Applying Lean Principles to Supply Chain Planning

Today, Lean is a concept, a philosophy, a practice, and a set of tools all wrapped in one. For more than 50 years, organizations have invested time and money adopting the principles of Lean (while originated at Toyota Corporation for manufacturing operations, the principles of Lean have since spread to many types of businesses and functional areas).

The focus of Lean is to maximize quality, minimize unnecessary steps and optimize customer value (provide them what they want when they want it). The two primary principles of Lean, Just in Time and Jidoka, are referred to as the pillars of the lean philosophy.

A Lean organization focuses on providing the best quality within the shortest possible lead time, while minimizing waste throughout your processes (waste being classified as any resource that is not being used properly). We may first think that minimizing waste means minimizing inventory, but time, effort and people are also resources to be utilized properly. Analyzing how people are used and time is spent is a critical step in minimizing waste.

We can apply Lean principles to supply chain planning, the biggest objectives of which are to reduce costs and improve customer service. Why wouldn’t adopting a Lean philosophy help?

A series of conceptual tools evolved from the Toyota Production System that can be applied to supply chain planning. Let’s take a look at a few and see how they can help planning organizations become Lean.

Just in Time (JIT) ensures all efforts are directed at providing only the goods and services required by customers, both when they want it and in the exact quantity they desire. The goals of JIT are aligned with the goals of supply chain planning.

Value Stream Mapping involves mapping out all the steps of your processes, including the flow, timing of each step, and wait times for all associated activities. Value Stream Mapping identifies and eliminates waste. There is no doubt that mapping out the various processes in Supply Chain Planning and how they are all connected will lead to a better understanding of the value of each step and how to streamline and eliminate non-value-added activities.

Kaizen (continuous improvement) is an ongoing process of looking for improvements in every area of the process. This philosophy can be embraced at all levels of the organization and applied to any task. Finding ways to do things more efficiently, accurately, and effectively minimizes waste and adds value to supply chain planning processes. Doing more with less is all about finding ways to minimize waste and improve efficiencies.

5S stands for Sort, Straighten, Standardize, Shine and Sustain. This five step process organizes all areas of the workplace. The Sort process consists of distinguishing needed tools from unneeded tools and eliminating clutter. Straighten is the concept of keeping everything in the correct place to allow for easy access. Shine focuses on keeping the workplace neat and clean. Standardizing is the process of making the previous three steps habitual. Sustain is the concept of keeping and maintaining established procedures for every function and step of the operation. Substitute “data and software” for “solutions” and you can see how 5S could apply to supply chain planning.

The Five Whys is the philosophy of always asking questions. Small children love to ask “why?Asking questions leads to an understanding of how things work and to finding potential fixes to problems. This should be a core principle in supply chain planning. Determining why something happened in the supply chain leads to the ability to anticipate and optimally respond.

As Lean principles continue to evolve from their origins nearly a half century ago, they represent enhanced tools that can and should be applied to supply chain planning operations.

Are you using Lean Principles in your supply chain organization?