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

with APA style reference

Answer 1

Question 1: Why Companies adopted Lean Thinking and JIT model?

Lean thinking is a business methodology that aims to provide a new way to think about how to organize human activities to deliver more benefits to society and value to individuals while eliminating waste. Lean thinking is a way of thinking about an activity and seeing the waste inadvertently generated by the way the process is organized. It uses the concepts of:

1) Value

2) Value streams

3) Flow

The aim of lean thinking is to create a lean enterprise, one that sustains growth by aligning customer satisfaction with employee satisfaction, and that offers innovative products or services profitably while minimizing unnecessary over-costs to customers, suppliers and the environment.

Just-in-time also known as JIT is an inventory management method whereby labor, material and goods (to be used in manufacturing) are re-filled or scheduled to arrive exactly when needed in the manufacturing process.

The focus of JIT is to identify and correct the obstacles in the production process. It shows the hidden problems of inventory. Just In Time method prevents a company from using excessive inventory and smoothens production operations if a specific task takes longer than expected or a defective part is discovered in the system.

Advantages of Lean Thinking

1) Increased product quality: Improved efficiency frees up employees and resources for innovation and quality control that would have previously been wasted.

2) Improved lead times: As manufacturing processes are streamlined, businesses can better respond to fluctuations in demand and other market variables, resulting in fewer delays and better lead times.

3) Sustainability: Less waste and better adaptability makes for a business that’s better equipped to thrive well into the future.

4) Employee satisfaction: Workers know when their daily routine is bloated or packed with unnecessary work, and it negatively affects morale. Lean manufacturing boosts not only productivity, but employee satisfaction.

5) Increased profits: And, of course, more productivity with less waste and better quality ultimately makes for a more profitable company.

Advantages of Adopting Just-In-Time include

1) Just-in-time approach keeps stock holding costs to a minimum level. The released capacity results in better utilization of space and bears a favorable impact on the insurance premiums and rent that would otherwise be needed to be made.

2) The just-in-time approach helps to eliminate waste. Chances of expired or out of date products; do not arise at all.

3) As under this management method, only essential stocks which are required for to manufacturing are obtained, thus less working capital is required. Under this approach, a minimum re-ordering level is set, and only when that level is reached, order for fresh stocks are made and thus this becomes a boon to inventory management too.

4) Due to the abovementioned low level of stocks held, the ROI (Return on Investment) of the organizations be high in general.

5) As this approach works on a demand-pull basis, all goods produced would be sold, and thus it includes changes in demand with unanticipated ease. This makes JIT appealing today, where the market demand is fickle and somewhat volatile.

6) JIT emphasizes the ‘right-first-time’ concept, so that rework costs and the cost of inspection is minimized.

7) By following JIT greater efficiency and High-quality products can be derived.

8) Better relationships are fostered along the production chain under a JIT system.

9) Higher customer satisfaction due to continuous communication with the customer.

10) Just In Time adoption result in the elimination of overproduction.

Question 2: Discuss major types of Waste, companies has to keep in mind during production.

There are seven types of waste:

1) Waste from product defects.

2) Waste of time.

3) Transportation waste.

4) Inventory waste.

5) Waste from overproduction.

6) Processing waste.

Waste minimization is one of the primary objectives of Just In Time system. This needs effective inventory management throughout the whole supply chain. Initially, a manufacturing entity will seek to reduce inventory and enhance operations within its own organization. In an attempt to reduce waste attributed to ineffective inventory management, SIX principles in relation to JIT have been stated by Schniededans and they are:

1) Reduce buffer inventory.

2) Try for zero inventory.

3) Search for reliable suppliers.

4) Reduce lot size and increase the frequency of orders.

5) Reduce purchasing cost.

6) Improve material handling.

Question3: Assess the reasons for using lean thinking (suitable examples), what are the benefits from Suppliers to end users?

Implementing lean manufacturing practices in part means identifying and eliminating the wasteful practices and procedures that are specific to your business and replacing them with more optimized lean strategies.

Just a few examples of lean manufacturing in practice include:

1) Value stream and process mapping: Value stream mapping and process mapping involve evaluating and charting broad and specific processes to better understand precise areas of waste. Once processes are mapped and analyzed, existing issues can be pinpointed and eliminated or streamlined.

2) Tightly controlled automation and production flow: Well-implemented assembly lines are essential to lean production. Lines should be automated where possible, but accommodate live workers where quality control demands.

3) Inventory reduction and Kanban: Under lean production practices, inventory levels are strictly regulated, often using a system called Kanban. With a Kanban system, essential inventory is replaced only when an employee takes a small “Kanban card” to a supervisor; inventory is then procured or replaced strictly as needed. Inventory is kept with corresponding Kanban cards on a centrally located Kanban rack.

4) Employee training: Employees should be trained not only on lean principles, but on the specific lean methods and processes to be utilized moving forward.

