Incident 01 – I recently stumbled upon a fitness magazine at a gym that carried an elaborate article on how to trim the fat and get lean by taking a few magical pills. The marketer’s extravagant promising note appeared convincing enough to allure a substantial crowd to fall for the quick-fix trap. But what captured my attention were how these no-name businesses take-away hoards of money, capitalizing on their target consumer’s congruities. The characteristics of such a successful Direct-to-Consumer no-channel business are:
- LOW Days Inventory Outstanding (DIO), meaning less inventory carrying costs
- LOW or NO Work-in-Progress (WIP) products, meaning NO potentially waste products
- LOW Days Sales outstanding (DSO), meaning almost always instant payment from consumers
Incident 02 – As I flipped through the pages, the next one I saw myself reading was a metabolism-mantra on how frequent eating could lead to a lean health. I’ve driven home the point many times in my previous blogs that information-latency is the biggest barrier to the agility of supply chain. Whether this mantra holds good or not for biological health, I sure was fascinated by its truth in the supply chain world. An increasing flow of the right information feed in real-time to and fro the network ought to create a Lean Supply Chain.
So why am I alluding to these incidents? Lean, a philosophy conceptualized by the auto-industry and reinforced by Toyota, is a strategic business philosophy that simply aims at maximizing Value and minimizing Waste, no different from a health fitness mantra. However, the recent string of debacles at Toyota has raised apprehensions amongst many on its underlying Lean Principles. More to it, as much as it sounds easy, the understanding of ‘Lean’ has remained very localized, from being departmental in small shops (addressing cellular challenges), to being floor-focused in manufacturing set ups (assembly-line hitches), and to being a widely a adopted enterprise motto. Despite the proven-upsides of embracing ‘Lean Concepts’, ignorance and presentiments have discouraged companies from taking advantage of this pragmatic approach to get their end-end supply chain leaner. A clear manifestation of such a behavior is the over-spent wasted dollars on disparate IT implementation that promises to bring desirable results but in fine-print, not in the leanest form.
‘Lean Principle’ is not just a shop floor manufacturing destination. It’s a journey aimed at eliminating costs, wastes and improving efficiency, agnostic to specific industry verticals. The core objectives of any Lean Enablement are:
- Operational Excellence
- Asset Reductions
- Increase Profit Margins
- Responsiveness
- Reliability
- Flexibility
Evolving this thought to a ‘Lean IT Principle’, the picture below illustrates how a comprehensive B2B Automation program not only improves the agility and thereby the fitness of your extended supply chain, but is also the right step forward to improving your sustainability index.
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Lean Principles |
Detailed Processes |
The Green Lean IT (Enabling Sustainability) |
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01. Identify Value |
· Insure ROI from ERP implementations (Improve Utilization of Supply Chain Applications) · Improve near real-time B2B collaboration · Establish global footprint · Significantly Reduce Cash-to-Cash Cycle |
· Insure Efficiency and Effectiveness of Sustainability programs around IT · Sustainable in Design, Process Execution, an Data |
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02. Identify Value Stream |
· CREATE VALUE – Introduce fool-proof data collection, disposition and persistence · ELIMINATE WASTE – Human touch points, manual inspection, manual wait times, manual printing, manual data entries etc. |
· CREATE VALUE – Increase supply chain intelligence through frequent, automated near-real time data feeds · ELIMINATE WASTE – CO2 Production and H2O usage. |
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03. Establish Flow |
· Seiri/Sort – Flag the transactions for non-compliance and data error · Seiton/Set in order – Fix forms and format of data · Seiso/Systematic Cleansing – Reprocess and Resend · Seiketsu/Standardize – Roll-out templates and communication standards, encode business rules · Shitsuke/Sustain – Institutionalize the adoption |
· DELIVERING Innovative solutions on SUSTAINABLE IT Infrastructure INSTILLING enterprise-wide environmentally conscience attitude · EXTEND STANDARDIZATION to Trading Partners |
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04. Establish Pull |
· Increase Information Velocity · Decrease the lead time for Decision Making · Cross Organizational Collaboration and Synchronization |
· Just-in-time, enabling Rapid Information Flow · Increased synchronous collaboration and visibility leads to economic sustainability |
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05. Seek Perfection (Kaizen) |
· Continuous Monitoring and Event Management · Benchmarking – Establish KPIs and Metrics to track B2B Automation performance against preset goals · Process Innovation, encouraging employee creativity |
· Continuous Sustainability Assessment · Track and Manage Global Sustainability Index |
Bottom-line, Lean is not just a shop-floor fad; it’s a guiding principle that can be adopted in many aspects of personal or corporate life. Referring to Steve’s latest blog on Mechnical Turks, many enterprises are still in a state of denial, relying on the hidden-wastes to operate the supply chain engines at the consumer’s expense.
One Response to “Is your Supply Chain Fit or Fat? Go, LEAN IT!”
Very helpful illustration you have there. Lean is indeed the way to go. Enabling sustainability should be implemented as it is being neglected by most companies.