Lean Supply Chain: Key points, Benefits and Limitations


Supply Chain Management can be used by every kind of business. The business can be as small as a nook shop to as large as Toyota Motor Company.

A supply chain is a network of facilities, functions and activities that are involved in gratifying customer demand. Relating to Martin (1992) it is "the network of organisations that are involved through the upstream and downstream linkages, in the various techniques and activities that produce value in the form of products and services in the side of the best customer". The coordination within the complete string is therefore very important. The resource chain relating to Martin addresses activities on the business process, procurement, development, inventory carrying, storage, handling and syndication within an company. Supply String Management is therefore, the integration of key business functions across the supply chain for the purpose of adding value for customers and stakeholders (Lambert, 2008). How big is the business establishes the level of Supply String Management it'll get itself involved in. Companies invest heavily in Supply String Management to give their customers value because of their money since source chain management is essential to maximizing return on investment in a corporation.


To improve a company's competitiveness and overall success, present day businesses have embarked on new source chain principles of Low fat and Agile Resource Chain. Lean source string occurs when inventory goes so fast that organizations basically holds zero inventory readily available. Supply String Management is expensive to operate and Companies are decided to cut costs to maximize their profits. . Fierce competitive market conditions are driving a car companies to look at Lean strategies to improve corporate and business financial performance, Thus they practice Low fat Supply Chain Management. Lean Resource Chain Management is the one which makes the company produce just what is needed, when it is needed and where it is needed. This means the business will avoid wastage such as defective products, unwanted inventory and holding out time. The system also increases value to the finish user. Lean creation with the appropriate product development phases, ensure readiness at product kick off eliminating waste material and lowering product development routine times.

Core account questions for companies making use of in Lean principles implementation include

What are the look requirements necessary to Customer Value?

Will a fresh product slot into an existing Product Family or will it constitute an completely new Product Family?

Will materials, components, parts, and assemblies be sourced from preferred' suppliers licensed for pull-based Kanban fulfillment?

The right blend of core factors depends on the business's specific competitive tactics.


It is assumed almost worldwide, that Trim thinking comes from Japan (Toyota, specifically), but Henry Ford ( Ford Automobiles, U. S. A) had been using elements of Lean thinking as early as the 1920's, as evidenced by his price

"Probably one of the most noteworthy accomplishments in keeping the price of Ford products low is the steady shortening of the development cycle. The longer articles is in the process of production and a lot more it is relocated about, the higher is its ultimate cost. " Henry Ford 1926

Lean is defined by many organisations as "A systematic approach to figuring out and eliminating waste products through continuous improvement, flowing the merchandise at the pull of the customer in search of perfection. "

Cappello (2006) argues that wherever slim principles are applied, they need to be enforced by strong leadership. It is, " a fight not limited to minds, but for hearts as well. " Low fat principle program requires that managers persuade employees (and other supply chain stakeholders) that trim is not simply a short-term marketing campaign, but a long-term strategic proposition aimed at reaching a competitive advantage. This requires daily initiatives to regularly remind, educate, and enforce lean policies.

The concept for applying lean supply chain management is to maximise value for customers and earnings for corporations through the elimination of waste materials, "Muda", through each level of business and applying business strategies that enable continuous and ecological improvement throughout the resource chain. The main aim of a lean resource chain is to meet each customer's demand the first time, at the cheapest cost, at each and every time. This permits "flowing" the product through the chain in response to the move of the customer in search of perfection. This stream process is also known as "Kanban". "Kanban", a Japanese term, means card signalling. It is the information sign used to indicate the need for material replenishment in a draw creation process. An effectively designed Lean supply chain provides true value to the finish customer at a reduced cost to the company.

Though there a wide range of vital principles underlying the Slim thinking process, there are a few key key points that provide as the travelling force propelling the theory into practice in almost all organisations. They are confirmed below with the primary focus as the customer driving the wheel of trim thinking and everything principles being allowed through technology.

Fig. 2 The Value of Lean Key points, an Oracle white paper, Nov. 2003

Value and Determining the Value stream: - Value in trim thinking can be simply defined as everything involved with providing goods or services to a customer in a manner that profitably meets or exceeds the customer's requirements and prospects. The value stream is set in two ways, the inner Value stream, which is the internal stream of activities to be performed to make a product and the next being the resource string value stream, which is dependant on the business, its distributor and the client. Value in its entirety can only just be defined by the client regardless of the amount of effort put into the product or service by the professional of the service or product.

Waste:- Throw away in this framework refers to all non-valued-adding activities that ultimately increase cost throughout the chain. A couple of eight main discovered categories of waste pertaining to lean supply thinking:-Over production, Non Value adding Procedures, Transportation, Delays, Extra motion, Unnecessary stocks/ inventory, Delays and Product& Service quality flaws. The sorts of waste and exactly how they influence organisations will be cared for at length in the next pages of the paper.

