Lean Supply Chain Management and Consumer Satisfaction - Essay Example

Implementation of Lean Table of Contents Introduction 3 Implementation of Lean 3 Lean Supply Chain Management and Consumer Satisfaction 5 PERT Model – The Planning and Control Technique 5 Benefits of Using PERT Model 6 Best way to implement Lean 6 Value Stream Mapping (VSM) Method 7 Waste Management Procedure and its Importance 7 Suitability of Organisation for Lean Implementation 8 Lean Implementation at Toyota Motor Corporation 9 Seek Elimination of Waste 9 Seek Improved Quality 9 Seek Increased Product Flow 9 Seek Reduced Cost 9 JIT and Toyota Motor Corporation 10 Conclusion 10 Reference List 11 Introduction Over a period of time, several researchers have given their views regarding the application and process of lean management. Lean management has been defined as the systematic approach of businesses to increase the product and services’ value to their consumers. This systematic approach is focused on minimising the waste of material, time and efforts of the organisation by means of rigorous improvement (Christopher, 2012). Lean SCM represents a novel way of assessing or thinking about the networks of suppliers. Just-in-time (JIT) as well as lean manufacturing plays a major function for better working of SCM (Nightingale, 2005). Lean management demonstrate a range of activities that assist organisation to improve value added operations by eliminating different non-value added processes. It is done for the purpose of reducing system-wide expenses or costs while fulfilling the necessities of customers. Several researchers have developed the notion of lean management within the company’s supply chain procedure (Lummus, Duclos and Vokurka, 2003). According to these researchers, the information flow within the various stages of supply chain can be distorted by the participants of this procedure. This situation can further misguide the administration of organisation regarding the decision making procedure of production as well as waste management. The elimination of waste and introduction of value added approach of lean supply chain management has allowed the companies to lay emphasis on the economic production of minimum quantity and high quality goods (Gordon, 2008). Implementation of Lean Lean implementation includes five major steps which express value that meets the needs of customer at a precise time. (Source: Author’s creation) Specify value: The first step states that the value should be defined from the final customer’s perspective. It further explains that the value should be expressed in terms of exact product, which fulfils the requirements of customers at a definite price as well as at an exact time (Lean, 2015). Map: The value stream should be identified and the collection of all definite actions is needed to bring a definite product by means of three crucial management tasks; the task of information management, the task of problem-solving and the task of physical transformation. Once the value stream is identified, a map of present as well as future state should be created and then the waste should be recognised and categorised as well as eliminated in the present state (Lean, 2015). Flow: The third step explains to eradicate functional barriers in order to develop an organisation which focuses on product improvement and this will dramatically improve or develop the lead-time (Lean, 2015). Pull: The organisation should let the users or customers to pull the products as required by them thereby eliminating the requirement for sales forecast (Lean, 2015). Perfection: The fifth step defines the method of reducing cost, effort, space, time and mistakes is a never ending procedure. So, the organisation should return to the initial step and start the subsequent lean transformation in order to achieve perfection. It will assist the companies to offer such products which will fulfil the desires of customers (Lean, 2015). Lean Supply Chain Management and Consumer Satisfaction The practice of lean supply chain management assists companies to reduce their entire cost of product delivery by streamlining the multiple production facilities. It also reduces the product and inventory wastage within the organisation (Agus and Shukri, 2012). The process permits the organisations to allocate adequate inventory to the production procedure as per the demand of the consumers. Therefore, this process ensures less wastage of raw material, cost and time to generate and supply high quality services and product. The management of lean supply chain enables the companies to allocate flexible pricing as per the market norms (Li, 2012). The industry standardization process assists the organisations to improve the product as well as production quality. Thus, this process allows the management to enhance the satisfaction of consumers by delivering high quality and affordable products within minimum frame of time (Ellinger, et al., 2012). Through the approaches of information technologies, operations management and lean logistics, the management can lessen the lead time, reduce inventory level, deliver secure quality, lower costs and therefore attain greater customer satisfaction. These practices of lean are applicable to large