16 Major Benefits of a Lean Supply Chain

Last modified: June 10, 2016

Note from Editor: This adapted post from Cerasis, a North American transportation management 3PL was originally published for manufacturing and applies for supply chains as well. 

Buyers change to efficient providers to have their rapid delivery preferences and quality expectations met. This makes manufacturers modify their cycle times to prevent customer loss and those motivated to have the best service and systems of operation have turned to lean system strategies with a good variety of models to choose from. ISO standards are published which help maintain conformance. Some universities teach “5S” programs college curriculums and the SCOR model is used as well. Some emphasize implementation speed and cost-savings and the bulk of models are scalable by company size and structure.

Who Needs a Lean Supply Chain?

Anyone with several of these listed problems in their operations can benefit from a leaner supply chain:

  • Buffer inventory excesses
  • Work-in-progress (WIPs) lines are too full
  • Low quality data and data flow
  • Unmet goals for production
  • Lack of balance in production schedules
  • Systemic overages in overhead costs
  • Lack of end-user satisfaction with service
  • Unmet need for data to forecast sales
  • Error-filled records of inventory, shipping and unit specifications
  • Poor quality and delinquent suppliers still within the supply chain
  • Overages and shortfalls of unit inventories
  • Delayed cycle times
  • Complicated procedures for basic operations
  • Too many process steps across the supply chain
  • Excessive lead times
  • Standing backorders as a rule
  • Shifting of units without cause
  • Extra inventory units are often housed in holding areas
  • Poorly packed containers allowing unit damages
  • Waste in employee work activity

Planning and Implementing Lean Supply Chains

Lean supply chain implementation should not be undertaken until top management firmly supports the initiative and it is clear that many processes will be changed. After careful planning, test implementation on one product line to demonstrate proof of concept regarding your design for implementation prior to broad-scale execution.

  1. Choose an executive to spearhead the lean program and planning.
  2. Implement full worker training on new systems.
  3. Put forth comprehensive designs for the new/modified processes.
  4. Start with a single area of operations and plan to make a test run.
  5. Set quantified goals for performance improvements in several processes.
  6. Phase-in implementation by design.
  7. Create time-tables.
  8. Get management signoff prior to starting phase 1.

Outdated MRP scheduling approaches add ineffective products which fail to mirror buyer demands and lack flexibility to adjust often enough to meet the variable needs. That leads to excessively prolonged lead times and inventory, often employed simply to make up for system inadequacies. This leads to an unfulfilling end-user experience. It is far better to use a system which estimates actual depletion rates to replenish stocks.

Migrate to lean supply chain-friendly software, integrating departments and suppliers as appropriate to capacitate optimal flow of information and coordination of diverse activities. This is often the most challenging and expensive step in conversion to lean supply chain operating, but the payoffs in operational efficiency, quality, and customer satisfaction make it well worth the investment. Advanced Planning and Scheduling (APS) software can be an ideal tool for managing customer services, inventory allocations, scheduling, and other functions—eliminating countless routine hand-to-hand transfers of information that prolong the fulfillment process.

Measuring Lean Supply Chain Performance

Insufficient metrics employed by many business leaders only show use of equipment and production labor efficiency—with an unbalanced concentration for their benefit while skipping over many other issues of performance within a business. Cultivate well-rounded, self-monitoring metrics, which keep employees accountable to lean program participation and conduct regular reviews which are also helpful. Workers can then see these lean advantages of the system:

  • Smoother workflow by cutting data delays
  • Streamlined steps from physical reorganization
  • Simplified filing and e-filing
  • Grouping of similar tasks and routes
  • Efficiency added productivity

Lean Supply Chain Integration

Owners need close supplier coordination to optimize lean supply chain programs. Your suppliers may need to upgrade their own system or processes to meet yours. Sharing business intelligence gained by your lean supply chain can help suppliers get behind meeting your needs. Many benefits from integration include:

  • Lower forecasting dependency
  • Greater latitude in accommodating variable buyer purchasing patterns
  • Less “overproduction” waste
  • More collaborative supplier relations
  • Pro-active problem solving
  • Obviously reduced waste at all system points

Costs of Lean Supply Chain Implementation

You may spend to modify but have big gains from a lean supply chain implementation using current equipment. Management may quickly adopt lean in light of profits, ROI, market share and lowered costs of man-hours and inventory – particularly when their competition is lean and gaining ground.

Cost-Saving Benefits of Going Lean

Your moneymaker is a satisfied buyer. Productivity also up ticks through company unity and supply chain linking with redundancy and excess paperwork is removed.  Going Lean:

  • reduces cycle times
  • reduces needed supply chain floor space
  • cuts percentage of reworks
  • cuts purchasing costs
  • frees up capital, strengthens the company
  • reduces production costs
  • cuts necessary lead times
  • cuts quality and inventory costs
  • increases on-time delivery rates

Really Being Lean

Some supply chain facilities try to impress buyers by pretending they have a lean supply chain program. This lean façade runs up costs and site visits and at times even remote dealings easily expose the ruse. This “fake lean” is set up by companies who consider lean to be an encumbrance, however, a legitimate lean strategy will increase quality, efficiency, cost savings, and deepen buyer satisfaction.

Go Lean Now!

Today’s marketplace demands lean company operations. Lean principles are highly valued in upping product value and buyer-honoring practices, not to mention removing wasteful ways of operating. Lean, mutual problem solving cultures empower and encourage all team members to contribute to quality operations. Facilitating communications throughout the organization and its supply chain attracts quality personnel who are key in maintaining excellent production and buyer services for a competitive edge in the global marketplace.

Do you have first hand experience of a true lean supply chain implementation? Leave a comment below.


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