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Operations and Supply Chain


Dr. Muhammad Saeed Shahbaz

Master in Business Administration

(Executive) (66) 3A and 6 A
Lean supply chain
An extension of the Lean philosophy to supply chain efforts
beyond production.
Lean supply chain management seeks to minimize the level of
resources required to carry out all supply chain activities.
Firms work with buyers and customers with the mutual goal of
eliminating waste, improving speed and improving quality.
Key suppliers are considered partners, and close customer
relationships are sought.
• Extra resources are a cost
• To few resources stop production
• Does not mean no inventory (or other buffers) – it means the
lowest amount possible
All forms of waste – capacity, skills, redundant tasks, and so on.
Don’t fixate on the inventory 2
Lean Production

Lean Procurement
Lean Production
Lean Transportation

• Value chain: each step in the supply 1. Waste from overproduction

chain should create value 2. Waste of waiting time
• If it does not create value, it should be 3. Transportation waste
4. Inventory waste
• Customer value: something for which 5. Processing waste
the customer is willing to pay
6. Waste of motion
• Waste: anything that does not add
7. Waste from product defects
value from the customer’s perspective 3
Lean Supply Chain Practices

• Process standardization
• Systems Thinking
• Just-In-Time
• Continuous improvement
• Kaizen
• Waste Reduction

• Operational excellence

Process standardization

A key objective of lean SCM is the ability to pursue the

continuous elimination of waste by eliminating error
through the rationalization and standardization of all
internal and external business processes.

Systems Thinking

Improving the performance of every subsystem does not

necessarily improve system performance. The sum of
local optima does not equate to the global optimum.
Improvements in subsystem performance must be
gauged only through its impact on the whole system.

JIT is a well known lean approach. It represents the key philosophy
and characteristic of lean manufacturing and lean supply chain. JIT
is an approach to material control based on the view that a process
should operate only when a customer signals a need for more parts
from that process. When a process is operated in the JIT way,
goods are produced and delivered just-in-time to be sold.
This principle applies to the entire lean supply chain. Parts are
produced and delivered just-in-time to be built into the
subassemblies. Throughout the supply network, the trigger to start
work is governed by demand from the customer.
A lean supply chain can be conceived as a chain of customers, with
each link coordinated with its neighbors by JIT signals. The whole
supply chain is triggered by the demand from the end-consumer in
the market place. This system of flowing materials and good
through the supply network is characteristic of a pull system. Parts
are pulled through the chain in response to demand from the7 end-
“5S” System of Improvement. The 5S’s are lean concepts
derived from the Japanese words: seiri (sort), seiton (set
in order), seiso (shine or purity), seiketsu (standardize),
and shitsuke (sustain).
The 5S philosophy focuses on establishing effective
work place organization and standardization of work
procedures centered on simplifying the work
environment, reducing waste and nonvalue activity while
improving quality efficiency and safety.
The 5S system must be pursued rigorously by each
supply chain partner if a lean SCM initiative is to

Quick Changeover

While primarily concerned with the reduction of

machine set-up times, the concept of quick
changeover of processes to reduce operational lead
times can be applied to increasing the performance of
any process anywhere in the supply chain.

Six Sigma

The reduction of process errors to six decimal points and

the availability of mechanisms to ensure total quality
across the supply chain constitute the scorecard as to the
continuing success of a lean SCM effort.

Agile Supply Chain
Agile Supply Chain is built to be highly flexible for
the purpose of being able to quickly adapt to
changing situations.
This methodology is considered important for
organizations that want to be able to adapt to
unanticipated external economic changes, such as
economic swings, changes in technology, or changes
to customer demand.

Information based
supply chain rather
then inventory
Agile Supply Chain
• Alertness, defined as the ability to quickly detect
changes, opportunities, and threats.
• Accessibility is the ability to quickly access relevant
• Decisiveness, or the ability to make decisions resolutely
using the available information.
• Swiftness, or the ability to implement decisions
• Flexibility can be described as a company's ability to
modify its range of tactics and operations to the extent
needed to implement its strategy.

The agile supply chain Framework

Difference between Lean and Agile Supply Chain

Thank you very much