To enhance our status and ensure we provide optimum value without reducing quality, we can adopt a LEAN approach. The LEAN methodology originated in manufacturing during the 1950s, largely attributed to the Toyota Production System. It’s core aim is to eliminate waste and make processes more efficient.
Although LEAN is commonly associated with manufacturing, it can be applied across any sector, including services and procurement. Whether you’re managing tangible goods or intangible services, reducing waste in any part of your business can add value and improve performance.
Figure 1: Lean Approach
What Is Waste in a LEAN Approach?
Within a LEAN approach, there are seven key forms of waste. Reducing these across your operations will save money, improve efficiency, and increase customer value.
1. Transport
Unnecessary movement of goods or people. For example, frequent small deliveries could be replaced by consolidated shipments to save costs and reduce environmental impact. Similarly, inefficient travel routes for sales or service teams can lead to time and fuel waste.
2. Inventory
Excess stock that isn’t immediately needed ties up cash and storage space. Adopting approaches like Just-in-Time (JIT) can help avoid stockpiling and reduce risk of obsolescence.
3. Motion
Inefficient movement of people or equipment within processes. Repeated trips to storage areas or frequent handling of the same documents are examples. Consolidating tasks or rethinking layout can reduce wasted motion.
4. Waiting
Delays where people or machines are inactive. For example, production staff waiting for materials, or a delayed service due to system downtime. Scheduling and planning can help reduce these gaps.
5. Over-Processing
Doing more than necessary. If a non-customer-facing component is finished to an unnecessarily high standard, that’s wasted time and money. Focus only on what’s required to meet expectations.
6. Over-Production
Producing more than is needed, leading to surplus stock or waste. This is often seen when economies of scale are pursued at the cost of demand alignment. Accurate forecasting and flexible purchasing can prevent this.
7. Defects
Errors that result in rework, returns or waste. These might come from faulty materials, poor communication, or lack of training. Regular supplier assessments, KPIs, and stakeholder collaboration can help reduce defects.
Why Apply a LEAN Approach?
Thinking LEAN helps you:
- Improve profitability
- Streamline processes
- Deliver more value to customers
- Reduce environmental and social impacts
Ask yourself:
- What waste could I reduce in my supply chain?
- How can I apply the LEAN approach to deliver value more sustainably?
Done well, adopting a LEAN approach can improve your company’s bottom line and support ethical, sustainable and environmentally responsible business practices.
If you are interested in taking the next step in your procurement and supply career, explore our range of CIPS qualifications and contact our team to find out more.