Roberto Priolo on the benefits of developing a lean supply chain
As I browsed the Internet this morning, I ran into an interesting story about French car-maker Peugeot Citroen. The company was forced to stop production in its European facilities, due to lack of screws. Only two sites were able to keep working at a normal speed, and that was thanks to special deliveries of crucial parts urgently needed, by helicopter and taxi.
Even the smallest bit of this story is enough to make any lean practitioner cry out in anguish. Can you imagine the amount of waste generated by having a bunch of screws specially delivered with a helicopter? How much could that cost? More importantly, how much will downtime at many production facilities cost Peugeot Citroen?
This is a good example of how important it is to consider developing a lean supply chain. This doesn’t only mean to streamline and optimise your processes in relation with your suppliers, but actually encouraging them to turn to lean themselves. This may prove to be no easy task, I’ll give you that. However, the benefits are consistent.
Being perfectly aligned with suppliers who are lean themselves will help you to deliver your own products on time, adding value for the customer. Peugeot’s incident, caused by the company’s dependence on an Italian supplier that encountered major problems in switching to a new logistics system, should be a lesson for all of us.
The fact that this happened in a company that has had a continuous improvement programme in place for a very long time is even more telling: it means that it is not possible to lower your guard. Focusing on making processes as efficient and value-creating as possible is important, but making sure these measures are kept in place is even more crucial.
Taiichi Ohno identified, as part of the TPS, seven common types of waste, known as muda: one of them is waiting. A product that is not being processed or transported sits wastefully in a warehouse, waiting to be part of a process.
Peugeot Citroen has production on hold because without the screws it cannot mount shock absorbers and bumpers on many of its car models; at the same time, the Italian supplier, Agrati, has its products in storage, waiting to be delivered. This is waste, and waste does not add value for the customer.
With the September/October issue of the Lean Management Journal going to press very soon, I am now starting to think about content for the next issue. Without anticipating too much, I think it will be important to include something relevant to lean supply chain.
Editor, Lean Management Journal