Flow creation is a means to do things in small quantities in sequential steps, alternatively than in large batches, tons or mass control. Systematic and liquid movement of goods throughout the chain with minimal storage space or inventory without allowing materials to idle in queues or stagnate most importantly stock points is key to the supply string. From engineer to order all the way to repetitive and process making and delivery to the finish customer, tremendous profits can be became aware by using movement manufacturing principles. Types of improvements include

Increased inventory turns

Lowered manufacturing time

Decreased part and finished goods defects

The "Kanban" is an fundamental factor to both flow process and the Pull process.

The Pull basic principle works on the theory that goods or services are "tugged" or derived from the supplier predicated on the demand from the downstream customer rather than suppliers "pushing" goods downstream. The idea behind the "pull" basic principle is to keep producing parts as close as possible to the time when the parts are needed. "Need" in a low fat environment is typically associated with true demand by the market or a real live customer sales order. In a very pull environment, finished goods inventories are extremely limited or almost non-existent

People:- In addition to the functional changes, adoption of the Low fat methodology requires a significant organizational transformation. It requires formation of work teams, made up of multi-skilled employees who need to continuously improve after performance and production processes.

Responsiveness to demand and change deals with delivering quality products as guaranteed, when required, with the agreed-on price. However market or demand changes must be well anticipated to cater for changes in the resource chain

Pursuit of Excellence:- This is worried about the continuous search for ways of improvement, causes of waste materials, and their eradication from eth source chain. It is an attempt by each person in the chain to boost after skills and ideas and shoot for "perfect leanness" in the organisation

All these fundamental principles are aimed toward one goal, that is, Total Customer Satisfaction. As Li (2008) observes, low fat principles and lean policies are not only about removing misuse, but also about individual behaviour, culture, teamwork, authority and executive push.

Benefits and limitations of applying a Lean resource chain

The advantages of Lean Supply Chain Management minimize across every kind of company. The largest benefits is the reduction in cost to the company. The original way of minimizing cost is through mass production. Although this involves an investment in very costly equipment, through Low fat Supply String Management, the business enjoys reduced cost by mass creation. Traditional mass creation tries to minimize unit costs by increasing total development over the life cycle of the merchandise.

A second gain is reduced volume of transaction. This is equated to accelerate and responsiveness to client demands. Which means that supply chain is currently faster and better. The customer's needs are met rapidly. Lean supply chain management makes the company action biased. Once a customer is delighted there may be room to serve the next hence increase company income.

Lean Supply Chain Management relies closely on outsourcing. Outsourcing is the contracting of certain essential the different parts of the business to some other organisation. 1 The role of outsourcing in slim supply string management reduces risk to the company as it hands over certain ill-performed duties previously performed by the company to alternative party experts. The company is therefore in an improved position to concentrate on its strengths in the supply string, thus increasing value for the client.

Yet another good thing about Lean Supply String is Customer Satisfaction. Lean supply string management means that customer needs are satisfied in the shortest possible time. Trim supply chain management also can help you integrate current requirements into the production process offering newer variations of a specific well performing product on the marketplace which makes the business look fresh (circumstance of many electronic digital and automobile business). The business gets more revenue and loyalty will increase as customers tend to buy their needs from companies they can trust.

Lean thinking results in many Operational benefits including:-

Lead Time (Pattern Time) reduction

Increase in Productivity

Reduction in Work-In-Process Inventory

Quality improvement

Reduction in space Utilization

Administrative benefits in organisations are recognized. Reduction in order processing mistakes & eradication of "getting customers on keep" by streamlining of customer service, improved upon product quality as well as product delivery function are caused through trim management. Higher staff profiling criteria and staffing and recruitment demands are reduced. This is achieved when the same volume of staff is equipped with multi skills to take care of larger numbers of orders that could have recently needed more personnel. Records and streamlining of control steps enables the out-sourcing of non-critical functions, allowing the business to focus their efforts main competencies and on customers' needs.

The primary goal of every company is to meet or achieve its tactical goal, that is in the end Customer satisfaction the cheapest possible cost to the organisation. Lean supply chain management with a stepwise benefits through the procedure and tactical levels help organisations to meet their tactical aspirations.

Most organizations put into action Lean principles predicated on the operational advancements, primarily due to perception that Lean only pertains to the operations aspect however benefits slice across the primary decision making processes or departments of every organisation.

Even though Trim supply chain has many advantages, there's also limitations to use its guidelines to every single organisation. . Thought trim rules are good theoretically, it hasn't worked well for most companies.

