The principal objective of this article is to discuss the sourcing of materials by using lean manufacturing principles. First, we discuss the relevance for your business, and after that, we navigate through the other aspects that would be following the achieving of the objectives set for the piece.
The cardinal objective of a business is to earn profits through an increase in the price or reduction in the costs incurred in the manufacturing process. More often than not, bringing a reduction in the cost is a better option than increasing the revenue for the reason that competitive conditions prevailing in the market may either not permit or reduce the chances of effecting an increase in the price. It is in this respect the principle of lean manufacturing comes in handy in global sourcing as it aids in the streamlining of operations management and supply chain management.
About the Lean Management /Lean Manufacturing Principles
The concept of lean management is applied interchangeably. As the central principle on which both principles rest is the reduction of waste in manufacturing.
The origin of the lean concept can be traced to the book “The Machine That Changes the World’, whose focuses was on creating a benchmark in the crafting of production. The principles governing lean manufacturing evolved between 1945 and 1970. It found a sustainable application in Toyota from where it found its way to other Japanese companies as well as global organizations.
Lean Management/Manufacturing Principles
In a nutshell, lean manufacturing, in addition to eliminating waste, helps you to secure optimum quality by constructing a method in which each part is examined no sooner is manufactured. If any defect is noticed, the production line is brought to a stop until a solution is brought about. The central principle governing lean manufacturing is the identification of and elimination of waste (which is treated as a non-value-adding activity). Through a process, continuous improvement by affecting the flow of the product to deliver it to the customer by pursuing perfection.
Application of lean manufacturing in Sourcing
In your business, like others, the cost of materials forms a chunk of the final price of the product. The stages through which the raw material, parts, etc. travel before they are transformed into finished products have a bearing on the cost of your product. Until the final product comes out, these materials are considered inventories only. Hence, effective management of your stocks holds the key to your profitability. The application of lean management principles helps you exercise effective control over the carrying out of the manufacturing. Through the adoption of the production cycle with the least interruptions.
Thus, the lean management/manufacturing principles offer the instruments. It is possible to hold the inventories to form as a buffer between supply and demand, which enables the stocking of tangible goods to meet the future market. It is done by placing small amounts of inventory in strategic locations around the assembly lines instead of warehouses. These stockpiles otherwise termed ‘Kanban,’ help in the lowering of waste and enhancing productivity on the production floor.
In essence, lean manufacturing takes you to the standardization of the process, which enables effecting improvements to your final product. Effecting enhancements do not come overnight as you would be besieged with challenges. It is the continuous improvement as envisaged in the lean concept, which would provide you the necessary tools to overcome them and bring out the final product. At the same time, you keep a watchful eye on the cost of the product at all stages before it is rolled out.
We can conclude the article by pointing out the practical utility of this article for your business. The critical focus of lean manufacturing is the elimination of waste. While sourcing, you need to eliminate anything that does not add value to your final product. You have to keep in mind extensive inventories are not only a waste but also result in high costs. When you realize this and carry your sourcing by applying the eight principles of lean manufacturing:
- underutilization of the workforce
- extra processing.
You can avoid the costly mistake of poor product quality. When done, you gain not only by way of cost reduction. But also the customer who ultimately matters for keeping your business going and viable.
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