Lean Thinking Revisited

Posted on August 24, 2020 by F. Robert Jacobs
The supply chains for consumer goods in the U.S. remain under strain months after pandemic lockdowns triggered a range of sudden and surprising shortages. Tight supplies of common household goods like paper towels are likely to persist, the WSJ’s Sharon Terlep and Annie Gasparro report, in part because of the decadeslong quest by businesses to eke out profits by operating with almost no slack in production systems. The sputtering supply chains are putting a new spotlight on the just-in-time strategy born in the hyperefficient Japanese automotive industry that became a religion for many American executives. One landmark in the lean revolution for retailers was Walmart’s decision in 2006 to thin out inventory by $6.5 billion, a drive that relied on efficient transportation.
paper.114432.JPG
Companies that adopted the lean-inventory approach largely omitted tenets of the system that called for having extensive backup plans in case of an event that interrupted plant operations or caused a sudden demand surge. Companies now are seeking to shore up their supply chains with new suppliers and adding risk management to their agendas, But near-term gains have been slow to reach grocery shelves. Producers of paper towels have no plans to build new manufacturing capacity, for example, in part because the central piece of the machinery needed to make the product takes years to assemble.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a comment