5 Lean ways to cut supply chain costs

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As the global commercial market continues to shrink, there is more pressure on businesses of all shapes and sizes to compete on a worldwide scale. To stay viable in the face of global supply chains, it is more important than ever for businesses to improve their efficiency and productivity, while cutting their costs.

Businesses looking to improve their efficiency and reduce waste should consider training such as EEF's Lean Champion course, designed to give individuals with responsibility for implementing Lean programmes the tools to successfully manage Lean across their businesses.

Manufacturing is all about delivering products with the minimum amount of resource required and it has been proved that applying Lean principles supports common sense business objectives. Addressing supply chain costs is an important part of this.

Here are five ways Lean practices can be applied to help increase efficiency and reduce supply chain costs:

chain1) Understand different product categories:

There are three categories of product that can be used to define the supply chain strategy for a typical manufacturing company.  Firstly there are the core products that are manufactured on a continuous basis and form the bulk of production volume in any given period.  Secondly there are products that are manufactured regularly to meet customer requirements or to satisfy a recurring demand. And finally there are those products that are manufactured to specific customer requirements on an irregular basis.  The three categories are sometimes referred to as Runners, Repeaters and Strangers.

chain2) Define the categories in your business:

No matter what kind of business or what you produce, the product categories above will apply. Analysing what goes on day to day internally is a crucial step towards becoming Lean, and it is important to understand all the activities involved in delivering your products.

When looking at your supply chain it is also important to differentiate between the three product categories above, because they require different strategies to optimise resources internally. Many organisations tend to adopt and apply the same strategies to all three categories and unwittingly see inefficiency as a result.

chain3) Conduct process mapping for each category:

A process map for each product category will help identify what strategies to put in place to increase efficiency and become more Lean. Begin this process with the products that fall in your Runners category, because that is what you spend most of the time producing. You can then develop a plan to improve that particular area before moving on to Repeaters and Strangers. If you’re resource constrained, you should focus on core products primarily, but if you can do all three categories in one go, then the benefits are great.

chain4) Identity category specific Lean strategies:

Based on your process mapping activities, you can go on to define the Lean activities best suited to each category of your supply chain. Typically for Runners, you would focus on implementing flow principles and start applying tools like Kanban, work-in-progress reduction, and elimination of bottlenecks.

For Repeaters, you would typically look at strategic inventory to reduce lead time, reduction of batch sizes, and product standardisation.

While for Strangers, you would focus on strategic stock policies and optimised flexibility in production to produce with minimum fuss.

chain5) Invest in training

Lean and process improvement training can help businesses achieve better productivity and reduce their supply chain costs by making processes more efficient. EEF training courses such as the Lean Champion and the Lean Tool Refresher courses are designed to help lean and continuous improvement managers implement Lean principles, and lead their teams to a more Lean working environment. 

 

 

Blog author: Patrick Lee, EEF manufacturing growth lead

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