Lean supply string management is very expensive in the sense that the knowledge needed at every level (since all personnel are need to be multi skilled) come at a higher investment superior.

Also, it relies seriously on outsourcing which has many disadvantages. Freelancing comes at a price because the third party is a business entity and will have to make profit on its procedure. In addition, it means that the organisation must stomach some original costs. Some of that are redundancy costs and the costs in offering equipment. During outsourcing, whenever a problem slips through the bank checks in lean supply chain management, the company will have to bear the expenses of production as products should be recalled. This has been evident recently with the pioneers of Lean Thinking, Toyota motor company facing multiple recalls.

Traditional mass development tries to minimize product costs by increasing total creation over the life cycle of the merchandise. To recuperate the enormous first capital costs sunk in to the product before it was produced, mass providers forecast and run long creation cycles for every SKU(stock keeping product). Consumer tastes and variety suffer in this scenario. Costs is reduced using lean theories but at the expense of what more superior consumers now demand. Customer demands in recent times are focused on variety of products which cannot be achieved over a solely "lean" platform.

One can therefore conclude that Low fat thinking is not strong or aggressively change-embracing. Totally using Lean rules may cause organizations to are unsuccessful under the recently growing environment of unstable and rapid change. This isn't generally friendly toward the needs of the client as new improvements predicated on customer needs are not implemented. Lean supply thinking may be quite inflexible to changing habits and insensitive to the market. Customization demands in current markets by the consumers have been the primary downfall of stringent lean thinking. It is therefore being revisited to help improve its practicality in todays organisations.


Waste refers to whatever uses resources, but will not add real value to the product or service. It finally boosts cost throughout the chain. You will find seven main recognized categories of waste material pertaining to low fat supply thinking:-Over development, Non Value adding Processes, Transportation, Delays, Surplus motion, Unnecessary stocks and options and Product& Service quality defects. Just lately, the "Eighth lethal throw away" has been added by Taiichi Ohno and Shigeo Shingo, as the waste products of "Untapped creativity of all employees in a corporation and supply chain". This is increasingly attaining headway as the very best most severe of wastes within an organisation. Untapped creativity can result in more earnings lost than ever imaginable. Employees in every organisations should be allowed or inspired to share ideas and improvement strategies that can help move the company to a higher level.

Waste of overproduction handles the production of products in quantities that are well more than the real customer demand.

Transportation waste particularly refers to the amount of travel the merchandise endures as it goes by through the resource chain. This provides no value but forms the majority of costs incurred to the manufacturer and the finish customer

Common examples of Non-value adding operations are:- reworking (the product or service must have been done correctly the first time), deburring (parts must have been finished properly)and multiple inspection in any way levels of the resource chain (parts should have been produced using strictly adhered requirements and supervision to minimize the amount of inspection required).

Delays or Needless ready while products are queued through the source string as they undertake varied processes is another form of throw away throughout the resource chain

Excess motion brought on by poor housekeeping, work move design, structure and inconsistent or poor records of work processes are frequently forgotten. These however play an increasingly problematic waste material of valuable resources such as time throughout the chain.

Unnecessary securities or inventory arise specially when an organisation contains a large level of inventory in a "just in case" circumstance without appropriate market demand analysis. These tie up up essential capital into goods relaxing in stores or warehouses. Inventory beyond customer requirements negatively impacts cash flow and uses valuable living area.

Production defects and service problems are main culprits in learning resource wastage. Firstly, materials resources are consumed and therefore must be replaced. Second of all, the manpower is wasted during the original production procedure for the part or provision of the service) the very first time cannot be recovered. Thirdly, manpower is again necessary to correct the problems in the product or service) and again to handle any customer grievances and regain the customer's trust.

Waste in business and organisations are common but unfortunately dismissed. It is regardless of the reality they donate to the major loss and the invariable shut-down of many market sectors worldwide. Over creation, Non Value adding Procedures, Transportation, Delays, Extra motion, Unnecessary stocks and shares, and Product& Service quality defects. This paper seeks to bring to light how trim principles, particularly, avoidance of waste, can result in a profitable slim supply string.

The telecommunication industry in Africa is a booming business with an incredible number of subscribers nationwide. In recent times however, the necessity to access fast and easily accessible mobile data service has been on the increase. Shin Lo consumer electronics, a Chinese structured provider of data modems to countries in Africa has faced a downward submit profits and customer patronage. Shin Lo has many circulation centres over the African continent, specifically Nigeria, South Africa, Ethiopia and Zimbabwe. These circulation centres provide modems to American & northern Africa, southern and eastern Africa respectively. The modems are delivered from the key maker in China then to all these distribution centres after which they are retailed to the average person countries, examples being, Ghana, South Africa, Morocco, Togo, Burkina Faso, Malawi, Zimbabwe, etc. Shin Lo has however confronted a high amount of modems being returned with problems and customer issues due to product unavailability leading to loss of revenue. This has induced their primary competitors, Hauwei systems, to climb through to the market. A crucial analysis of the organisational framework and process brings to light the various forms of waste and how its avoidance can result in a profitable low fat supply chain in Shin Lo consumer electronics.