scale production (Jung, Chen and Jeong, 2007). Organisations that do well by fulfilling the requirements of customers with better effectiveness and efficiency than their peers are likely to attain their objectives. Effectiveness in the exploitation of a company’s resources when offering customer satisfaction is directly translated into profitability and reduced cost (Jung, Chen and Jeong, 2007). PERT Model – The Planning and Control Technique Program Evaluation Review Technique (PERT) is one of the planning and control techniques which are used for the purpose of defining as well as controlling tasks required to complete the project. The steps of the PERT planning are as follows: Identification of activities as well as milestones: The activities are generally the project’s tasks. The milestones are referred to the events which mark the commencement as well as the end of activities (Maserang, 2002). Determination of proper series of activities: This step is combined with the above step because the series of activities is obvious for some of the tasks. Other jobs may necessitate some analysis in order to find out the accurate order in which the activities must be performed (Maserang, 2002). Construction of the network diagram: By utilising the series of activities, a network diagram is drawn which shows the series of parallel and successive activities (Maserang, 2002). Estimation of time needed for every activity: An exclusive characteristic of PERT is that it deals with the uncertainty and improbability in the activity completion period. For every activity, PERT model comprise of three time estimates which are: most likely, optimistic and pessimistic time (Maserang, 2002). Determination of the critical path: Normally, the critical path of any project is determined by totalling the times for each activity in every sequence as well as deciding the longest path for every project (Maserang, 2002). Up gradation of the PERT chart: As the project develops, the projected time is replaced with the actual times. Sometimes delays may take place; in that case, additional resources are required to remain on the schedule and then the PERT chart is modified in order to show the novel situation (Maserang, 2002). Benefits of Using PERT Model The benefits of using the PERT model is that it helps in improved planning as well as scheduling of the activities. The PERT chart provides the benefit of enhanced forecasting of the resource requirements. It assists in identifying the recurring planning patterns, hence, simplifying the process of planning. The model provides the ability to observe and therefore reschedule activities in order to reflect the resource limitations and interproject dependencies. It also provides completion time of the expected project and the possibility of completion prior to the specified date (Maserang, 2002). Best way to implement Lean Lean flow is all about how the items to which the organisation is dealing with move from initial to last step. In the lean flow, the intention is to move the product or item through several processes without any hazard to quality as well as customer satisfaction. The concept of ‘Toyota Production System’ (TPS) and ‘Just-in-Time’ (JIT) can be employed in any organisation or industry. If the lean is successfully implemented, then the productivity improvement is expected at more than 40%. It will also help to improve the delivery of item and therefore will lead to better customer satisfaction. In this way, it will augment the profits of the organisation and will enable to attain the competitive advantage in the marketplace. The best mode to implement lean is to utilise the minimum time and resources as possible in order to achieve perfection and therefore to improve customer satisfaction. Value Stream Mapping (VSM) Method VSM is a process of visually mapping the flow of material and information in order to prepare a future state map with better performance. The researchers have assessed that the VSM comprises of two flows out of which one concentrate on resources from supplier to customer, while the other flow explains the communications from customer back to supplier (Rother and Shook, 2003). This method assists the companies to design the future sequence of events in the supply chain management by examining the current state of the organisational supply chain. VSM is the important tool of lean management which represents material and information flow as well as the proper visualization of the end-to-end organisational operations and its outcome. It assists the management to analyse the lack of information flow in the supply chain management. The proper insinuation of VSM model assists companies to eliminate waste in business process such as non-utilized talent, transportation, inventory and extra-processing cost etc. In this way, it enables the companies to cut their cost and waste of their business operation (Rother and Shook, 2003). Waste Management Procedure and its Importance Waste management procedure is the prevention, monitoring, treatment, reuse and handling of waste which are involved in the business operations. Lean is regarded as an important characteristic of any successful manufacturing firm. The fundamental principle of waste