Lean Supply Chain Is A Catalyst For Enhancing Product Quality And Business Performance

Production practices have had an important role in satisfying the dynamic market. Many approaches have being developed in order to respond effectively to specific business requirements. In fact, some areas of management have focused its study on the overseeing, designing, and controlling the process of production in an effort to find the best methodology that ensures the business success and performance. However, complexities arise in this field because many variables such as costs, inventory, scheduling, suppliers, etc have to be considered in any business. Lean approach and the traditional approach are two points of view that aim to address this complexities, and those will be examined in this essay.

Success for many organizations depends on the firm’s ability to balance product and process changes while exceeding customer expectations for improved cost delivery and quality. In lieu of these issues firms have started to implement principles of supply chain management. Supply chain management mainly involves managing the flow of incoming materials, manufacturing operations, and downstream distribution has to be in alignment that is responsive to change in customer demands eliminating a surplus of inventory.

“Lean is a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the **product at the pull of the customer in pursuit of perfection.” Lockwood [24].

The lean supply chain helps to imrprove efforts focusing waste, improve manufacturing schedule and economically produce small quantities. It is also flexible to react to changes in the market. Hence, BMW has this facility of allowing a customer to change its order within a week of placing and still maintain the original delivery time and high quality. Similarly, agile supply chain helps in carrying a generic inventory. The best part is that it helps in reducing risk of keeping too much stock as well as being out of stock. Mass-customization can be easily pursued through an agile supply chain which offers variety at a lower total

The profit margins in the grocery business are extremely thin, so the Kroger Company’s supply change management continually works on improving its supply chain to increase efficiency and reduce costs. Kroger utilizes a program of lean process engineering to constantly improve its supply chain. This process involves examining each individual step of the supply chain from its suppliers to product delivery at its stores and furthermore, this process has been proven to drive down waste and reduce cost (Kroger, 2008). Kroger’s supply chain management is located near the top of the organization structure since the company as a whole has a strong emphasis on improving the supply chain to reduce cost and increase profit margins. Therefore the further up the organizational structure the supply chain management team is located the more optimally it will function and the greater the influence it will have on the decision making process (Burt, Petcavage, and Pinkerton, 2010).

Aldi is a food retailer organization operating since 1913 in the international market including Germany, Australia, and the US. Aldi is an organization that focuses primarily on quality of the products and giving its customers value for money. The case study is the description of how Aldi uses lean approach such as lean thinking, lean production to improve productivity and maximize customer satisfaction. Aldi’s core purpose is ‘provide value and quality to our customers by being fair and efficient in all we do’ by following the Core values. Core values of Aldi are simplicity, consistency and responsibility that goes hand in hand with Lean production concepts.

All organizations depend on operationally lean logistics in order to maintain inventory, meet customer demand

Machado, Scavarda, and Vaccaro (2014) reported lean techniques used in supply chain management leads to increased profitability, higher quality services, reduced lead times, and increased productivity. Lean provides several potential competitive advantages, such as flexibility, price, quality, accuracy purchasing, inventory control and distribution. It is not a new concept, but it has recently gained acceptance in the health care industry. It can be used to develop a model of supply chain management that enables leaders to identify and minimize waste, assist in decision-making, and contribute to the quality of services by reducing supply chain costs.

“Lean Thinking” can help reduce total cost of ownership (TCO), this means the supply team in the entire “chain” must work to:

Lean is defines the manufacturing philosophy that reduces the time between the shipping and customer demand, which based on the systematic method by eliminating waste, that means giving the customer what they want when they want it, and don 't waste whatever. Rahmana, Sharif and Esa (2013) suggested lean production is mentioned to improve the company 's performance from the philosophy in reducing waste in order. That means, lean system destination is the decrease cost by removing the non-value activities, which they are applying a category of tools and techniques for checking and eliminating defective in the production process. In the Evenort Company should emulate the five overriding principles of lean thinking in terms of implementing lean that there is guarantee the company has been driving correctly in the lean manufacturing (Cardiff 2015) as can show in table 1.

Becoming Lean and implementing an action plan for it is not easy; it involves the commitment of time and assets. Companies ought to know what their client need and be dedicated to providing that. To know what a good implementation plan is, one must observe the BAE Systems, York, Pennsylvania, Assembly, Test, and Integration Plant to discover an excellent benchmarking instance of how to implement Lean production and the enhancements that can be achieved as a consequence. The subsequent dissertation is our journey, our plan to implementing Lean. It may be suitable for your company or it may not. The position here is straightforward. There is not a one-size-fits-all modus operandi for implementing Lean. What works for one organization might not work for a different company. It is not a cookie-cutter method (Upadhye, et al. 2008).

Lean suggests the need for the supply chain to exploit the limited resources for an efficient completion of the job. Inventory, trucks warehouses, laborers and the capital for working are the primary sources in the supply chain (Myerson, 2012). The lean supply chain is designed to include inventories in the framework, warehousing space that is minimal to keep these inventories. It will also design to the establishment of long term, supply contracts that are stable with a negotiated cost that is low, typically without any substantial ability to alter ordered quantities.it will also design the destination of delivery and design the date required after there is an order placed. All these factors will minimize the supply chain cost operations making it efficient in cost and will constrain the ability of supply chain for the adaptation of any demand and supply changes. The supply chains should manage variability and an exclusive aim on lean that prevents supply chains to design an effective to manage the natural variability and then from doing the work that are important to them. At many cooperations, they have several products to manage where these products vary widely in demand and lead time patterns, the supply chain enterprise should be designed to work on

Over the years, the competition landscape for most companies has shifted from the highest-quality, lowest priced product or best performing product to the ability to respond to market needs quickly and get the right product at the right time to the right customer. This has in turn forced organizations to compete with their supply chain. Understanding supply chain management and putting this knowledge into practice has become a mandate to improve supply chain relationships in the entire world.

As globalization and technology bring the world together, management is forced to engage in strategies and calculated risk to remain competitive, allowing for organizational success through customer satisfaction. When executed correctly, lean manufacturing also known as lean thinking creates an atmosphere where competitive advantages and success is attainable. Due to the successful nature of this strategy, organizations other than manufacturing, have implemented lean thinking with a favorable outcome. Discussed below is the establishment of lean thinking, the steps of 5S, which is the tool utilized to lay the groundwork of lean thinking, and distinct differences between traditional cost accounting practices and lean accounting practices

The research concludes that in addition of the strategies mentioned, key management strategies such as Lean management (strategies which consist to reduce or eliminate waste), supply chain information integration, agility and risk mitigation (effective strategy to manage risk) have to be taken into consideration for an efficient resolution of the supply chain uncertainties problems. However, further research need to be done to prove the origins of supply chain uncertainties by investigating the impacts of factors such as decision and information technology complexities.