Supply chains are increasingly originating in low-cost countries and terminating in the United States or Europe. With supply chains lengthening, they are becoming more complex, and more susceptible to risk. Yet with greater scale, greater efficiencies are also possible. By removing supply chain waste - whether it s excess parts, employee resources, or inefficient systems across time zones - you can benefit your entire enterprise. Here are 10 tips for making your global supply chain leaner and more effective. Tip 1: Review the Big Picture To make leaner choices across your entire supply chain, you first need to know how your current operation works. Take a careful look at the products and services you deliver, and identify which elements provide customers with value and where waste can be trimmed. Create a true end-to-end value stream map. Map the entire flow of products and processes, and note where value is added. Observe who does what, and at which stage to the product or service. Don t just assess what s going on inside your factory walls, also acknowledge business partners and crucial relationships. For example, if you re an auto builder, ask yourself, how does my car come together, from the time that it is a small headlamp bulb at a supplier s, as it comes through my assembly plant and distribution centers, to the time it moves to dealers and consumers. Then, describe and quantify all the potential waste which could clog up the system. That waste might include excess material, capacity, time, effort, processes, and systems. Tip 2: Break the Big Picture into Workable Pieces After you ve identified the big picture, think about how that picture can be broken down into bite-sized chunks. Those smaller chunks give you an appropriate testing ground for increasing the leanness of your operation. Rather than scrutinize every single car model in the showroom, the auto manufacturer would choose just one or two models as a starting point. They would limit the choice to a subset of dealers, distribution centers, assembly plants, and suppliers. After they had proven the concepts and practice with one or two models, they could roll out enhancements to other models. Tip 3: Focus On Customer Demand The prevailing philosophy at many companies is to produce whatever they can and push the products out to the marketplace, in hopes that people will buy. Lean thinking takes the contrary, pull approach, in which nothing happens until the customer asks for it. By waiting until the customer requests what you re offering, you re not creating waste. In the real world, you may not always be able to sell exactly what the customer wants, but you can still figure out a way to shape the demand in a predictable fashion. Coordinate your internal advertising and promotion efforts, and continue to watch market signs carefully, so you can mobilize your supply chain at the right times. Tip 4: Position Inventory Wisely Keeping less inventory in your warehouse is one of several ways to reduce waste. Lean operations also look at total landed costs, which takes a truly end-to-end view of the decision. For example, sourcing from a low-cost country is not always the best solution, because of the implications to that decision. When partners in the supply chain are several thousand miles apart, there are longer lead times and greater risks. The cost of shipping, handling, taxes, and tariffs can also substantially increase costs. In certain cases it could make sense to keep sourcing from a supplier in Ohio instead of going to China for that component. Tip 5: Plan Materials and Capacity Globally Global planning is a critical element for a lean enterprise that shares material and capacity across product lines. Without global planning, one arm of your organization second guesses the other, replicating processes or having excess material and capacity. Many lean companies rely on a response buffer to speed up time to market. They project future demand, and begin certain activities ahead of time in anticipation. This might involve buying the right set of equipment, hiring the right number of people, or making a certain subassembly ahead of time. Inventory positioning means you have just the right amount of whatever you need to fulfill orders in the pipeline as efficiently as possible. Tip 6: Stay Lean inside Your Factory Walls Historically, lean manufacturing efforts have begun within the factory walls. Enterprises work to adjust factory plans and schedules for efficiency and less waste of time, resources, and materials. All these efforts allow factory scheduling stability. Achieving a truly lean factory has correct sequencing of activities, to make sure components are available at the line when they are needed. They plan for contingencies and communicate requirements to suppliers when the schedule changes. Tip 7: Share Risks, Rewards, and Schedules with Stakeholders Companies may try to streamline their balance sheet by throwing inventory overboard to someone else. But that s not an effective long-range approach. Suppliers saddled with added expense and overhead are in turn forced to raise prices or put their business in jeopardy. In the worst case scenario, the supplier is forced out of business. A truly lean supply chain maintains close communication and connection between members, so all parties can become more efficient. This includes 3rd party logistics and warehousing firms as well as suppliers. Contracts get structured to share risks and rewards. There is end-to-end supply chain visibility, allowing information about scheduling and impact analysis to be shared freely. Tip 8: Harmonize Business Processes When companies were strictly local, it was easier for internal departments to share information. Often all it took was someone poking their head up over a cubicle and asking their neighbor to track an order. With globalization, lean operations need to ask themselves how they can tailor business processes to get answers quickly, and to avoid redundancies and misplaced information. Time spent hunting down poorly tracked phone calls is wasted effort that doesn t add value to the end consumer. An order tracking tool which provides complete visibility, for example, can help improve productivity. Tip 9: Leverage Your Best-In-Show IT Companies acquired across continents and time zones can mean that international enterprises often find themselves sitting with multiple versions of similar computer systems, each with a local flavor. For a globally lean approach, start thinking about implementing a component-based IT architecture that minimizes IT redundancies across the enterprise, and maximizes reuse of the best system elements. For example, your company s Country 1 might do supplier sourcing exceptionally well, while Country 2 excels at invoicing and Country 3 is best for receivables. Rather than rip out all three separate systems and replace them with a monster new system, add components that allow the best features of the existing systems to speak with each other. Tip 10: Embrace a Culture of Continuous Improvement Ask the question, Why? five times for each problem you detect. For example, on noticing a defective part coming off the assembly line, you might ask Why was that part defective? A review shows that the machine has not been reliable. Why? Apparently, it has not been calibrated regularly. Why? Because operators don t know how to do it. The fourth time you ask Why? and learn that there has been no time for training with the high employee turnover. Solving the fifth why? Why is there high turnover? How can we reduce turnover?- will ultimately allow the company to solve this part s manufacturing quality problem. In a similar fashion, achieving leanness in your supply chain requires an enterprise-wide willingness to identify and eliminate waste. A truly lean global supply chain requires a culture of continuous improvement and change management from the top down. Source: line56.coma>

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