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Lean and sustainability strategies meld for supply chain transformation

Some manufacturers are expanding lean and sustainability strategies to the supply chain to reduce waste and bolster efficiencies, but extending these practices outside a company's four walls won't be easy.

Take lean manufacturing principles and combine them with sustainable supply chain strategies and you have a modern-day...

mashup that can transform companies by helping them reduce waste, save money and promote efficiencies throughout the business.

Companies have been applying lean manufacturing principles such as Six Sigma and value stream mapping to the shop floor for decades, and now some of those practices are spilling over into other internal areas, including the warehouse and external operations such as logistics and supplier collaboration, according to Paul Myerson, professor of Practice in Supply Chain Management at Lehigh University.

"Forward-thinking companies are definitely looking at their supply chain," Myerson said. "The supply chain is a much broader area than the manufacturing floor, so there is a lot of waste and a huge opportunity to reduce that waste."

It's still early on, and major challenges exist. The most significant challenge is that it's harder to control lean practices in the supply chain because it transcends the boundaries of an individual company and extends to partners and those partners' supply chain partners, notes John Denzel, CEO at FlowVision LLC, a consultancy specializing in lean manufacturing software and services.

"Even those companies that practice lean -- and that's a small footprint -- may do a pretty good job within their own four walls, but not so good when extended to suppliers," Denzel said. "They may be designing their own factories so they are leaner, faster and more responsive, but their suppliers aren't lean and they end up paying the penalty."

The benefits of smart assets

Nevertheless, one of the first places manufacturers look to meld lean with supply chain sustainability strategies is in the warehouse, simply because productivity and efficiency are so central to effective operation, Lehigh's Myerson said. Using value-stream mapping methods to optimize layout and promote standardized work throughout a warehouse presents a real opportunity for business advantage, he explained. Moreover, benefits can substantially increase when paired with basic sustainability strategies like using solar panels or motion-based lighting to cut back on electricity usage in the factory.

In the warehouse or during transit, the advent of technologies such as the cloud and the Internet of Things (IoT) can transform a dumb asset such as an individual SKU or a pallet of goods into a smart asset that serves up real-time data on its status, from its geophysical location to its condition during transit, said Josh Greenbaum, president of Enterprise Applications Consulting, a consultancy specializing in enterprise software.

"Lean is really about information, and the more information you have and the more supplier information you have, the better you can fine-tune the processes," Greenbaum said. For the ultimate lean supply chain, he said, you want to know in real time where your supplies are, when you can expect them, and what condition they are in -- specifically if there have been any problems due to excessive temperature changes, for example, or if excessive forces in transit caused any damage.

Having that intelligence lets manufacturers make adjustments on the fly, whether that means redirecting supplies to another factory in the event of an outage, or changing transportation modes to minimize downtime or fuel costs. "In doing so, the supply chain becomes a completely different operation than it was before," he explained. "There's the potential not just for cutting costs, but for adding value, and that's really where things change."

From a sustainability standpoint, Greenbaum said the real-time intelligence helps manufacturers earmark greener suppliers and become more predictive as part of their transportation planning with the goal of reducing their carbon footprints. Customers will also see benefits from leaner supply chain operations. "The ability to shift assets and supplies around helps a business be much more responsive to real-time changes in the requirements of its customers," he explained.

Unionware, a manufacturer of baseball caps, backpacks and other sewn accessories, has spent nearly a decade perfecting lean manufacturing operations, and is now applying some of those principles to its supply chain operations to great success, according to Mitch Cahn, the company's president. Leveraging Rootstock's cloud-based ERP platform, Unionwear is designing a range of custom apps to help it collect data in real time on the shop floor and throughout its logistics operations to aid in identifying waste and to promote efficiencies.

In addition, Unionware is actively managing its inventory levels with suppliers so it doesn't have to keep as much material on hand. "We can't do projections by color or fabric very well because we do so much custom work, so we have to keep a broad inventory," Cahn explained. "Knowing what supplies we have on hand and when suppliers can get [reinforcements] to us completely jibes with our lean manufacturing principles."

Next Steps

How IoT can benefit supply chain sustainability

Tips for supply chain risk management

Exploring the Internet of Things market

This was last published in October 2014

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