The Lean Concept In Supply Management
PurchTips - Edition # 49 May 18, 2004
By Charles Dominick
What Is Lean & Why Should Purchasers Care?
The term "Lean" (as in Lean Manufacturing) is used liberally in business today. It's made many of us curious. Next Level Purchasing's president Charles Dominick, C.P.M. recently interviewed Chuck Yorke to demystify Lean. Mr. Yorke is the president of Management Advisory Services and can be contacted at (248) 790-8816 or firstname.lastname@example.org.
CD: What exactly are the principles behind Lean?
CY: The principle is simple: Lean is the elimination of waste in all forms. What we call Lean started with the Toyota Production System identifying seven wastes: Overproduction, Inventory, Waiting, Transportation, Extra Processing, Motion and Defects. Some have identified more wastes. Waste is activity that doesn't add customer-perceived value to the product/service.
CD: How can Lean principles be applied to purchasing and supply management?
CY: There are three flows within companies - material (product, materials, service) flow, information flow, and cash flow. There needs to be accurate information flowing through the supply chain so material flows smoothly. Mapping a process such as purchasing can identify wastes to be reduced or eliminated - how far do we walk to locate a supplier file, do we collect too much information or misinformation, how long does an order wait for approval, etc.
CD: This decade's "Lean" seems pretty darn similar to "Business Process Reengineering" of the '90's. How are they distinct? Does excitement about Lean show how new one is to process improvement?
CY: Reengineering looks at improving processes, Lean focuses on removing waste. To experienced process improvers, sure, removing waste has always been part of the job.
CD: I've seen a vendor who preached Lean but had industry-worst quality. Are there any controls built into the Lean methodology to prevent sacrificing quality for efficiency?
CY: Sorry, but that supplier may have talked Lean but they didn't live and breathe it. Some companies implement a Lean tool or two but do not understand the concept. Bad quality is a defect and that is a waste that needs to be eliminated, not passed on to an internal or external customer. Employees need be engaged in finding and fixing problems, creating a Poka-yoke (mistake-proofing) mechanism to prevent the mistake from occurring again or to make it obvious so the problem is not passed along.
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