How effective is the ‘Lean’ approach for supply chains?
CML offers an expert opinion on the methods supply chain providers and 3PLs use in order to provide an excellent service to customers.
As the supply chain market becomes increasingly competitive, many 3PLs strive to offer the most cost-effective service to their customers. One method of achieving this is the ‘Lean’ approach, which involves the supply chain continuously identifying and removing non-value added activities from systems, in order to eliminate unnecessary costs while maximising productivity.
The ‘Lean’ method requires long-term planning from 3PLs to ensure that any fluctuations in work load are accounted for and built into the plan. This approach has been successful in the manufacturing industry for many years and has been applied to the supply chain and logistics management industry. However, a cautious approach is recommended as the ‘Lean’ method does not account for any unexpected surges in business. A 3PL should have the resources in place to ‘flex up’ its offering to satisfy demand. Reacting to an immediate surge could result in higher operating costs, in terms of staff and consumables, which would lead to a higher service cost.
Versatility challenges in a ‘Lean’ context are the reason why some 3PLs may integrate an ‘Agile’ strategy rather than implementing a ‘Lean’ methodology. An ‘Agile’ strategy enables 3PLs to customise their processes on a reactive basis. This means that the supply chain must be responsive to changing demand. Yet with no concrete commitment from the supply chain, fluctuation in demand can also result in a higher cost to the customer.
In today’s fast moving and arguably unpredictable market, it is no longer a case of a ‘one size fits all’ approach. An alternative for 3PLs is to adopt the principals of each method, otherwise known as a ‘Hybrid Strategy’. CML practices an ‘Agile’ approach combined with ‘Lean’ techniques, including continuous improvements to find efficiencies, without losing its ability to be flexible. An example of this is the Value Added Services (VAS) CML offers to support planned or reactive customer requirements. By providing quality control, embroidery, pre-pricing and many other services on site, the 3PL provides rapid response and also a cost effective approach as customers can retain their products in CML’s warehouse.
Therefore CML is able to provide its customers with an accurate and competitive cost of service as well as efficiently responding to unforeseen customer needs.