
Takt Time = Demand Rate
Takt Time = Work Time Available
No of Units Sold
Takt Time = 900 sec =

10.6 Sec/Board

85 Boards
Cycle Time = Minimum # of People
Takt Time

GOAL: Produce to