Leaning in the Right Direction

This article is adapted from material appearing in the book Supply Chain Management Best Practices, Second Edition by David Blanchard (2010, John Wiley & Sons) and is used with permission.

Jim Womack, one of the United States' leading proponents of lean, believes that U.S. companies need to transition from merely using lean tools to fully embracing lean management principles. “Companies today understand that you need to have quality at the source, that you need to put things into continuous flow, that pull is better than push in terms of scheduling, that the correct way to maintain machines is proactively rather than reactively. They understand lots of things,” Womack acknowledges. “The real question now is, can they implement a lean management system that can use the tools most effectively on a continuing basis? In most businesses there's a complete disconnect, for example, between the metrics they're using and the lean methods they're deploying.”

For instance, if your company is telling the purchasing department to beat down suppliers to get the lowest price, then you're not leaving yourself much of an opportunity to collaborate with your suppliers, Womack points out. Instead of aiming for consistently brilliant performance, you're settling for a short-term gain, which will soon evaporate when your suppliers decide they can no longer afford to work for you.

“There's a whole lot of curiosity about what it's going to take to change the way companies are managed, to actually get the full benefits from lean on a sustainable basis,” he says, “but it's going to require both experimentation and a fair bit of change in what managers do, and in what they think management is. Most managers think that their greatest contribution to the business is doing workarounds on broken processes rather than doing the hard work to get the process right so it never breaks down and you don't need to do workarounds.”

The biggest change needed in management thinking, Womack believes, is developing the ability to step back and say, “Gosh, the reason why we're fighting fires all the time is we don't have any fire marshals around here. We're brilliant at fighting fires, but not adept at all at preventing fires.” What Toyota has done so well, he asserts, is to put bulletproof processes in place for product development, fulfillment, order delivery, and supplier management so that things work and get done. Too often U.S. companies settle for an attitude of “we'll get back to you in a few days with an answer.”

Analyst firm Aberdeen Group recommends managers adopt these five best practices to achieve top performance through lean principles and inventory management:

  1. Develop standardized information flows from the supply chain organization to manufacturing, and vise versa.

  2. Establish a bi-directional information flow between the supply chain and manufacturing.

  3. Determine optimal inventory levels to ensure the reduction of wasted inventory by establishing optimal safety stocks at various buffers within the supply chain.

  4. Incorporate demand and production variability, inventory levels, and supplier lead-time as part of the schedule creation process.

  5. Develop lean techniques that support kanban variations suitable for supplier and internal operations.

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