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Lean Supply Chain and Technology: A Perfect Combination

Discover how you can integrate Lean thinking with proven, affordable, and emerging technologies, how companies are linking strategy, the value chain, and IT, and how these companies are executing on their plans to achieve real competitive advantage.

This chapter is from the book

Traditionally, Lean has been thought of as a “pen and pencil” technique for identifying and eliminating waste in business processes. As a consequence, while there are many books written on the topic of applying Lean tools and techniques in manufacturing, administration, and, to a lesser degree, supply chain, most if not all barely discuss the role and impact of technology in process improvement.

This book makes the case that technology is in fact a key enabler of a Lean supply chain and links Lean thinking with available and affordable systems and technologies to get the most out of improved processes.

Specifically, it details various supply chain, logistics, and operations management areas where Lean thinking (in its broadest possible sense) used in combination with existing and emerging systems and technologies—such as the Internet, e-commerce, enterprise resource planning (ERP) systems, 3D printers, bar code scanners, radio frequency identification (RFID) tags, etc.—can take an organization to the next level with increased speed, accuracy, integration, and collaboration among all parties in the extended, global supply chain.

We will discuss various tools, methodologies, best practices, examples, and cases of how, when and where technology can be combined with a Lean philosophy to “turbo charge” an organization’s supply chain for a distinct competitive advantage.

It’s a Small World After All

We live in exciting times, with the convergence of many activities and advances, including a global marketplace and supply chain, the growth of the Internet and e-commerce, omni-channel marketing and distribution, enterprise, and point software solutions coming in a variety of “shapes and sizes,” and new hardware technologies for the gathering, analysis, and dissemination of information. This new world brings with it many risks and challenges as a result of the increased complexity from globalization, higher transportation costs, deteriorating or insufficient infrastructure, weather disasters, and terrorist threats. An organization’s ability to navigate all this can give it a distinct competitive advantage; if these things are not managed well, it can mean potential failure.

All this helps to explain the increased interest in both process improvement methodologies such as Lean, Six Sigma, and the combined Lean Six Sigma and the increased use of technology to help enable and manage everything. However, as companies have limited resources, it is critical that they perform due diligence both in terms of process improvement and the selection and implementation of technology.

Like many other aspects of Lean thinking in the supply chain, technology can be an enabler of an improved process and can also help to retain and acquire new customers. So it’s no surprise that technology, when used to collaborate with supply chain partners, can significantly reduce risk. This is explained quite clearly in the white paper “Mitigate Supply Chain Risk with Collaboration and Visibility to Achieve the Perfect Order,” by Ariba, a procurement software vendor. This white paper states,

In today’s global economy, no company works alone. Intricate supply networks require interaction with hundreds—or even thousands—of outsourced resources, partners, suppliers and customers around the world. That’s why innovative manufacturers are embracing new collaboration and automation technologies to help overcome inefficient, error-prone, manual processes. By enabling collaboration without boundaries, industry leaders are providing greater visibility into direct materials to deliver the perfect order. [www.ariba.com, 2014]

The white paper points cites a recent survey of supply chain executives, which found that mitigating risk is the single biggest day-to-day challenge and one of the highest priorities when collaborating with trading partners. The survey also showed that almost all respondents found value in collaboration and that it’s a top priority for most chief procurement officers. The collaboration can take many forms, including sharing information, automating processes, and using business networks or hubs. Most of those surveyed felt that manual processes were a major concern (and source of waste), and the majority of those surveyed also recognize that a new generation of technology is critical for automating processes, enhancing collaboration, and mitigating supply chain risk.

Ultimately, those who have used technology for visibility and collaboration attain significant benefits, such as improved order accuracy and faster, more automated transaction cycles—all signs of a leaner, more efficient supply chain.

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