management or reduction of waste has become extremely influential since the time it has been developed. A number of researchers have evaluated the significance of waste management procedure for appropriate execution of organisational operations while minimizing the waste and maximising the productivity. The procedure of waste management assists companies to gain flexibility (Staniskis, 2005). The primary emphasis of this method is to circumvent the excess production that can result in product pile up. The waste management procedure allows organisations to reuse as well as recycle the remaining resources in order to reduce cost of the company. This method also recommends the companies to dispose the waste in a proper manner in order to maintain their production and supply chain procedure (Hajmohammad, et al., 2013). Suitability of Organisation for Lean Implementation Insightful execution of lean is essential for the high-end manufacturing firm and is also complementary to the decision making procedure. For the lean implementation, big manufacturing as well as information technology and consulting firm is suitable because they involve high-end process and tools which are necessary for the lean implementation. Companies like Toyota Motor Corporation and IBM have successfully implemented the lean management in their business process (Weele, 2005). Implementation of lean is considered as a transformational procedure and therefore it requires supporting the development of organisation alongside process enhancement. Time management is also one of the vital factors in the process of lean implementation because it involves lots of time to apply lean management. Toyota Motor Corporation has efficiently done the time management by eliminating the wasted resources at an accurate time form their manufacturing system. The six sigma concept of lean management includes various statistics as well as advanced calculations. Therefore, the big information technology companies can only include this system in their business process because they have capable engineers and experts who can efficiently apply this process (Holweg, 2007). It is complicated to implement lean in small organisations because they face several difficulties in this process. One of the problems is to decide upon which tools of lean to apply as well as when to apply. The execution of lean management comprises of change management in the business operations. It is not possible for the small firms to adopt the change management in their business operations because it involves changes in several processes within the organisation. Time management is one of the major concerns for the small companies in order to implement lean. They lack in their capability of removing wasted resources in proper time. Implementing lean requires a lot of time because it is a long-term process and the small enterprises lacks time management. The firms, other than the manufacturing and information technology involves only the front-line managers and not the engineers, so, it is difficult for them to adopt the six sigma concept (Holweg, 2007). Therefore, lean is properly implemented in the big manufacturing and information technology organisations. Waste minimisation as well as resource efficiency is becoming increasingly important in the organisations, but the procedure of waste management cannot be uniform for all the organisations and sectors. This is because the individual waste management procedure of different companies cannot be able to deal with all potential waste materials in a sustainable manner. Waste management system requires being flexible in terms of social, environmental, and economic condition of the specific organisations. Therefore, the researchers have argued that this method generally permits the organisation to follow an economically efficient, environmentally resourceful and cost effective way to deal with the end-to-end supply chain (Hajmohammad, et al., 2013). Lean Implementation at Toyota Motor Corporation Toyota Motor Corporation makes use of four main lean principles in its production system. Seek Elimination of Waste By removing wasted resources or items from any of the manufacturing system, they directly boost the productivity of their system. The company increases productivity by reducing the inputs of resources into their system. By doing this, Toyota Motor Corporation actually reduces costs or expenses which are then passed to the users in terms of the lower prices. This results in the augmentation of the market share which enhances their profitability (Weele, 2005). Seek Improved Quality Under this principle of lean management, the main goal of the company is to eradicate errors and imperfections in the process of production. This is because, the deprived quality disturbs or alarms the schedule of production and hence reduces yields, slows the product flow speed and adds to total processing time (Weele, 2005). Seek Increased Product Flow Lean operations are generally required to be approachable or responsive towards the market changes. Toyota Motor Corporation designs a system of production which will exploit the product flow by means of several operations efficiently and quickly. This system comprise of JIT approach in order