Question

Critical Thinking

The global marketplace has witnessed an increased pressure from customers and competitors in manufacturing as well as service sector (Basu, 2001; George, 2002). Due to the rapidly changing global marketplace only those companies will be able to survive that will deliver products of good quality at cheaper rate and to achieve their goal companies try to improve performance by focusing on cost cutting, increasing productivity levels, quality and guaranteeing deliveries in order to satisfy customers (Raouf, 1994).

Increased global competition leads the industry to increasing efficiency by means of economies of scale and internal specialization so as to meet market conditions in terms of flexibility, delivery performance and quality (Yamashina, 1995). The changes in the present competitive business environment are characterized by profound competition on the supply side and keen indecisive in customer requirements on the demand side. These changes have left their distinctive marks on the different aspect of the manufacturing organizations (Gomes et al., 2006). With this increasing global economy, cost effective manufacturing has become a requirement to remain competitive.

To meet all the challenges organizations try to introduce different manufacturing and supply techniques. Management of organizations devotes its efforts to reduce the manufacturing costs and to improve the quality of product. To achieve this goal, different manufacturing and supply techniques have been employed. The last quarter of the 20th century witnessed the adoption of world-class, lean and integrated manufacturing strategies that have drastically changed the way manufacturing firm’s leads to improvement of manufacturing performance (Fullerton and McWatters, 2002).

Consult chapter 7 of your text book or secondary available data on internet and answer the following questions.

Question:

1. Why Companies adopted Lean Thinking and JIT model?
2. Discuss major types of Waste, companies has to keep in mind during production.
3. Assess the reasons for using lean thinking (suitable examples), what are the benefits from Suppliers to end users?
4. Due to COVID 19 emergency do you think agile supply chain is the right concept in this kind of situation? Give reason with example.

The Answer should be within 4- 5 pages.

The Answer must follow the outline points below:

• Lean Thinking and JIT Concept
• Agile Supply chain
• Their Main functions
• Reasons with suitable Examples
• Reference

Answer 1

Why Companies adopted Lean Thinking and JIT model?

Due to the rapidly changing global marketplace, only those companies will be able to survive that will deliver products of good quality at the cheaper rate and to achieve their goal companies try to improve performance by focusing on cost-cutting, increasing productivity levels, quality and guaranteeing deliveries in order to satisfy customers.

In order to achieve these objectives, companies need a more efficient manufacturing process with focus on cash flow and flexibility which they can only achieve through the dynamic supply chain and low inventory.

Just in Time (JIT): JIT concept created in Japan by Toyota (Toyota Production System). This concept basically focuses on ideas and practices on which the company bases its philosophy of keeping a small inventory, requiring what is needed to manufacture a specific product only when it is needed. This allows manufacturers to receive the needed raw materials even hours before starting with the production process. Also, it doesn’t keep the finished goods on a warehouse agilely shipping them to the final consumer.

One of the main concepts that characterize JIT is that production is intended to be pulled through instead of being push through. Meaning that production only takes place for customer orders, and the production cycle starts when an order has been placed by a customer. This forces suppliers to deliver raw materials when they are needed, requiring more frequency on the delivery of stocks.

Lean manufacturing reexamined the concept of JIT thinking in how it could add value to the product keeping in mind the customer's perspective. For this reason, Lean Manufacturing embraces JIT evaluating every step of the production process in order to add value through each one of them.

Another important aspect of Lean Manufacturing is that its main goal is to reduce waste along the production process, it is not only about keeping a small inventory, and it aims to enhance cost efficiency while securing a competitive advantage over other manufacturers. Reducing waste means the minimization of unnecessary processes such as extra transportations, wrapping material, extra-large location or expensive labor.

Lean manufacturing is in a larger sense an American version of Japanese JIT and Kaizen, embracing continuous improvement while measuring results, reducing inventory and streamlining a production system that adds value to products on each manufacturing step. Lean manufacturing tries to use not only a small inventory but a set of efficient workers in an efficient space, no matter if it is dedicated to a mass or a small production.

