How do you align your supply chain partners with your lean goals and strategies?

1 What is lean process improvement?

Lean process improvement is a methodology that aims to eliminate waste, improve quality, and increase value for customers. Waste can be anything that does not add value to the product or service, such as defects, overproduction, waiting, transportation, inventory, motion, and overprocessing. Lean process improvement focuses on identifying and eliminating the root causes of waste, streamlining the flow of materials and information, and empowering the workforce to continuously improve.

2 Why is demand fluctuation a problem for lean?

Demand fluctuation can create a mismatch between the supply and demand of your products or services, leading to excess inventory or stockouts. Excess inventory can cause waste in terms of storage costs, obsolescence, and reduced cash flow. Stockouts can cause waste in terms of lost sales, customer dissatisfaction, and reduced loyalty. Both scenarios can harm your competitiveness and profitability. Demand fluctuation can also disrupt your production planning and scheduling, causing waste in terms of idle capacity, overtime, rework, and quality issues.

3 How can you forecast demand more accurately?

One of the key steps to manage demand fluctuation is to forecast demand more accurately. Forecasting demand involves using historical data, market trends, customer feedback, and other sources of information to predict the future demand for your products or services. You can use various methods and tools to forecast demand, such as time series analysis, regression analysis, exponential smoothing, moving averages, and software applications. The accuracy of your forecast depends on the quality and quantity of your data, the complexity and variability of your demand patterns, and the frequency and horizon of your forecast.

4 How can you adjust your production to demand?

In order to manage demand fluctuation, you need to adjust your production to demand. This balancing act requires weighing production capacity and flexibility against demand variability and uncertainty. To do this, you can implement different strategies, such as level production, chase production, or a hybrid of the two. Level production involves producing at a constant rate regardless of demand fluctuations, while chase production involves producing according to the actual or expected demand. Hybrid production combines elements of both strategies in order to optimize inventory and capacity.

5 How can you collaborate with your supply chain partners?

A third key step to manage demand fluctuation is to collaborate with your supply chain partners. This means sharing information, coordinating activities, and aligning incentives with suppliers, distributors, retailers, and customers. To do this, you can use vendor-managed inventory (VMI). This approach reduces waste in terms of ordering costs, inventory holding costs, and stockouts. Additionally, you can use collaborative planning, forecasting, and replenishment (CPFR) to jointly plan, forecast, and replenish inventory with distributors and retailers based on shared data and goals. This helps to reduce forecast errors, bullwhip effect, and mismatched expectations. Finally, customer relationship management (CRM) is a great way to build and maintain long-term relationships with customers based on their needs, preferences, and feedback. This reduces lost sales, customer churn, and missed opportunities.