Applying Lean Manufacturing Principles to Optimize the Supply Chain

Abstract:
Very high mix, low volume and volatile demand manufacturing environments present unique supply chain management challenges in comparison to more high volume, low mix environments. As more manufacturers experience more volatility, these challenges increase.

Traditionally, Lean manufacturing practices are believed to better suited for high volume, low mix manufacturing. This is a myth. This article illustrates, with real world examples and results, that LEAN manufacturing practices have many benefits to offer in all manufacturing environments – regardless of the product mix and volume.

Specifically, the article compares the supply chain challenges using two cases of manufacturing environments. It describes how the supply chain was optimized in terms of performance metrics with special emphasis on excess and obsolete (E/O) inventory and Lead Time (LT) reduction in the optical industry. The improvements in each of the metrics are shown to have a direct effect on the organization’s Ship to Commit (STC) performance.

The paper also describes the special tools developed to optimize different parts of the Supply Chain process and how some Lean manufacturing components – particularly Six Sigma and Kaizen – were deployed to optimize the Supply Chain metrics for a high-mix, low-volume manufacturing environment. The results of each practice are included.