Let’s be honest about it, in today’s ever changing dynamic business environment, virtually all operational processes are interrelated. In many cases, Value Chains have become very complex and in some cases very long.
This is often done for all the right reasons, although it has to be said in many it is not. Sometimes the drive to cut costs trumps all other logic. But whatever the reason, organisations have to consider how they will react to issues when they occur. Any disruptions along the supply chain, need to be responded to quickly and in real-time so that the customer is not affected.
25 years ago, focusing improvement activities on one model area in the manufacturing facility was the norm. Then having learned how to look for and tackle waste, organisations would perhaps move on to a second area and then a third and so on. However, as supply chains have become more complex, improvement activities have to be more strategic.
Confining improvement activities to a single manufacturing facility or production area is no longer sufficient as in many cases the complexity of supply tends to have a significant impact on all aspects of production. Improvement initiatives cannot work if done in isolation. Any changes made in one functional area, such as manufacturing can have unintended consequences that can lead to problems or increased costs in other areas.
Understanding demand and, just as importantly, understanding the variability of demand, is essential for the removal of waste.
Over the past 15 years the way supply chain is influenced has changed. Today’s variability is very different, it is often powered by economic and market forces outside one’s own control. These include global markets affecting customer decisions often opting for more value-priced products, product life cycles and a need for more product innovation, commodity prices being driven on a global scale, and even the way people shop using the internet and waiting for promotional activity.
Now more than ever it is critically important to understand your organisations forecasting and demand planning processes. Challenge historical assumptions. Improvement initiatives have a much better chance of delivering the expected benefits if used strategically across the whole supply chain. Use the improvement process to drive change in the right places. Make sure that your organisation has the ability to quickly and profitably respond to changing demand patterns.
The original goals of traditional lean manufacturing, to drive out inefficiencies, reduce costs and constantly challenge waste, have not changed. The need to increase your value proposition and decrease variability will always remain the same. They are just as valid now as they were when the Toyota Production System was created.
What has changed is the need to think strategically and link up improvement activities. These goals now need to be embraced across the extended value chain both internally and externally with supply chain partners. Doing this will generate increased flexibility and an improved ability to meet customer demand.
So build an improvement strategy that looks at the entire supply chain from the outset. Understand what is required to become a truly high performance organisation and look at how to achieve this is the most effective way by linking up all your improvement plans and aligning them to one single set of business objectives.