Lean Supply Chains
In previous issues, we explored the reasons to adopt a
lean philosophy in meeting your customer requirements and how such an approach
can lead to significant improvements in areas such as service, cost, and
revenue.
Converters and specialty printers play a significant
role in the performance of the end-to-end supply chains in which they
participate. As Proctor & Gamble’s CEO A.G. Lafley
defines the mission: “delivering the two moments of truth – when the customer
chooses the product and when they use it. If the supply chain does not deliver
the first moment of truth (the interaction and in-stock performance) there is
no second moment.”1 The challenge for converters and specialty
printers in helping to make that first moment of truth is to be a lean
organization that is integrated with other lean organizations (customers and
suppliers) in an overall lean supply chain.
The two most important concepts in crafting a lean
supply chain are to focus on the end-to-end performance and to achieve a flow
of products and services in response to actual customer demand.
A.
End-to-end Performance
Maximizing end-to-end performance and creating a lean
supply chain requires an analysis of the value-added activities and the
elimination of waste in the entire value stream. Converters and specialty
printers need to understand how customers actually get and use their products,
how suppliers produce and deliver their materials, and how their internal
operations add value in meeting customer requirements. The initial emphasis
when improving end-to-end performance is to focus on customers, suppliers, and
to leverage a concept called Value Stream Mapping.
1.
Customers: Converters and specialty
printers tend to have a lot of customers that are Consumer Products Companies
(CPCs) and many of these are very large organizations. In addition, many
customers have been leveraging lean concepts and are very active in improving
the performance of their supply chains. These companies see competition in
terms of one supply chain versus another. A recent AMR research report2
indicates that many CPCs are embracing supply chain best practices and
technologies. This research ranked the top companies in terms of overall supply
chain performance with Proctor & Gamble, Johnson & Johnson, and PepsiCo
all listed in the top 10. The opportunity for converters and specialty printers
is to gain a more complete understanding of how customers are actually using
their products and find areas to eliminate waste or add additional value.
2.
Suppliers: The supply base for
converters and specialty printers also includes a number of very large
organizations. It is relatively easy to get your customers to raise the bar on
performance expectations. However, raising expectations and seeking
dramatically improved performance from suppliers can, at times, be a challenge
if your supplier is an organization that is much larger than yours.
Fortunately, some of the top companies in the above mentioned AMR research
report are also suppliers to converters and specialty printers. Companies such
as 3M and Hewlett-Packard are serious about improving supply chain performance
for all of their customers. The opportunity for converters and specialty
printers is to work with suppliers to define the exact requirements of what is
needed and to eliminate waste that occurs in all activities along the value stream.
3. Value
Stream Mapping: A value stream map
should include “the entire set of activities running from raw material to the
finished product for a specific product.”3
The process of mapping your value streams needs to examine the production
processes and steps that occur within your organization as well as those that
occur at suppliers and customers. While this may be a daunting task for
converters and specialty printers whose customers and suppliers are much
larger, there are some relatively easy activities that need to be explored. The
first is to understand how your customer actually receives and uses your
products. For example, what are the steps in getting your label, tag, or
packaging incorporated into/onto the finished product? A value stream map of these
activities will identify opportunities for improvement, some of which might
require an adjustment in how you are preparing and shipping orders to your
customer. A similar approach with suppliers may identify wasteful activities
and lead to changes in how materials are shipped to you or how you receive and
move materials in your facilities. The good news for converters and specialty
printers is that many large customers and suppliers have been engaged in lean
initiatives and they will be very open to value stream mapping. A few successes
with a couple key customers and suppliers will provide a compelling case for
others to participate.
B. Achieve a
Flow of Products and Services
Creating a value stream map that includes, at a
minimum, your key suppliers and customers is an excellent start to improving
performance and crafting a lean supply chain. The other lean concept that is
important for converters and specialty printers is to achieve a flow of
products and services in response to actual customer demand. Two methods that
provide the biggest impact in achieving this flow are lean operations and
collaboration.
1. Lean
Operations: The processes for
manufacturing and logistics have a significant impact on the flow of products
to your customers. The ability to print on demand and in small lot sizes
requires the application of lean concepts to combine, eliminate, and simplify
production and logistics processes. One commercial printer
reports how they have left the traditional methods of producing three to five
jobs a shift and are now producing thirty to forty jobs a shift. We will
explore how to improve your capabilities in manufacturing and logistics in more
detail in future articles and also discuss how you align these processes so
that product “flows” through your operations in response to true customer
demand.
2.
Collaboration: Converters and
specialty printers need to collaborate with both customers and suppliers. With
customers, collaboration should include access to actual demand such as Point
of Sale (POS) data and other supply chain data such as inventory and production
schedules. Lean supply chains will include the routine delivery of materials
such as labels and packaging directly to the point of use. With suppliers,
collaboration will include providing your inventory and production scheduling
information. For common materials, the replenishment signal to suppliers might
be accomplished through a KanBan system whereby the empty container becomes the
authorization to ship you more materials. The common theme with collaboration
is that replenishments from suppliers and to customers are driven by actual
demand. The sharing of information allows all members of the lean supply chain
to synchronize activities and eliminate inventory.
Summary
Global competition has become a race of one supply
chain versus another. Lean supply chains will win the race through the
integration of multiple lean organizations. Converters and specialty printers
can become highly valued participants in lean supply chains by focusing on
end-to-end performance and achieving a flow of products and services in
response to actual customer demand.
In our next article, we will take a close look at the
impacts of lean on your organization. While the original concept of Lean Manufacturing was focused on
production activities, the most successful organizations take holistic
approach. We will explore how these successful organizations align strategy,
processes, and technology as part of their application of a lean philosophy.
References