Below is a guest post written by Dean Vella of the University of San Fracisco and Bisk Education.
For any business hoping to bolster its bottom line, one of the best practices is to put its supply chain management techniques on a diet. A lean supply chain means customers are getting exactly what they want with the utilization of fewer, yet more efficient, resources. This approach means more than just cutting fat; it also enhances value. Reducing waste and inefficiencies leads to improvements. Pointless process steps will be significantly lessened, as will time spent waiting for information, parts, orders, and other resources.

Suppliers in a lean supply chain are able to respond quickly and appropriately to marketplace changes. By encouraging a shift to efficient, sustainable supply chain strategies, companies can reap dividends, including strengthening their relationships with their customers by better matching business processes to consumer preferences. 

Major corporations across numerous industries have embraced supply chain management. Retail giant Wal-Mart is considered a leader in the field. Over the past decade, the company has integrated supply chain in key components of its operations, including suppliers, manufacturing, warehousing and distribution, while introducing cutting-edge technology to forecast inventory levels and monitor transportation and delivery.

It’s not only large-scale operations that can benefit from a review of supply chain processes, however. Quick decision-making, rapid response and waste reduction should be the goals of any company, large or small.

Among the concepts that companies are leaning on to streamline their supply chain:

 Strategic Purchases

Strategic purchases are critical to an organization’s competency. In relation to a lean supply chain, this approach can bring elevated risk and a higher level of complexity because the supply of a particular product or resource is tighter. As a result, the company and supplier may take a more long-term view of their relationship.

However, an organization can reduce costs associated with carrying an excess volume of inventory, including warehousing expenses. For example, John Deere reduced inventory levels by using logistics management software to develop stocking levels at its thousands of facilities nationwide.

Bottleneck Purchases

These types of purchases are typically one-off and involve significant expenditures. For example, a company may need to purchase an information system, capital equipment, or similar long-term assets that are often project-oriented.

Collaboration and Connected Sourcing

With the increasing globalization of the marketplace, collaboration and connected sourcing are two of the most critical aspects of a lean supply chain. These practices demand that companies make fundamental shifts in inter-organizational relationships through shared trust, risks, and rewards. Working with their suppliers, organizations can spotlight process redundancies, introduce metrics to measure improvements, and seek buy-in from employees and partners at every link along the supply chain.

Lean concepts apply to all steps of a company’s supply chain, whether it’s product development, human resources, marketing, purchasing, distribution, or finance. With global fluctuations in the availability and price of supplies, as well as growing environmental concerns and shifting consumer demands, companies must trim excess from their supply chain in order to stay nimble and achieve sustainability.

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Maddy Miller

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