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The Lean Supply Chain: A Model for Operations Management - Term Paper Example

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Companies attempting to recognize costs, improve flexibility and responsiveness to changing customer demands, and also maintain competitive edge are moving toward establishment of a lean production and supply system…
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The Lean Supply Chain: A Model for Operations Management
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Download file to see previous pages Kumar and Suresh (2009, p.183) define lean supply methodology as setting standards of production that allow for the production of the maximum variety of product using a minimal of tools, materials, labor and systems. Lean supply, however, requires many different considerations in order to maximize total business value and cost reduction in order to create a competent operations model. Evidence suggests that a well-coordinated lean supply system will require technological systems implementation, changing the dynamics of organizational culture from a socio-economic lens, and also by performing qualitative and quantitative quality measures throughout the operations cycle. Not all suppliers are going to be willing to comply with lean needs or maintain the capacity to provide faster response to the customer, which can conflict establishing a lean system for operations. Lean supply methodology, though an excellent method of streamlining and improving business function, is not without its challenges and barriers to implementation. Understanding the Lean Supply System In many different industries ranging from manufacturing to food services, the lean supply system avoids holding costs that continue to strain operational budgets. In most industries, there is a necessity to maintain finished product inventories as well as raw materials inventories in order to meet with customer and manufacturing demand levels. Though these businesses attempt to move inventory based on sales forecast and operational forecasts, forecasting demand is not an exact science. Thus, businesses are forced to pay higher taxation on these inventories, provide for environmental concerns (e.g. refrigeration and temperature controls), pay for lighting and other associated utilities, and manage personnel costs associated with these held inventories. Heizer & Render (2004) identify that holding costs like these are largely unavoidable as the tangible space needed for housing inventory volumes are often fixed costs in the operations budget. Companies that do not have a lean supply philosophy will often piggyback on existing distribution networks to avoid these holding costs or hold stock at a hub warehousing system. This is one of the value-added benefits of selecting a lean supply system, allowing the business to be more flexible without having concerns over working with third party warehousing partners. The lean supply system allows the business to conduct its forecasting on a shorter time cycle, considering the time through the production cycle to the ultimate movement of inventory as delivery to the final customer. The organization will look toward diversified supply options to ensure rapid deliveries of raw materials needed to create a final product or service, thus avoiding the need to house and store volumes of materials not necessarily slotted for immediate movement through the production or shipment system. But, how is the lean supply accomplished? Herein lays the difficulty of lean methodology: Discovering how best to establish operations function and ensure responsiveness of supply partners throughout the value chain. When an organization has not developed a lean supply system, they have much more control over procurement and delivery of raw materials, forecasting weeks or months forward to account for risk contingencies and ensure that production can be increased spontaneously by maintaining high inventories of needed ...Download file to see next pagesRead More
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