As an efficient project manager, just like yourself, cutting costs sure is one of the most important things for your project. By reducing project or product costs, you find your way to save more and increase your business profits. These can be done with the help of a lean supply chain.
So what is a lean supply chain? What does a lean supply chain look like? And how can you develop a lean supply chain strategy? This post has all the answers for you.
What is a lean supply chain?
A supply chain is a complex structure and network of companies and organizations working together for the production and delivery of your product.
A lean supply chain is, to some extend, the epitome of an effective and efficient supply chain. It improves the quality and productivity by reducing wastes and unwanted components from the process and add more value to your end product.
Now, let’s break it down so you’ll have a better idea of what a lean supply chain is and how a lean supply chain can help you reduce wastes and improve profit margin.
What contribute to a lean supply chain?
1. Sourcing
Sourcing in many organizations can be divided into two different departments, a local and a headquarter one, especially when your organization is quite big. This could add unnecessary staff and activities in getting the same quantity and quality of job done.
For instance, the sourcing staff could get different quotes just because of their different locations. As a result, different information of the same supplier could be recorded in the system, and people would be at lost as to which supplier or vendor to contact with.
In a lean supply chain, such activities that provide little or no value should be axed. To do so, a better process should be built for fewer mistakes and less amount of work done by fewer people. The supplier assessment platform powered by Insight Solutions Global is such a tool in helping you reduce your sourcing wastes.
2. Manufacturing
Lean manufacturing nowadays is probably more well known then lean supply chain in that the former usually is where the significant improvement happen.
In the manufacturing process, quality control plays a big part in reducing wastes and resources, and finally, the formation of a lean supply chain.
With proper product quality control, the yield rate of your company will be increased, and the quality of the end product will also see a growth. In this case, you’ll gain more happy customers and less return goods with quality problems.
3. Warehousing
Is there excess and obsolete space in your warehouse? Are you paying for space that is not adding value to your end product and your customers, like unnecessary inventory?
If you say yes to both of the questions, you still have the improvement room to a lean supply chain.
Storing and maintaining unnecessary inventory requires money and resources, which could add up to the final product cost. But you can’t have no inventory at all, since it could severely increase the lead time of your product and add more risks to the overall supply chain.
So the key here is to strike a balance. You need to avoid inventory waste is to have an agile inventory system that you can track your stock levels at all times. A cloud-based inventory management software is a good starting point.
4. Transportation
Transportation and shipping is always overlooked when it comes to a lean supply chain.
For instance, a company may neglect the fact that they can combine additional orders at a batch to minimize shipping costs or avoid expensive shipping options.
This is totally understandable, because satisfying customer service and fast delivery is how you can earn more happy customers. But with the unnecessary transportation costs considered, it may be time for your organization to consider keeping stock in a local depot.
That said, a lean supply chain is not just cutting costs at each section of the supply chain, it’s more an overall redundancy so less waste is generated in the long run.
How to develop a lean supply chain
Developing and achieving a lean supply chain is much more difficult than it sounds. But with the help of Insight Solutions Global’s team, you can rest assure that we’ll help you develop your own lean supply chain in no time. To do so, we:
1. Identify waste source and cost reduction opportunities
To do so, we need to understand your project and product requirements, including product details, functionality and reliability. With our years of experience in the field and our broad supplier network, we’ll work our best in identifying the waste in your supply chain and finding your cost reduction opportunities.
2. Study engineering requirements and identify root cause
When the waste sources are identified, we’ll conduct a thorough technical and commercial analysis of cost breakdown with our extensive supplier database and experienced benchmark system. This is how we locate the root causes of the excessive product and project costs.
3. Solve root cause and reduce product cost
We roll up our sleeves and get the job done: be it sourced and selected reputable suppliers in a short time, provide re-design and re-engineering proposals, or develop a cost reduction road map, we have the right team that is dedicated in fixing your project issues and reducing your product cost.
If you’re interested, feel free to see for yourself how we helped our client reduce the product cost and build a lean supply chain: Product Cost Reduction Case Study.
If you’re also bothered by developing your lean supply chain, feel free to give us a shout, and we’ll be glad to help you out.