The organisational resource chain structure was such that, all modem main layouts were produced in China, regardless of their destination. These were then shipped, by sea, to each circulation point. Each circulation point then undertook the set up of auxiliary parts onto the key platform of the modems and then configured each modem to suit the regions. Following this was done, it was then retailed to telecommunication providers to help expand apply their logos onto the modems and engage in secondary settings steps to streamline the modem features to the average person company. Eg. In Ghana, MTN, Vodafone, Tigo etc before retailing it to the ultimate consumer of the merchandise. Engaging the Trim principle of throw away removal, the wasteful techniques have been discovered throughout the source string of the Shin Lo modem supply chain and the following are recommendations to employ the Lean key points of Waste elimination to its supply chain businesses.

Waste of vehicles was the first to be identified. Due to the number of distribution centres, Shin Lo has a dispersed and ill well prepared analysis of the price tag on travel and amount of movements the merchandise were going right through. Transportation costs from China to all the distribution centres has brought on a huge financial gape into which all presently meagre revenue are directed. The adoption of a single continental syndication point in South Africa would greatly reduce these vehicles costs ( see Fig. 3). Sea vehicles can be employed between China and South Africa. After which Air or highway transportation can be employed to the many countries depending on market demand and rate required.

Product shortages and delivery delays have been the major customer issue in certain countries especially in Ghana and Malawi. This has been the reason for Shin Lo's key competitor-Huawei Solutions' success in these two countries. This form of waste products (ie delay) can certainly be comprised. Accurate market analysis of the continental market with software like the ERP at the solo continental distribution centre can help adapt the speed and quantity of modems that needs to be aimed to certain countries. The mixture of these low fat key points and software technology keeps the assurance of revolutionizing the way business is conducted. This avoids certain countries with slower marketplaces from keeping the modems as inventory in storage while other countries come across shortages. Because of the bad storage area facilities, products sold are normally defective credited to wear and tear. This triggers more modems to be returned for re-working and re-finishing and additional increases lack of revenue to the company. Customers who face the duty of returning goods through their upsetting experience might not exactly return and further causes loss of market for the products and the telecommunication service provider all together.

Another major contributor of the downhill spiral of Shin Lo gadgets is the amount of modems went back with defects. This is an identified throw away that can be managed from investing in the single syndication point in South Africa, where all assembling of modems to all elements of the continent will be achieved. That way, the root cause of flaws can be traced, identified and dealt with. This is not possible currently due to the multiple steps the modem undergoes at the many locations and production processes.

Observably, the modems may have been going right through multiple defects due to excess motion as well. That is also categorised as waste products. Modems are transported and dealt with from China, further taken care of at the local distribution things and then to the countries before getting to the customers. Without standard guidance across all circulation points, it is unclear if all the functions are performed to standards. The single distribution point in South Africa with the standardized process tips before shipment to the countries will eliminate any unwanted motion or movements that the modems may be studied through.

Non-Value adding procedures such as most important configuration of modems to the regional specifications at the distribution points are also unneeded as well as time and cost consuming. Country configurations already include regional configurations and therefore Shin Lo just need to ship the merchandise after set up to the countries for any configurations to be executed. This also helps the telecommunication service provider screen all configurations and properly find faults in development scripts and other software related issues This will certainly reduce lead time and minimize cost of hiring personnel as well as buying software and equipment for the many distribution and construction centres.

Although the slim principles of Low fat supply string can play many part in enhancing the supply chain of Shin Lo, the key principle which the Lean supply chain thrives, eradication of throw away, can greatly speed up its go back as market leaders in the provision of modems to telecommunication operators over the continent


As global competition is constantly on the intensify across companies, companies are actively seeking strategies that will permit them to compete more effectively and profitably. Lean Resource is greatly related to the success of several organisations. Yet, in a growing and unpredictable business community such as that today, alterations to Slim thinking is required to accommodate for the immediate changes in demand in marketplaces. As is the success of any business system, constant improvements to all aspects and new improvements and lines of thinking are spearheading the success of businesses worldwide. Whatever the supply chain however, it is universally accepted that Trim thinking and its own principles play a big role in the success, efficiency and efficiency of any business or company in all edges of the world.

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