A key prerequisite of supply chain optimization is real-time supply chain visibility. In the ideal state of the demand-driven supply chain, material flows in a synchronized fashion from one tier to the next, while remaining responsive to variation. Visibility’s power is in its ability to drive the supply chain partners towards realizing this ideal by reducing risk, supply chain waste (cost), and speed to market.
Imagine applying lean principles to the most common batch-process in most offices; the monthly financial close. Many companies take days or weeks to close their accounting books and prepare financial statements every single month. While it may seem like lean principles could never be meaningfully applied to such a quantitative and seemingly foundational business process that couldn’t be further from the truth. In fact, many lean organizations reduce their month-end closing activities to a single day, while maintaining accuracy and significantly improving the efficiency of their closing process.
Simply put, performance measures are quantified measurements of how well an organization, value stream, or process performs. But not all performance measures are created equal. For lean manufacturers, lean success requires lean performance measures developed to drive high performance.
Many organizations find early in their lean journey that their accounting approach does not mesh well with lean thinking. While lean can help a company become far more effective and efficient by reducing waste, we should be able to account for those improvements. However, common accounting practices often fail to adequately measure lean improvements. An alternative, lean accounting approach is…
Most of our time should be spent doing value added work. However, if you take a look at the total lead time through value stream you will discover that “Muda” or waste steals a lot of our time. Another thing that a lot of companies do is to try and reduce the overall lead time by making the value add process more efficient. In reality there’s more value in reducing the waste in the process first before worrying about improving the value added steps.