Discuss alternatives to lean manufacturing

Discuss alternatives to lean manufacturing

According Opportimes.com, a strong rebound in global demand, supply disruptions and inventory depletion have pushed up raw material prices and transportation costs around the world, particularly in North America. An increase in the price of raw materials, coupled with increasing uncertainty in manufacturing supply chains, has led many people to rethink their inventory management. Here, Claudia Jarrett, US country manager at industrial parts supplier EU Automationexplains why plant managers should consider alternatives to lean manufacturing.

Lean manufacturing, which was formerly called just-in-time (JIT) manufacturing, was originally developed by Toyota in 1970. It is a production method designed to help reduce production time, while reducing response times to customers and suppliers. JIT also encourages manufacturers to only order parts when needed, as close to the point of assembly as possible, so that there is minimal inventory on hand.

Simply put, the strategy aims to increase efficiency by eliminating waste, optimizing processes and reducing costs. This is achieved by only producing what is requested and not overstocking. By reducing the production time, the process improves the productivity rate and helps increase profits. In turn, lean manufacturing has been a popular method for manufacturers to ensure products are received only when needed, saving space in their inventory and reducing time in the production cycle.

The current landscape

COVID-19 revealed lean manufacturing issues that caused manufacturers to reconsider this methodology. The JIT is built on forecast demand which, although reliable in the past, has now become more unpredictable. Indeed, the forecasts are based on historical data, but unpredictable social and political upheavals, such as national lockdowns and the conflict in Ukraine, mean that these data can no longer be reliable to the same extent. However, there are a few strategies to avoid stockouts, even given current levels of uncertainty about the future.

Manufacturers are now looking for alternatives to ensure the continued supply of components. Conventional approaches, such as just in case (JIC), where manufacturers create inventory of components, also present their own set of challenges. Rather, companies want a middle ground, one that offers reliability without cutting into profits.

A solution moves towards nearshoring or reshoring. A supplier closer to production can significantly reduce replenishment times and deliver parts faster when needed. The problem of shipping parts has always hindered faster cycle times, while relying on overseas suppliers can increase shipping time and coordination complexity.

Manufacturers can also set up a supply chain that works globally, but also adapts to local demand. This is what we call a “glocal” supply chain. Companies like EU Automation rely on a reliable network of global suppliers and work with international business experts, who speak more than 20 languages, to overcome language and cultural barriers. Operating from four different locations, including the United States, we offer manufacturers knowledge of both global demand and local markets to ensure the right amount of stock is delivered on time.

New methodology

By providing visibility into production, new automation technologies can also help manufacturers reduce lead times and stay afloat during unexpected events. This allows manufacturers to target specific production areas that need improvement. Additionally, knowing a component’s journey through a warehouse provides insight into wastage and consumption rates.

Automated replenishment allows companies to manage warehouse assets. Automated devices identify components in short supply before automatically ordering them from the distributor. This helps production managers keep up with demand, without worrying about component shortages.

The disruptions are likely to affect manufacturing for many months to come, and while manufacturers have enjoyed the benefits of JIT production and lean manufacturing for many years, times have changed.

We now live in a time where alternative approaches need to be considered for steady supply, the reality being that supply chain difficulties and component shortages are likely to persist for some time. Therefore, it is critical that manufacturers adapt their inventory management to avoid downtime and reduce delays, and consider the benefits of alternative approaches.

For more information on inventory management, visit EU Automation Online Knowledge Center.

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