to schedule production by means of operations to reduce wasted time (Stevenson and Sum, 2009). Seek Reduced Cost As the Toyota Motor Corporation reduces wasted manual labour time and resources, there is a consequent reduction or fall in the process cost. With lean management, the product movement is improved. Minimising waste, enhancing product flow and improving quality all add up towards minimising the cost of production of the company (Stevenson and Sum, 2009). JIT and Toyota Motor Corporation Best practices like lean manufacturing as well as JIT were built up around the Toyota Production System. These methods play a crucial role in the smooth supervision of the production lines of Toyota Motor Corporation. JIT production relies on precisely tuned practices by making use of exact quantities of items needed. The ideal objective of JIT production system at Toyota Motor Corporation is synchronising production and demand to no product units until an order for the product is placed, which eliminates useless inventory, unwanted production and entire waste related to them. It facilitates a smooth workflow with attentively measured and planned work-cycle times as well as restrains the cost of capacity and wasted time. It aids the staff of Toyota Motor Corporation to lay emphasis on their works without any intrusion, which result in timely delivery and products of better quality (Toyota, 2015). Conclusion The paper is designed to focus on the concept of lean management including its theories and models. Lean management demonstrate a range of activities that assist organisation to improve value added operations by eliminating different non-value added processes. The practice of lean supply chain management assists companies to reduce their entire cost of product delivery by streamlining the multiple production facilities. This process allows the management to improve customer satisfaction by delivering high quality product. The benefit of PERT technique is that it helps in improved planning as well as scheduling of the activities. VSM model assists companies to eliminate waste in their business process. Waste management is an important part of the lean management which assists companies to gain flexibility in the business operation. For the lean implementation, big manufacturing as well as information technology and consulting firm is suitable because they involve high-end process and tools which are necessary for the lean implementation. Reference List Agus, A. and Shukri H, M., 2012. Lean production supply chain management as driver towards enhancing product quality and business performance: Case study of manufacturing companies in Malaysia. International Journal of Quality & Reliability Management, 29(1), pp.92-121. Christopher, M., 2012. Logistics and supply chain management. United Kingdom: Pearson. Ellinger, A., Shin, H., Magnus Northington, W., Adams, F. G., Hofman, D. and OMarah, K., 2012. The influence of supply chain management competency on customer satisfaction and shareholder value. Supply Chain Management: An International Journal, 17(3), pp.249-262. Gordon, S. R., 2008. Supplier evaluation and performance excellence: a guide to meaningful metrics and successful results. Florida: J. Ross Publishing. Hajmohammad, S., Vachon, S., Klassen, R. D. and Gavronski, I., 2013. Lean management and supply management: their role in green practices and performance. Journal of Cleaner Production, 39(1), pp.312-320. Holweg, M., 2007. The genealogy of lean production. Journal of Operations Management, 25(2), pp.420-437. Jung, H., Chen, F.C. and Jeong, B., 2007. Trends in supply chain design and management: Technologies and methodologies. Berlin: Springer Science & Business Media. Lean, 2015. The five steps of lean implementation. [online] Available at: < http://www.lean.org/WhoWeAre/LEINewsStory.cfm?NewsArticleId=17> [Accessed 16 June 2015]. Li, L., 2012. Effects of enterprise technology on supply chain collaboration: analysis of China-linked supply chain. Enterprise Information Systems, 6(1), pp.55-77. Lummus, R. R., Duclos, L. K. and Vokurka, R. J., 2003. Supply chain flexibility: building a new model. Global Journal of Flexible Systems Management, 4(4), pp.1-13. Maserang, S., 2002. Project management: Tools and techniques. [online] Available at: < http://www.umsl.edu/~sauterv/analysis/488_f02_papers/ProjMgmt.html> [Accessed 16 June 2015]. Nightingale, D., 2005. Lean supply chain management principles and practices. [pdf] Available at: < http://ocw.mit.edu/courses/aeronautics-and-astronautics/16-852j-integrating-the-lean-enterprise-fall-2005/lecture-notes/7_lean_sup_ch_mg.pdf> [Accessed 16 June 2015]. Rother, M. and Shook, J., 2003. Learning to see: Value stream mapping to add value and eliminate muda. Cambridge: Lean Enterprise Institute. Staniskis, J., 2005. Integrated Waste Management: Concept and Implementation. Environmental research, engineering and management, 3(33), pp.40-46. Stevenson, W. J. and Sum, C. C., 2009. Operations management.  New York: McGraw-Hill. Toyota, 2015. Toyota : Just-in-Time. [online] Available at: [Accessed 16 June 2015]. Weele, A. J., 2005. Purchasing & supply chain management: analysis, strategy, planning and practice. London: Thomson learning. Read More