Lean Supply Chains: Everything You Need to Know

Supply chains are the foundation of modern manufacturing. Every manufacturing business must pay critical attention to its supply chain, ensuring they have all the materials to deliver high-quality products.

Running a resilient supply chain can be costly, and companies often seek ways to optimize costs while maintaining productivity. Lean management offers an answer to this issue, helping companies reduce waste in the supply chain and boost profits.

This article will explain Lean supply chains and what you need to know about this strategy.

What is Lean management?

Lean is a set of management techniques designed to eliminate waste in organizational operations. It revolves around identifying and removing any non-value-adding activity from a business, maintaining productivity while improving the bottom line.

Learn more about our Lean Training.

What is a Lean supply chain?

It is a supply chain that’s managed based on Lean principles. It is a strategic approach for streamlining operations, reducing waste, and delivering excellent value to the end customer.

A lean supply chain prioritizes efficiency and customer satisfaction. It empowers companies to deliver high-quality products and increase profitability.

How does a Lean supply chain work?

Lean supply chains are all about identifying and eliminating waste. This process starts with analyzing the whole chain to identify areas where waste is present. The next step is devising creative solutions to eliminate this waste in a way that doesn’t disrupt the entire supply chain—this part requires teamwork and brainstorming. Afterward, the business implements the solutions to remove waste and build a more efficient supply chain.

The supply chain elements to focus on include:

Warehousing/Inventory

Warehousing is a significant cost center for every manufacturer. The longer materials stay in a warehouse without being used, the higher the potential losses. Lean management requires having as little inventory as possible—you need only sufficient materials to fulfill current orders instead of excess quantities that take time to be utilized.

Transportation

Goods transportation is vital to every business’s success. Lean management optimizes transportation costs, ensuring that goods can be delivered quickly for the lowest possible price. For example, a large furniture distributor can arrange full truckload shipments instead of less-than-truckload to optimize costs and shipping times.

Repeat customers

Securing repeat customers is critical to running a Lean supply chain. Repeat customers mean you can maintain your Lean supply chain without many tweaks (as you keep producing the same items for the same clients). It helps you maintain a robust supply chain while maintaining long-term growth and profitability.

Advantages of a Lean supply chain

1. It reduces costs and increases profits. Every atom of waste represents money you can save and invest in other business processes. Lean management involves identifying and eliminating such waste to cut costs.
2. It increases efficiency. Running a Lean supply chain enables you to deliver high-quality products faster than usual, helping your business stay ahead of the competition.
3. It fosters responsiveness to changing business conditions. Running a Lean supply chain means you can easily tweak processes to adapt to emerging business conditions. For instance, during the COVID-19 pandemic, many chemicals companies switched their supply chains toward drugmaking– this was only possible because they could easily alter their Lean supply chains to make another product. Such a rapid switch would be impossible if they had too much inventory and inefficient transportation infrastructure.

Final Words

We’ve explained the mechanisms, importance, and benefits of running a Lean supply chain. Here at 6Sigma, we offer Lean certification courses providing practical knowledge about building and optimizing Lean supply chains. Participants become certified experts in designing and maintaining Lean supply chains, a valuable skill in many industries. Contact us today to see what we can offer you.