Reducing waste and non-value-added activities is a great way to optimize supply chain.
There may be at least seven different types of wastes one may reduce within supply chain
- Over Production
This may be as simple as producing well above the requirement.
- Transportation
This may be due to wastes created while in transportation or due to complex logistics routes followed between supply points to demand points (users).
- Waiting/Lead times
High lead times from supplier to warehouses/Manufacturing locations or between warehouses to demand points (users) causes either customer dissatisfaction or stoppage of work.
- Inventory
Too much of Inventory lying idle in warehouses is a real waste of overheads and working capital.
This is mainly due to lack of proper systems leading to lagging behind the demand swings. This lag is always overcome by building additional inventory buffer.
This wastage may be overcome by better forecasting processes and by building systems between supplier and warehouses. Also, one needs to look into supply points for supplier also so as to reduce lead times drastically within the entire supply chain to the supply point.
From Supply point in warehouse to demand point- one may need to have a seamless logistics network so as
- Motion
Manufacturing locations or warehouses need to be designed with proper ergonomics in mind else there is always waste of resources due to incorrect motion flow.
- Over Processing
Overprocessing due to complex authorizations process leads to wastage.
- Defects
Defects due to quality of incoming materials or due to quality of processes or due to improper technical specifications lead to rework and wastages.
Waste reduction is a key step in improving supply chain efficiency and this impacts bottom line of the organization positively. Also, it impacts customer satisfaction leading to customer delight.
Source—Self experience and various supply chain articles
