One of the most important points for a successful business is to ensure that the front end of the business runs smoothly otherwise the ability of the back end of the business to meet customer expectations, will be difficult or impossible to achieve. Therefore your key steel product suppliers are essential in ensuring that this start to your process is well controlled and risk free.
To mitigate the risk of supply shortages many companies will over order to ensure that stock is available as required. The problem with this Just-In-Case approach is that additional costs and storage requirements are introduced which impact on your profitability or competitiveness.
Moving from a high cost, high space utilisation Just-In-Case system to a lean low cost Just-In-Time process will take some planning and a good understanding of your needs and processes by your supplier, but the benefits can be many, such as reduced storage space, reduced chance of damage to stock, reduced chance of product becoming obsolete (in case of changes in design or customer needs), reduced cost of idle goods.
Collaboration with your supplier therefore to achieve these benefits is critical to ensure that stock supply is effectively controlled so that you receive only what is required at the time it is required and at the expected quality. Process control can be via tools such as a Kanban system; however it is important that the following points are incorporated into your Lean Supply chain plan:
- Relationships are important
- Understanding needs and resources
- Planning and review
- Flexibility and rapid reactions to meet fluctuating market demands
For more information about improving your supply requirements please contact SER® consultant.
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