In the age of an electronically connected global economy, where capital travels from nation to nation at the speed of light, swimming afloat in the supply stream is not always easy. It really doesn’t matter what sort of business your in, globalization of the supply chain means that if you’re not ready and in it, your business is simply and quickly passed by for one that is. Manufacturers, wholesalers, distributors, retailers—there’s no discrimination when it comes to the instant gratification of the consumer demand. With the maturity of enterprise resource planning software (ERP), the expectations are for vendors to operate lean in order to respond rapidly and with a cost-effective value.

It is certainly true that, because of ever-tightening margins, wasteful production practices are no longer tolerated. Instead, producers and providers are expected to run lean, a process of streamlining production and distribution to reduce and eliminate waste or non-value activities to the process. In a broader sense, one could extrapolate this philosophy out to the larger supply chain as well as focus it into the movement of products within the supply chain. In other words, connectivity also means that the stream of supply must flow with as few impediments as possible. At the same time, any processes that stop supply chain flow must be steady and unceasing, and processes that use inventory should always add value during the activity.

Finding your place within the supply chain flow is to following in the path of others, while also blazing a trail for your own downstream customers. In both cases, there is the need for a mutually reinforcing relationship, one in which the customer-vendor-customer chain is locked in trust, reliability, and productivity. The repetitive failure of meeting any of these needs incurs the wrath of the chain—the link is severed and business is lost. All aspects of the lean supply chain must fit with each other, or they don’t fit at all.

While the purpose of any supply chain is to provide a smooth stream of product without turbulence or eddies pooling about, the lean supply chain is designed to reduce excess inventory. In the lean supply chain, the philosophy of just-in-time (JIT) pull production is maximized with customers creating the demand. In this sense, the lean supply chain takes advantage of the business intelligence that the relationships (and connectivity) provide. As one sub-market (or link) shifts in demand, the whole market (or chain) moves with it. This is the fundamental concept upon with forecasting is built, and the basis by which JIT approaches are successful.

Ultimately, members of the lean supply chain must exist in a state of continuous improvement. There’s no resting on your laurels in the modern global economy. When capital moves at light speed, orders can travel almost as fast and the unprepared are quickly found out. To be a link in the lean supply chain is to be in constant motion while also in constant analysis. It is, indeed, a very difficult—though never impossible—position to be in.

This entry was posted on Monday, October 6th, 2008 at 9:00 am and is filed under CRM, Inventory, Purchasing, Quality, Scheduling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.