Manufacturers can leverage their supply chain as a strategic advantage, but the reality is that many today still aren’t taking full advantage of technologies that can help increase the value of their supply chain. By applying lean concepts at the supply chain level, manufacturers can become more agile and improve service to their customers while simultaneously lowering costs from production to delivery—and enter the era of the lean supply chain.
A failure to link manufacturing with supply chain can lead to a fractured, misaligned approach to business performance, problems that can become more acute over time.
Without a tight relationship between production and distribution, a manufacturer will find itself with competing priorities between the plant’s objective to maximize production and the organization’s goals to meet customer demand and manage cost.
At first blush, this may appear to be the difference between a make-to-stock and make-to-order model. While true that make-to-order requires a balance of production capacity with an agile distribution network, implementation of a lean supply chain requires adoption of lean manufacturing principles along with supply chain systems that work closely together and can respond to change. Such a combination yields benefits regardless of the manufacturing model.
Over the years, principles of lean manufacturing have gained traction within plants, helping organizations improve material handling efficiency, product quality and ultimately, customer satisfaction. A walk through a typical plant reveals line after line of automation—each machine purpose-built for its specific task—whether to mix, fill, sort, combine, assemble, put on a lid, or apply labels or other packaging. Each automated process seeks to increase efficiency and reduce waste. The benefits of lean manufacturing are very well documented, so why stop there? Why not apply those same principles across the supply chain to help reduce waste and drive down costs in three main areas:
- + Inventory
- + Labor
- + Transportation
To accomplish this, one must embrace the concept that customer satisfaction and on-time deliveries can be guaranteed, not by holding onto large inventory levels, but via a well-run and efficient supply chain.
The make-to-order concept in its purest form would require little to no inventory, but that wouldn’t be a viable model for some manufacturers simply due to the time required to build the finished goods. In addition, the need to fulfill rush orders and ensure shift changes don’t cause a lapse in production and shipping would also make it difficult for some to adopt a pure make-to-order model. This doesn’t mean that a manufacturer operating under a make-to-stock model or another manufacturing process won’t realize benefits from a lean supply chain—lean supply chains are not dependent on when in the order lifecycle the goods are made.
The Right Systems
By streamlining pre-production and post-production movements of raw materials and finished goods, manufacturers using these principles with the right technology behind it have seen reduction in time from receipt of raw materials to shipment of finished goods, allowing many to achieve same-day build and ship.
For instance, a transportation management system (TMS) enables more efficient shipping by making better routing decisions to minimize transportation costs. Whether consolidating shipments to increase trailer utilization, maximizing route efficiency to reduce miles or facilitate zone skipping or LTL pooling to reduce costs associated with the final distribution leg, a TMS system drives down overall shipping time and costs and plays an important role in the lean supply chain.
Combined with a warehouse management solution (WMS), a TMS can support a leaner supply chain, but can it get even leaner? It is possible, but with another component that serves as a flow controller of sorts, managing movements of trailers in and out of the yard and driving additional efficiencies into the lean supply chain: a yard management system. Yard management, when deployed along with WMS and TMS solutions, completes the lean supply chain from a system perspective. Additional workflows are unlocked and better decisions can be made once this component is added to the mix.
Tight collaboration between system components is critical. When planning transportation movements for the day, the execution system inside the warehouse must be informed of the plans. Exceptions within the warehouse may require an adjustment to the shipment. How do you make this happen, in real time, unless the systems are both working from the same information?
When transportation management has visibility into trailer data in the yard, better carrier selection decisions can be made. If the transportation management system knows that a given carrier already has empty trailers on the yard, wouldn’t it be less expensive to use one of those rather than request a different carrier to send an empty trailer? Yet, if that data is available in a different system, it cannot be leveraged during planning. Additionally, significant savings can be achieved when information is shared between the yard and the distribution center. Once a trailer is either unloaded at the receiving dock or loading is completed at the shipping dock and the trailer is pulled away, another trailer should be immediately moved to that dock. If this process isn’t immediate, associates on the dock have to wait, killing productivity and introducing more waste into the supply chain.
By linking these processes together and creating yard movement tasks in real time based on operational triggers within the warehouse, labor efficiency is driven even higher and waste is reduced or eliminated.
The obvious answer for all of these examples is to build integration between warehouse management, transportation management and yard management systems.
Still, individual systems can go offline for any number of reasons. Integration between systems can break down over time as individual product updates are made. Manufacturers need a better solution to successfully manage their distribution network than just a collection of best-of-breed systems. It isn’t enough to simply integrate a warehouse management system from one vendor with a transportation management system from another vendor.
To meet today’s challenges, a comprehensive, manufacturing-focused supply chain solution is required, with components built upon a single platform that offers a common login and user experience, shared business rules and, perhaps most important, shared data. Only then can a true lean supply chain be achieved.