Benefits across the supply chain stakeholders are mentioned below:

Lean Suppliers

Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiencies of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean suppliers deliver on time and their culture is one of continuous improvement.

To develop lean suppliers, organizations should include suppliers in their value stream. They should encourage suppliers to make the lean transformation and involve them in lean activities. This will help them fix problems and share savings. In turn, they can help their suppliers and set continually declining price targets and increasing quality goals.

Lean Procurement

Some lean procurement processes are e-procurement and automated procurement. E-procurement conducts transactions, strategic sourcing, bidding, and reverse auctions using Web-based applications. Automated procurement uses software that removes the human element from multiple procurement functions and integrates with financials.

The key to lean procurement is visibility. Suppliers must be able to “see” into their customers’ operations and customers must be able to “see” into their suppliers’ operations. Organizations should map the current value stream, and together create a future value stream in the procurement process. They should create a flow of information while establishing a pull of information and products.

Lean Manufacturing

Lean manufacturing systems produce what the customer wants, in the quantity the customer wants, when the customer wants it, and with minimum resources. Lean efforts typically start in manufacturing because they free up resources for continuous improvement in other areas, and create a pull on the rest of the organization. Applying lean concepts to manufacturing typically presents the greatest opportunity for cost reduction and quality improvement; however, many organizations have received huge benefits from lean concepts in other functions.

Lean Warehousing

Lean warehousing means eliminating non-value-added steps and waste in product storage processes. Typical warehousing functions are:

1) Receiving

2) Put-away/storing

3) Replenishment

4) Picking

5) Packing

6) Shipping

Warehousing waste can be found throughout the storage process including:

1) Defective products which create returns

2) Overproduction or over shipment of products

3) Excess inventories which require additional space and reduce warehousing efficiency

4) Excess motion and handling

5) Inefficiencies and unnecessary processing steps

6) Transportation steps and distances

7) Waiting for parts, materials and information

8) Information processes

9) Each step in the warehousing process should be examined critically to see where unnecessary, repetitive, and non-value-added activities might be so that they may be eliminated.

Lean Transportation

Lean concepts in transportation include:

· Core carrier programs

· Improved transportation administrative processes and automated functions

· Optimized mode selection and pooling orders

· Combined multi-stop truckloads

· Crossdocking

· Right sizing equipment

· Import/export transportation processes

· Inbound transportation and backhauls

· The keys to accomplishing the concepts above include mapping the value stream, creating flow, reducing waste in processes, eliminating non-value-added activities and using pull processes.

Lean Customers

Lean customers understand their business needs and therefore can specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance and quality. Lean customers are interested in establishing effective partnerships—they are always seeking methods of continuous improvement in the total supply chain to reduce costs. Lean customers expect value from the products they purchase and provide value to the consumers who they interact with.

Question 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 current COVID-19 pandemic has caused disruption through all sectors with various degrees of impact. It is time for companies to rapidly assess, recover, and respond quickly through numerous obstacles and challenges that still stand in the way. Through the chaos of recovery, it will be very easy to overlook the root cause and gaps within a supply chain that may have paralyzed businesses during this unpredictable major event in the first place. Building towards a resilient supply chain will be at the epicenter of future discussions for years to come.

Agile supply chain is not the option available in market but a necessity for the success of the company. Agile supply chain is the solution to the many problems that exist in today’s supply chain management networks. This concept has been recognized, as a solution to increase the responsiveness of a supply chain in a more changing environment. Today’s supply chain compete on various strategies, but the most commonly used one is agile strategy. Because this strategy anticipates demand fluctuations in a volatile market demand patterns. Also this solution has facilitated the suppliers to manage their own data through self-service functionality.

Key Parameters of Agile Supply Chain Management:

This strategy become the priority, mostly preferred strategy in present era. It focuses on the inventory management. Excess inventory and potential shortages are eliminated by using this strategy. In present era, various software’s have been introduced in the market to manage the inventory. Agile supply chains are best at, getting more accurate and up to date demand. In simple words it is the reaction time how quickly respond to market demand and satisfy their end customer. To make it possible one should have a network based on electronically connected to retailers and all other drivers of the chain, this is how end to end visibility is achieved. To make it robust chain, it would be vital to use state of the art, planning applications, that supports the working teams in decision making and sometimes with what if scenario capability, usually companies go for backup plans that costs considered to be extra, than such applications make it more responsive and cost efficient.

Running ad-hoc what-if scenarios with predictive real-time analytics can help organizations react to demand or supply changes in rapid fashion – preventing oversteering and making it easier to react smartly to changes with more confidence.

Lastly, According to Christopher (2000), We are now entering the era of “New Competition” where markets are dynamic, and prices will go to organizations that can better build structures, and do more integration. This solution of agile supply chain management is more information-centric rather than inventory centric. Therefore, agile supply chains are need of the hour. Since market and demand patterns are changing on a very rapid pace, than the ultimate strategy would be to opt for agile supply chain management. Through this strategy one can retain the market and also compete with the market.