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The network starts with the sources that provide basic ingredients to produce the
products or services. An example of this network can be given by explaining figure
5.2. Suppose, Company X produces high quality shirts that have good demand in the
market. This company gets the supply of its fabrics from Company Y, a textile
mill. In order to make the fabrics, Company Y gets yarns from Company Z. The
retailers of the shirts of Company X are Co. A, Co. B and Co. C. The ultimate
customers get the products of X from these retailers. At the end of every week, X
get information from its retailers (A, B & C) about the sizes and styles of shirts
in these retail shops. Then, X orders more fabric from Y for the next delivery.
According to the needs of fabrics of X, Y then orders yarns from Z. in this way,
the players in the supply chain use the recent sales information to produce what
to be sold next.
Figure 5.2: Supply Chain Management
In this way, all the partners in the supply chain get benefited. A good
relationship with the suppliers is imperative in this case. The manufacturer needs
to make a long term relationship with the suppliers and ensure an assurance and
commitment from the part of the suppliers so that they provide a better and timely
supply of goods. An efficient SCM helps both the producer and supplier by reducing
costs and increasing margins.
Source: Lawrence, J.J. and Hottenstein, M.P. (1995), The relationship between JIT
manufacturing and performance in Mexican plants associated with US companies,
Journal of Operations Management, Vol.13, pp.3-18.
JIT denies the traditional plant layout pattern of the organizations. In the
traditional job and batch manufacturing system, products are passed from one group
of identical machines to another. Machines with identical functions are located
together in department or process. Mainly traditional system supports the
departmental structure. In this case specialized labors are kept for each
department or machines. But JIT supports the manufacturing cell structure. Hansen
and Mowen (2003) say, manufacturing cells contain machines that are grouped in
families, usually in a semicircle. Each cell is arranged to manufacture an
individual product. The workers are assigned to cells and are skilled to run all
machines within the cell. Thus, JIT encourages multi-skilled labor.
Hansen and Mowen (2003) state the following comparison of JIT and traditional
approaches (table 5.1):
Table 5.1 Comparison of JIT approaches with traditional manufacturing and
purchasing
JIT Traditional
1. Pull-through system;
2. Significant inventories;
3. Small supplier base;
4. Long-term supplier contracts;
5. Cellular structure;
6. Multi-skilled labor;
7. Decentralized services;
8. High employee involvement;
9. Facilitating management style;
10. Total quality control;
11. Buyer’s market;
12. Value chain focus. 1. Push-through system;
2. Significant inventories;
3. Large supplier base;
4. Short-term supplier contract;
5. Departmental structure;
6. Specialized labor;
7. Centralized services;
8. Low employee involvement;
9. Supervisory management style;
10. Acceptable quality level;
11. Seller’s market;
12. Value-added focus.
Source: Hansen, D.R. and Mowen, M.M. (2003), Cost Management, Thomson South-
Western.
Principles Description
Value Value should be precisely specified for specific product. The product
should be redefined through the eyes of customers.
Value stream It is important to identify the product, i.e., the total set of
actions required to bring the product from raw materials to its customers should
be identified.
Flow The flow of value should be uninterrupted. Departmentalization and batch
processing should be avoided and the result of this will be short lead time, high
quality and low cost.
Pull This principle encourages letting the customers pull value from the product.
This is usually done by achieving a system called Just-in-time (JIT).
Perfection Always trying for perfection through continuous improvement.
All these authors focused highly on value creation, quality maintenance through
continuous improvement, demand-pull production and less lead time. These
principles should be applied sequentially. Ahlstrom (1998) suggests that the
principles like zero defects and delayering should be applied at the early stage
of implementation. He identified the principles like elimination of waste,
multifunctional teams and pull scheduling as core principles and these should be
applied throughout the implementation process. Vertical information systems and
team leaders are treated as supporting principles in the implementation. When the
base of lean production in the organization will be set, the principle of
continuous improvement should start working on a ceaseless basis (see figure 5.4).
Figure 5.4 Sequences in the Implementation of Lean Production
5.3.3. Some Guidelines for the Managers who want to Introduce Lean
The managers of Bangladesh, who want to introduce lean manufacturing process in
their organizations, should be very careful before introducing it. It needs a good
range of planning and commitment from the part of the decision makers before
introducing this kind of manufacturing process. In this section of the article,
some guidelines are presented for the managers who will think of introduce lean.
Firstly, it needs top management’s approval and commitment to introduce lean
production process in the organization. Top management are the decision making
people in the organization and lean production demands a good number of concepts
which are not traditionally followed in Bangladeshi organizations. For example,
giving enough responsibility and power to lower level employees may not seem very
practical to the top management. Top management should feel the need for
introducing this kind of process in the organization and should commit to provide
all kinds of support in order to implement this.
Secondly, employees should be well trained. Lean production encourages Delayering
and putting responsibilities on the shoulders of the employees of lower hierarchy
level. Moreover, teamwork is encouraged. As a result, it is very much necessary
that all these employees know their duties and responsibilities well and they work
as skilled workers. So, formal training for the employees is very important for
implementing successful lean production process.
Thirdly, in planning process also, multidisciplinary teams should be used. In the
principles of lean manufacturing it is said that multidisciplinary teams should be
used in lean production. But before going to implement lean manufacturing, a good
planning is very important. This planning should also be done by a
multidisciplinary team in which there should be people like engineers,
accountants, marketing and management professional.
Fourthly, good relationship with both suppliers and customers should be developed.
Lean production emphasizes on short lead time and demand pull inventory
management. It means, when an order is received from customer, only then raw
materials and other needed materials should enter in the organization from the
supplier and as a result, there will be no need of holding inventory in the
organization. For this, a good relationship with both the customers and the
suppliers is needed. The supplier should be reliable enough to supply quality
materials for reasonable price. Otherwise, the task of ensuring zero defects will
not be possible.
Fifthly, employees should be motivated with appropriate incentive plans in order
to establish their commitment towards the process and the organization. In order
to make the implementation of lean successful, every person in the organization
should take part. They should be enthusiastic for continuous improvement and
ensuring quality. A good and effective incentive plan is needed in this case.
Sixthly, a pilot project should be started and tested before going for the final
implementation of lean production. As lean production demands a huge range of
planning and cost, the plan for lean should be, at first, implemented as a pilot
project (in a small scale) to anticipate the possibility of success of the final
project. If the pilot project shows satisfactory performance, only then it will be
applied to the whole organization at a large scale.
5.4. Conclusion
The concepts like SCM, JIT and Lean Manufacturing are interrelated. On one hand,
if an effective supply chain management is not maintained, JIT system will not
work. On the other hand, lean production embraces SCM and JIT and various other
modern production management concepts. All these concepts demand for the attention
to the customer requirement by providing quality products to them. Applying these
kinds of concepts in the business make the firms competitive in the market.