The business case for a lean supply chain
There exist many forces in today’s markets that push us towards refining our supply chains, and advocate leaner practices. There is an overall shift to high volume, low margin products, which necessitates lower overhead. Most customers expect, and demand continual improvement of price, delivery speed, and service levels. The success of the globalisation movement has made supply ‘chains’ into complicated nets that defy the traditional ‘flow’ and ‘process’ models. Growing complexity in our SKU rosters is further complicating supply chains. Markets are becoming less stable, and shorter lead times have become a necessity.
All of these factors tend to increase waste in the supply chain, at a time when lowered margins demand that we eliminate waste aggressively, wherever we can find it. In order to generate the working capital we need to grow, we need to use the supply chain as the asset it is, as the bridge that connects all of the efficiency efforts in your business.
Distributors and manufacturers across Europe and the UK are already familiar with lean processes, and the benefits of running a lean operation in general.
When applied correctly, lean processes can cut costs and lead times while increasing both quality and profits. It should lead to more stable processes, and more reliable results from those processes.
This stability is a vital ingredient for your long term success, in any market. Stability also creates a better organised and more predictable working environment, which will reduce worker stress and improve morale. It allows information flow throughout your business and, critically, all along your supply chain.
Overall, your business case for implementing a leaner end-to-end supply chain is that it will reduce your operating costs by eliminating waste in the supply chain, and by reducing the overall cost of fulfilment. It will provide improved revenue through better lead time reduction and increased customer satisfaction. A lean, standardised supply chain can reduce the complexity of your processes and make everything you do more efficient.