Supply Chain

The Vision of a Leaner Supply Chain

April 15, 2013

“The vision thing” as George H. W. Bush once said, is important to establishing the guidelines for a Lean Supply Chain.

“The vision thing” as George H. W. Bush once said, is important to establishing the guidelines for a Lean Supply Chain. In an IBM Global Business Services Executive Report (click here to download report), it’s pointed out how Volatile global markets and customer demand Variability require better Visibility than most companies now have. By managing this process better, enterprise Value is created (that’s a lot of “V’s”!).

One of the key concepts behind Lean is to reduce or eliminate any activity that doesn’t add value to the customer, as it is waste. In their survey of 664 Supply Chain organizations, IBM found that the increasing level of complexity of organization’s Supply Chains has increased the challenges that management must face. They include:

The need for better visibility as the number of Supply Chain partners has increased. Even with improved technology, collaboration and integration are a major concern and opportunity.
Increased fluctuations in customer demand as well as higher expectations for service, cost and quality.
The never ending pressure to leverage Supply Chain costs to improve profitability and support competitive strategies. Management must have the talent to meet increase flexibility while maintaining costs and managing risks.

To meet these challenges, the report points out, requires three new “rules”:

Know the customer as well as yourself. Smooth volatility with predictive demand.
See what others do not. Unveil visibility with collaborative insight.
Exploit global efficiencies. Enhance value with dynamic optimization

They point out that true “Visionaries” (yet another “V”) are the elite companies in their survey (a minority made up of larger companies) that focus Supply Chain visibility and collaboration, business intelligence and analytics, risk management, network optimization and demand management with a Sales & Operations Planning (S&OP) process in place. All of these activities ultimately add value to the customer and can be used to minimize non-value added activities from occurring.

About the Author

Paul Myerson Blog | Professor of Practice in Supply Chain Management

Paul's blog "Lean Supply Chain," has moved. You'll find his latest ideas and commentary on IndustryWeek's IdeaXchange.

You'll find more articles written by Paul at http://www.industryweek.com/blog/lean-supply-chain .

Paul Myerson is Professor of Practice in Supply Chain Management at Lehigh University. He is the author of a Lean Supply Chain & Logistics Management (McGraw-Hill, 2012), developer of a Windows-based supply chain planning software (www.psiplanner.com), and co-author of a lean supply chain and logistics management simulation training game by ENNA (www.enna.com).