The Concepts and Importance Lean Supply Chain

Several researchers (Most of them are institute of supply management) explained that the information transferred from one stage to another in supply chain tends to be distorted and can misguide upstream members in the production decisions, resulting in wastes, thereby affecting the coordination between the different stages of a supply chain. Lean supply chain continuous improvement processes to focus on the elimination of waste or non-value-added functions. These waste and non-value-added stops across the supply chain and reduce set of times to allow for the economic production of small quantities. ABC (institute of supply management) came out with his points that strongly support on lean supply chain best practices and performance. How organizations keep goods and services flowing in smooth, uninterrupted and cost effective fashion from suppliers to customer firms end to end. Inventory perspectives; how do we keep minimal, but sufficient inventory in the supply chain pipeline in order to Provide good service levels without interruptions Bozdogan emphasized that the successful of lean supply chain management principles derive from 10 Basic Lean Principles:

• Focus on the supplier network value stream
• Eliminate waste
• Synchronize flow
• Minimize both transaction and production costs
• Establish collaborative relationships while balancing cooperation and competition
• Ensure visibility and transparency
• Develop quick response capability
• Manage uncertainty and risk
• Align core competencies and complementary capabilities
• Foster innovation and knowledge-sharing (core subjects of masters in supply chain management)

The Lean Supply Chain’s Practices

APICS,; Manhood et al focused more on lean supply chain level of practices (“Poor Practice”, “Inadequate Practice”, “Common Practice”, “Good Practice” and “Best Practice”) while Aberdeen Group is focused more on level of adoption (“laggards”, “industry norm” and “best in class”) of lean supply chain implementations. In conjunction to the objectives of the study, the APICS,; Manrodt et al research framework on level of lean supply chain practices seems to the perfect match and suitable to be used in order investigate the extent of lean supply chain practices towards performances in Malaysia. If we go back to the research objectives, four objectives related to the lean supply chain practices which are first, to investigate the extent of implementation for lean supply chain practices in Malaysia and second, to examine the effects of lean supply chain practices on the performance of the lean and lean supply chain in Malaysia. Additionally the study is to examine the mediating effect of lean performance. This argument perfectly supported the importance of framework selected.

Lean Performances

Lean performance is total internal lean optimization process. To develop a lean supply

Chain, there is need to apply lean to the supply chain as a system (Hennery supply chain specialist). Lean is an approach that identifies the value inherent in specific products, identifies the value stream for each product, supports the flow of value, lets the customer pull value from the producer, and pursues perfection. It is through this holistic, enterprise-wide approach to lean implementation that the theory extends beyond functional strategy to a broader supply chain strategy employed by the company. A lean organization optimizes the flow of products and services to its customers. It delivers customer value by:

• Reducing lead times
• Improving quality
• Eliminating waste
• Reducing the total costs
• Engaging and energizing people. (Analysis of supply chain specialist)

Framework and Hypotheses

As lean practices will be the core component of organizations business performances, these variables may also significantly influence the lean performance, which need to be focus in this study. Therefore, this theoretical framework (Figure 2) is served to investigate the performances rate of independent variables (lean practices from diploma in supply chain management notes).

Image Courtesy: AIMS College UK

Figure 2.Proposed Theoretical Framework

Hypothesis

Lean Supply Chain Practices and Lean Performance

In term of demand management, it is very important that how well firms manage the

Demand signal, demand collaboration, sales and operation planning and inventory

Management is also reflected in how a lean supply chain system views as a system. Lean performance is total internal lean optimization process; therefore demand management is vital to play their role to accept the concept of lean performance within their processes subsets. The strengths of lean approach are leanness are more immediate and practical focus on waste, flow and flexibility, therefore, supply chain partners including the upstream suppliers and downstream customers can work together as a team to provide value to the end-user customer.

(Hypothesis are taken from my masters in supply chain management documents and other topics are taken from diploma in supply chain management syllabus books)