LOGISTICS MANAGEMENT

Introduction

Globalization and the adoption of technology in businesses have made it necessary for companies to adopt various strategies to remain effectively competitive. The production processes which are commonly associated with higher costs can be reduced through the elimination of wastes and the use of efficient systems. By creating cost affordable products, companies can also increase their competitive advantage in the global business environment. This paper aims to analyze lean thinking and JIT models, wastes incurred in production, reasons for adopting lean thinking, and the use of agile supply chain systems in production processes.

Lean Thinking and JIT model

Manufacturing companies, reducing costs has been one of the essential aspects to maximize profits. Just In Time (JIT) models are mostly adopted by companies to improve efficiency and productivity. It also reduces the wastages encountered during the production processes by focusing on raw materials needed for the production only (Melanie, 2017). This model enables companies to adopt measures that reduce the cost of inventory hence avoiding the concept of overproduction. It can also aid in business partnerships since businesses whose clients request products that they do not have, and the company can purchase from another supplier on demand instead of buying excess goods. The business environment is becoming more aware of market changes and uncertainties.

The JIT system is mostly adopted by small enterprises due to their low working capital and increases cash flows. However, this system becomes more convenient for businesses with highly reliable supplies. Lean thinking concept has been embraced by companies to aid them in being creative about organizational practices to ensure that human resources are useful and productive while decreasing wastage. It operates on five principles, such as perfection, value, pull, flow, and value streams. Lean thinking aids enterprises to maximally utilize their human resources for continuous improvement of the company’s operations, therefore increasing team growth (Majewski, 2017). When companies define the value of goods they want to produce for their clients, they can allocate resources that provide the quality of products demanded by their clientele.

Through lean thinking, the company is cautious about activities that would effectively create the value goods hence eliminates any wastes encountered in production. After the elimination of trash, the company adopts smooth-flowing operations that motivate production. Establishing pull systems relies on the needs of clients to create only goods demanded. The goal of the lean thinking processes is to develop perfect products and services which fully satisfy clients’ demand..

Wastes considered in production

Any products in production which do not adequately add any value whatsoever to the consumer but use resources are regarded as waste. Wastes are avoided due to their cost implication for a company. There are various wastes that companies identify earlier in the production process to prevent them where possible; they entail transport, overproduction, inventory, defects, motion, unused talent, waiting, and extra processing (Skhmot, 2017). The lean thinking scheme is useful in identifying and eliminating wastes. In transport, excessive movements can result in excess wear and tear, exhaustion, and unrequired activities, especially when transportation conducted is not necessary. During the inventory, wastes occur from overproduction and over purchases, which increase the financial resources used. In defects, residues arise from creating unfit products that do not meet the client’s needs hence cannot be used.

Overproduction occurs when companies produce more than is needed by the customers. This can be avoided by using the JIT model of production to prevent increases in capital expenditure. Wastes in motion are caused by unnecessary movements of machinery and personnel. This often results in wastage of time and energy in doing unrequired activities. Residues that are encountered in waiting include time spent in awaiting materials or machinery (Skhmot, 2017). This results from having an insufficient mechanism to carry out work at various stations and stages of the process. In extra processing, more work is done to produce a product that exceeds customer’s demands. This often results in waste due to over-utilization of resources to achieve a much higher quality. The available talent in production consists of personnel skills that remain unused potential. Mainly, this arises when employees are not sufficiently trained, employed to perform duties that do not utilize their qualifications and are not valued to contribute feedback to the company.

Reasons for lean thinking and benefits to users

Lean thinking has been utilized efficiently to eliminate wastes from work activities. Through waste elimination, it is possible for companies to direct the resources used towards better initiatives. Lean thinking emphasizes continuous improvement; hence the result is targeted to be perfect. This motivates the company to adopt more efficient systems and strategies geared towards making the manufacturing industry better. For instance, instead of producing excess shoes in a company, the company can get feedback from clients on the types of shoes they prefer as well as the quantity. Production is reduced hence avoiding wastage in overproduction. Lean thinking aids in regulating complex processes as well as managing the team involved in the production.

Utilizing the employee’s skills to harness the production also aids the company in increasing morale for carrying out the work. In the supply chain business, each human resource is relied upon to carry out their work to ensure continuity and smooth flow of processes. Lean thinking aids businesses in creating value for their clients through the creation of demanded products only. The quality aspect is highly embraced hence maximum care in creating products and services. Reduction in costs encountered during production leads to an overall decrease in the prices of goods and services; therefore, end-users can comfortably afford the commodities.

Agile supply chain concept

The COVID-19 pandemic has disrupted the global business environment and caused uncertainty in the manufacturing processes. There has been a disruption in the natural business environment. Agile supply chain concepts involve fast response to market demands by producing more batches of items. Its primary focus is to save costs by being market flexible to quickly ascertain market issues and address them effectively. The COVID-19 pandemic was unexpected and caused uncertainty in the business environment. Agile supply chain systems are more effective in dealing with such kinds of disruptions since there is an increasing demand for commodities. For instance, due to the unexpected lockdown state in some countries, the need for food supplies and other household commodities is quite high.

Food manufacturers are facing issues in getting labor to produce more due to health issues. Online businesses are becoming more profitable since buyers can purchase products without necessarily going to the shops. However, flexible systems are more efficient for companies with established network suppliers (Deloitte, 2020). For instance, companies that partner with Amazon can sell their products online to consumer’s hence continuous production. This pandemic has caused numerous countries to consider the adoption of digital supply chain systems, which are more efficient in customer delivery. Agile supply chain systems adopted by companies such as Amazon have enabled it to get more revenue from the rampant sales of numerous products globally.

Conclusion

The uncertainty of the business environment necessitates the adoption of very agile measures to meet market requirements.  The COVID-19 pandemic has created significant disruptions for various businesses. However, most digital supply chain companies have had a tremendous increase in their revenues due to excessive demand. The adoption of suitable measures to handle various environmental fads will be the only way companies can become competitively advantageous.

References

Deloitte. (2020). COVID-19 Managing supply chain risk and disruption.

Majewski, M. (2017, 3, 20). Ten benefits of lean. Retrieved from Plainview.com: https://blog.plainview.com/10-benefits-of-lean

Melanie. (2017, June 29). The benefits of the Just In Time approach. Retrieved from unleashed software: https://www.unleashedsoftware.com/blog/benefits-jit-system-approach

Skhmot, N. (2017, 8 5). The eight wastes of lean. Retrieved from The lean way: https://theleanway.net/The-8-wastes-of-lean