Green and Sustainable Supply Chain Management

Environmental changes across the world have generated a movement to identify the causes of global warming and develop solutions to end it before it is too late. In an effort to achive this, many countries are creating laws and regulations with the specific aim to reduce carbon emissions and greenhouse gas effect.

The truth is that environmental change is upon us. Not only do we have climate problems but we are also dealing with a resource depletion issue. With economies like India and China growing at near double digit rates, the population of the world continues to grow creating shortages of many resources that we use to take for granted.

Many consumers, stakeholders and businesses are becoming more involved in the growing green movement. Influenced by customer loyalty shifting towards environmentally friendly products, businesses are trying more and more to make their supply chains greener by introducing sustainability strategies throughout their organizations and supplier relationships. The recent focus on sustainability has resulted in a growing need for integrating environmentally safe choices into supply chain management practices. The concept Green and Sustainable Supply Chain Management can be defined as the process of using environmentally friendly inputs and transforming them through change agents into outputs that can be reclaimed and re-used at the end of their life-cycle therefore, creating a sustainable supply chain. The whole idea of a sustainable supply chain is to reduce costs while helping the environment.

Sustainability and Profitability

A Green and Sustainable Supply Chain integrates ecological factors and supply chain management principles to identify the environmental impact of an organization’s supply chain processes.… Read the rest

Postponement Strategy in Supply Chain Management

Postponement is first implemented in manufacturing processes to reduce cost of inventory and improve service level within the company while the product variety increases. The concept of postponement is to delay the change in form, identity and place to the latest possible point until customer commitments have been obtained. It is by exploiting the commonality between items and by designing the production and distribution process so as to delay the point of differentiation. Postponement is closely intertwined with modularization where products in a certain product family are designed where all of them consist of different standardized units. With modularization, combination of different standardized sub-components allows the producing of different end products. The form, function and place of the product are altered and is in contra with the push systems in which goods are manufactured entirely in anticipation of future customer orders and stored downstream without customer’s formulated specifications.

Postponement is a mass customization technique that is applicable for certain products that can have their variety postponed until just before shipping. Here’s a list of methods for achieving mass customization:

  • Create products and services that are customizable by customers (involving design function)
  • Modularize components to customize finished products and services (involving the manufacturing, distribution, marketing function and the product design).
  • Provide quick response throughout the value chain (involving the design, manufacturing, distribution and marketing function).
  • Customize services around standard products or services (involving the distribution and marketing function).
  • Provide point of delivery customization (involving the marketing function).
Need for Postponement

The application of postponement strategies is increasing in the practice of international business.… Read the rest

Cellular Manufacturing – Meaning, Implementation and Benefits

A cellular manufacturing layout is in direct contradiction to the traditional production line. In the production line, numerous workers are needed to service a single production line running from receiving of raw material to shipping of finished product. A breakdown in staffing or machinery in any part of the line nearly always resulted in the entire process being idled until the specific difficulty in the line was repaired, or re-crewed. With cellular manufacturing, production is divided among groups, or cells, of workers and production machinery. Thus, the breakdown of one cell, due to equipment malfunction or staffing problems, does not radically affect the rest of the production process.

Technology and cellular manufacturing have combined to streamline the production processes of numerous established and start-up manufacturing facilities worldwide. Lean systems, such as Kaizen, and Six Sigma, to name just two, though very often high in startup cost, provide both a short- and long-term benefit in reducing the waste common to the traditional production line. The bottom line in any manufacturing enterprise is profit. Cellular manufacturing has been proven to dramatically increase profits.

