Stabilizing Supply Chain Disruption by Building a Lean Organization

Today’s global supply chain environment is experiencing high inflation, higher freight costs, supply uncertainty, and a tighter labor market. Many manufacturers are challenged to balance reducing operational costs while trying to secure a consistent supply of raw materials to meet customer demand. Some elements of the supply chain disruption and inflationary challenges may not be immediately controllable, although various strategies can be employed to enable organizations to create stability in this volatile environment. 

One of those strategies is to establish a lean or continuous improvement capability in your organization. Lean can be defined as a culture of problem-solving, which aims to create flow through the elimination of waste in the operation. 

The first step in establishing this capability is to make the case for change and gain senior leadership support to secure resources to establish the capability. The next step is to assess the organization’s current capabilities in continuous improvement. The expert-led assessment involves rating the maturity of the current culture, the ways of working, and the tools used to drive improvement. After assessing the organization, the next step is to develop a roadmap for lean implementation to address the gaps. This roadmap will include the resource structure, a playbook, metrics, and a training rollout strategy for the organization. 

The next step is to develop site-specific roadmaps for implementation. These should be tailored to address major problems that the site faces, regarding safety, productivity, supply, or cost. Once the major issues are determined, they are assigned to a team who captures the opportunity in a formal project charter or A3 form. This roadmap will also include training needs and the implementation of lean tools and routines to sustain the tools. 

One of the main obstacles in the early stages of lean implementation is instability. Stability is the capability to produce consistent results over time. If a business is experiencing instability, it will find it increasingly difficult to focus on continuous improvement, although, improvement is needed to stabilize. So, how is this addressed? The cause of instability should be addressed as part of the site-specific roadmap for lean deployment.

Let’s look at an example. An organization experiencing high turnover will find it difficult to meet customer demand consistently at the right cost. Building a lean culture with this instability could be difficult because working on improvement often means pulling workers away from the day-to-day process into workshops to allow them to identify and solve problems. To address this instability the organization may need to provide a combination of competitive wages, a stable working environment, and meaningful work. The organization must offer competitive wages to attract and retain talent in the area they operate. The next thing employees consider is a stable working environment. This means having a clean and organized workplace, a good training program, and standardized processes. A clean and organized work area is safer and offers higher productivity because it makes abnormalities visible. Apart from this, employees also look for meaningful work. Meaningful work involves having clear expectations of the work, having the right tools to execute work, and a culture that promotes problem-solving. 

Today’s supply chain environment includes many factors beyond the manufacturer’s control. Even with these challenges, organizations can create some stability by implementing lean processes guided by a roadmap

If the stability issue is related to quality defects caused by variations in the work methods, then standardized work and training should be implemented in that area to stabilize it. If the main issue is equipment downtime, then standardized maintenance practices should be implemented to address unplanned downtime. 

Once the stability issues have been addressed, the next step is to select a pilot area to launch the lean deployment. The pilot area should be selected based on a strong business need. This ensures commitment and support from the leadership for improvement. It is also recommended to select an area with people who can be developed to learn and spread the practice to other areas of the site. These individuals become the internal change agents. As improvements are made through the application of lean tools in the area, it is important to recognize the team and communicate progress to senior leadership. 

The final element of the lean implementation is to implement management routines to monitor and sustain the lean tools on the shop floor. The key here is to develop leaders that understand lean principles. Managers are trained to lead with respect, check standards on the shop floor, and run daily meetings to check performance and solve problems. 

Leading with respect can be practiced through routine observations of the process with an eye for observing how people are working, providing processes, and continuously improving. These observations, often termed “Gemba Walks”, are layered with higher frequency for supervisors closer to the shop floor. Leaders use these to see reality, engage with employees, and solve problems impacting performance that cannot be solved by those working directly in the process. This simple routine is essential to maintaining a highly engaged culture and preventing natural deterioration caused by a lack of process observation. 

Another key routine to implement is a daily management system. These are a series of meetings that occur daily at different levels of the organization. These meetings are brief, no longer than fifteen minutes, stand up, and managed through visual boards with clear performance measures and action plans to address problems from the previous day of shift. The visuals allow everyone in the area to know if they are winning or losing, and if an area is off-track, the team develops countermeasures to address the performance gaps. Daily management is a routine a leader can use to coach problem-solving and develop the next generation of managers. 

In conclusion, today’s supply chain environment includes many factors beyond the manufacturer’s control. Even with these challenges, organizations can create some stability by implementing lean processes guided by a roadmap, while developing the next generation of managers that will be prepared to handle the next distribution.