EP136 Demand-Driven Business
Innovation holds no value without effective implementation. Supply chain management facilitates the seamless transition of materials, products, and information from inception to the customer. #AdvancedQualityPrograms #TheQualityGuy #DemandDrivenBusiness
Sylvester Stallone said “Every champion was once a contender that refused to give up. “
All successful companies emphasize understanding and satisfying the end user. This philosophy prioritizes getting close to the customer to anticipate their needs before they even arise, translating into the consistent delivery of exceptional products.
Innovation is meaningless without proper delivery. Supply chain management ensures a smooth flow of materials, products, and information from suppliers to producers, distributors, and ultimately, the customer. A demand-driven supply network reacts to actual customer demand, optimizing efficiency. The goal is to pull resources through the system only when needed, aligning with lean principles.
Lean principles prioritize the customer and the processes required to deliver products and services. Kaizen promotes continuous process improvement, Just-in-Time practices accelerate material flow, quality at the source eliminates defects, and value-stream analysis streamlines ordering and delivery processes. These are just a few examples of how lean principles optimize demand-driven supply networks.
While some view lean approaches as overly simplistic, the key to success lies in achieving a continuous flow of materials, having the right materials in the right place at the right time. This includes raw materials, components, and sub-assemblies used in your final product.
There are two primary methods for managing material flow:
Material Requirements Planning (MRP): These are computer-driven systems that use anticipated customer demand forecasts to calculate the needs for material and secure a continuous flow.
Pull Material Systems: These manage material flow based on actual customer orders, ensuring enough material to pull through the whole chain.
Many perceive these two approaches as an either-or situation, but these systems are not mutually exclusive. Both aim to ensure the right materials are readily available.
Imagine you have a company that creates toys. To make these toys, you need parts and materials like wood, plastic, or screws ready when you start producing.
Being strategic with your supply chain means planning carefully where you keep these parts and materials before you need them. To do this, you can employ three tactics that support your lean supply strategy:
Strategic Inventory Positioning: This involves storing parts and materials at convenient places throughout the production process. Think of it like having boxes of needed materials close to where the parts for your toys are needed, such as near assembly points. This way, you don’t have to waste time searching for what you need when you need it.
Buffer Inventory Protection: Even with materials at convenient places, you might want to keep a small extra stock of certain parts just in case. This “buffer” helps you manage unexpected situations, like if a location is not accessible, preventing sudden delays.
Pull System Implementation: Instead of constantly ordering new parts, you only order what you actually need right now, no more, no less. This helps avoid having too many of those parts sitting around, which can be expensive and wasteful if you don’t have a large budget for producing your toys.
The Lean philosophy thrives on continual adaptation, making it a crucial element of any organizational culture. Over time, the culture becomes the unique way each company operates and solves problems.
This does not occur spontaneously. It requires careful management and cultivation within the teams and people. For this to happen, culture must start at the highest levels of the organization. Change management involves diverse approaches and tools used to guide people and resources towards the end result. When building a Lean culture, the principles must originate from, be supported by, and be driven by the organization’s leaders. But how, you may ask? Well, there are three simple steps to apply.
Unfreeze: This step involves recognizing a need for change and preparing the organization for the transition. This includes identifying potential resistance points within the organization and developing strategies to overcome them.
Change: This step focuses on actively implementing all activities that create change. Specific tasks and goals are delegated throughout the company, with top executives managing and supporting the overall effort. This may involve the management team collaborating to address problematic areas and resistance.
Refreeze: The final step solidifies the new methods, making them permanent pillars and principles within the corporate culture. In this case, Lean practices become ingrained in all processes, shaping the company’s standard operating procedures.
Lean thinking permeates every aspect of a successful company, becoming a mindset that drives every action and decision. Building a lean workforce, where employees naturally embrace lean principles, is the ultimate goal.
Cultivating a Continuous Improvement Mindset is necessary. Employees must believe there’s always room for improvement. Problems are not just solved but prevented. Permanent problem resolution requires identifying and eliminating the root cause, not just treating symptoms.
Improvement teams include employees from diverse areas impacted by a specific issue. For example, a quality issue with raw materials might involve engineers, factory operators, purchasing agents, and even suppliers, ensuring a holistic solution that doesn’t negatively affect other parts of the process.
Finally, eliminating waste is a core principle of a lean culture. Just as Kaizen and other philosophies aim to do, a lean culture strives to eliminate all sources of waste by either repurposing them or preventing them from occurring in the first place.
A quality mindset and continuous improvement efforts become prevalent throughout the organization, making lean a cornerstone of daily operations. The corporate culture evolves into one where ‘this is just the way we do things here.’
“Going in one more round when you don’t think you can – that’s what makes all the difference in your life.”… Sylvester Stallone