Cellular Manufacturing is a model for workplace design, and is an integral part of lean manufacturing systems. The goal of lean manufacturing is the aggressive minimization of waste, called muda, to achieve maximum efficiency of resources. Cellular manufacturing, sometimes called cellular or cell production, arranges factory floor labor into semi-autonomous and multi-skilled teams, or work cells, who manufacture complete products or complex components. Properly trained and implemented cells are more flexible and responsive than the traditional mass-production line, and can manage processes, defects, scheduling, equipment maintenance, and other manufacturing issues more efficiently.… Read the rest

Role of the Warehouse in Postponement Strategies

The rapid changes occurring in customer-supplier relationship has resulted in shortening the product life cycle along with the product variations, which could meet the complex customer satisfaction demands. As the customer requirements changes rapidly, it increases the complexity of planning and demand forecasting to suit the changing demands. Hence, postponement strategies are able to help in solving such complex issues. The strategy involves delay in the production process to the maximum possible time, while delaying the point of product differentiation. As the whole strategy is related to the value of information, it can be maximized with delay in production decision time, giving more time to receive and analyze the customer requirement and demand. Hence, the postponement strategies help in improving the quality of decision, while also optimizing the quality of product planning and demand forecast. The relevant strategy also allows for the flexibility in the production scheduling, where the actual demand, in real terms, can play an effective role in the complete supply chain network.

While Alderson introduced the concept of postponement strategy in marketing, for the first time in 1950, the postponement applications have been extended to areas like manufacturing and distribution, as well as, process re-design. Later on, the delayed product differentiation enabled the postponing the product design and manufacturing process, to improve the relevant product quality. Similarly, the concepts involved would include the point of differentiation and the level of postponement, which would refer to the warehousing facilities needed at different locations for storing the products.

However, the motivation for implementing postponement policy in Supply Chain Management confined mainly to the provision of incentives for reducing cost and improving the level of service, while increasing product variety to suit the changing demands of the customers.… Read the rest

Elements of a Quality Culture

Indeed, quality culture starts with top management. There need to be top management leadership to drive this culture of quality across the organisation. For this to happen, business leaders and managers must have the commitment in setting up quality control programmes, strategic planning for quality and provide resources for quality. In addition, top management leadership role is also a distinguishing element of a quality culture. Adopting a democratic leadership style where workers are not punished for errors and failures and that continuous learning is what prevails in the organisation. Management attitudes should be towards treating employees as members and remove barriers of superiors or subordinates. This suggests to everyone that the work of all members of the company is important and adds value to the final outputs. Members of the organisation should focus on the purpose for which they are all here to get better and better at creating that mutually beneficial relationship between them and their customers. Therefore, the authority of the top management is to support the mutual interests of its team openly and conscientiously.

Employee focus

Employee, being the most prominent factor of production, needs to be given consistent attention by management. Their current skills and competencies (both technical and interpersonal) need to be assessed continuously through performance management programmes, the SERVE model for service competencies among others and training should be given as and when needed. Alternatively, managers must be attentive on the needs of employees with proper rewards and incentives programmes being conducted. For sustaining a quality culture, it is also vital to consider the non-work aspect of employees such as marital or family problems, financial or other social problems.… Read the rest

5 Why Analysis – A Root Cause Analysis Tool

5 Why Analysis is a simple approach for exploring root causes and instilling a “Fix the root cause, not the symptom,” culture at all levels of a company. The 5 Why Analysis was originally developed by Toyota founder Sakichi Toyoda and was later used within Toyota Motor Corp. during the development of the Toyota Product System (TPS). At Toyota, 5 Whys is still a critical component of problem-solving training, and the method is still widely applied within the company when problems occur.

“Toyota Business Practices dictates using the ‘Five Whys’ to get to the root cause of a problem, not the ‘Five Whos’ to find a fire the guilty party.” – Jeff Liker, The Toyota Way

It can be used whenever the real cause of a problem or situation is not clear. Using the 5 Whys is a simple way to try solving a stated problem without a large detailed investigation requiring many resources. When problems involve human factors this method is the least stressful on participants. It is one of the simplest investigation tools easily completed without statistical analysis. Also known as a Why Tree, it is supposedly a simple form of root cause analysis. Application of the procedure involves taking any problem and asking “Why – what caused this problem?” Then, when the cause is identified, asking “Why?” again (i.e. “what caused the cause?”) The strategy, as commonly understood, is to ask “Why” five times or more uncovering links in a causal chain going back in time. By repeatedly asking the question, ‘Why?’ you peel away layers of issues and symptoms that can lead to the root cause.… Read the rest