Posts Tagged ‘Value chain’

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In the latest edition of Manufacturing Insights, Bob Parker has a good piece discussing how high-tech/electronics can realize benefits through lean manufacturing.  Bob uses the publicly reported results on revenue and profit to draw a reasonable conclusion that the companies that have actively adopted Lean methodologies are out-performing those that have not.   He further elaborates on some of the challenges that the adoption process must address as the complexity and breadth of the supply chain grows.  In fact, I don’t think the article emphasize this enough.   The goal of lean manufacturing is to essentially connect the entire value stream and eliminate all forms of unnecessary waste.   The bottom line promises many things including; reduced lead times, less inventory, improved quality, and ultimately the ability to be much more responsive to customer needs.   With the continuing outsourcing trend, and both customers and suppliers more geographically dispersed, the ability to connect and synchronize that value chain has become dramatically more challenging than the days of the vertically integrated factory.

Many of our most sophisticated customers are still struggling with approaches to ensure that as demand changes occur, the entire supply chain is correspondingly adjusted.   To make the point clear, imagine a string of cars on the highway that are only 10 feet apart but all traveling at 60 mph.  If the first car suddenly slows down, only the second car in that string knows that anything has happened and even a minor delay in response will increase the risk of crashing.     With each successive car the opportunity for safely adjusting their speed diminishes, until at last you have one enormous pile of wreckage.    Instead, imagine if all the cars had radios so that the first car could broadcast the fact that he was hitting his breaks.   All the cars would slow together, and thereby avoid the resulting accident and rising insurance costs.

The challenge of connecting the supply chain is no small task as many of the players are using different ERP systems and lack the sophistication to properly establish or adjust ROP (reorder points) values based on the changing variables (demand, yields, etc..).   This is an area where RapidResponse with its ease of integration to disparate ERP systems and  exceptionally powerful analysis and reporting tools can be an instrumental part of the Lean value chain synchronization process.   As demand changes at the brand owner location, and assessment of the risk and need for Lean related adjustments across the entire supply chain can be made.    If adjustments are needed, they can then be communicated simultaneously.