Greatly emphasizing on using a few resources, Lean Manufacturing focuses on eliminating activities that may represent a cost and don’t add value to the finished product for customers. Lean Manufacturing evaluates and reshapes the design process, the way the supply chain is managed and the relation between the company and its customers, something that JIT doesn’t consider.

Discuss major types of Waste, companies has to keep in mind during production

In Lean Manufacturing term there 7+1 wastes that companies need to focus during the Operations which often abbreviated as TIMWOOD+S

T - Transportation waste: Production should consider the most optimum route for both internal (Within production facility) and external supply chain (From vendors to factory and factory to customer)

I - Inventory waste: Production should not block the cash flow in form of inventory and should focus and operate on minimum inventory level

M - Motion waste: or movement waste of both the product and people

W - Waiting: Waiting often impact the other processes in the queue and hence the cycle time for final production

O - Overproduction - Extra inventory blocks the cash flow and carries the risk when market demand is dynamic

O - Overprocessing: These are the losses for which customer is not paying and are not required for the final product production.

D - Defects: These are the most obvious losses in production. Defects result in rejections, Over-processing of the product and ultimately the loss to the manufacturer.

S- Skill - Majorly manpower skills. This waste is normally associated with the performance loss of manufacturing. Companies are focussing more on automation to minimize the losses.

AGILE Supply chain:

The agile supply chain basically refers to the use of responsiveness, competency, flexibility, and quickness to manage how well a supply chain entity operates on a daily basis. Unlike the lean supply chain, the agile supply chain uses real-time data and updated information to leverage current operations and real-time data against demand forecast, which helps to improve the overall efficiency and productivity of the given entity.

Another key benefit of agility in the supply chain is focusing on avoiding potential shortages and eliminating excessively stocked inventory. In a sense, overstocking inventory was a typical response of lean concept. Since lean concept focuses on making processes more effective and efficient, many supply chain entities often ended up with a huge stock of merchandise. Unfortunately, changes in the economic market, consumer demand, and the growing customization of goods has led lost costs as inventory was incapable or became unwanted over time.

In a report by McKinsey & Company, up to 94 percent of companies that had implemented supply chain practices with other solutions, are able to deliver on time and in full, without keeping inventory in excess of 85 days. Similarly, companies that did not implement agile practices often had inventory levels remain in the warehouse for more than 108 eight days, and only 87 percent of deliveries were on-time. This does not even consider how many deliveries may not have been fulfilled, such as delays in shipping processes, customization, or errors in order picking processes.

Benefits of Agile supply chain:

Agility practices enable the supply chain to change how processes operate. With the use of lean concepts, the supply chain may have improved the workflow of individual employees.Implementing agile supply chain solutions with real-time data modular and raw material reserve formulations need to be placed close as possible to the end-product. Furthermore, agility allows supply chain partners to work together to produce the amount of product that is needed daily, not based on quarterly, monthly, or yearly forecasts. Essentially, agile solutions are a means of taking the lean supply chain and improving it to respond and foster supplier-to-customer-to-manufacturer relationships.

Agility also provides other benefits to the supply chain industry. By maintaining agility, supply chain entities can adapt to high variety, sudden changes in volume. Unfortunately, this implies the supply chain may not be able to produce a high volume of goods if certain materials are available. As a result, supply chain entities who have implemented agile supply chain solutions understand that real-time data means the sudden change in demand could occur without warning, which could undermine the relationship between suppliers. Therefore, these entities have sought to find ways to still arrive at the same finished product, but at a customized result for each order.

For example, a supply chain entity in fashion or textile printing may not print the actual materials until those materials have already been ordered by a consumer. However, this implies the printing on the materials would not be able to take place until an order has been created, and subsequently, the printing processes would need to take place as close as possible to the area where the order would be fulfilled. Ultimately, this critical point in the agile supply chain goes back to breaking down organizational silos and rigid structures to better meet the demands on a local level.