Recent events have caused supply chain disruptions, shipping bottlenecks and component shortages, adding pressure to manufacturers keeping up with high demand. More recently, the increase in the price of raw materials such as steel has led many to rethink their stock management. With uncertainty of manufacturing supply chains increasing, is lean manufacturing going out of fashion? Here Sven Bretschneider, head of supply chain at global supplier of quality automation components EU Automation, offers his insight.
Lean manufacturing, also known as just-in-time (JIT) manufacturing, was originally developed by Toyota in 1970 as a way to reduce inventory costs and potential waste. Lean manufacturing has been a popular method for manufacturers to ensure products are received only at the time needed, saving space in their inventories and reducing time in the production cycle.
Currently, manufacturers are under pressure to keep up with demand despite raw material and product shortages. Getting components at the time needed is no longer as easy as before and supply chain disruptions affecting replenishment put manufacturers at risk of delaying production because of stock shortages.
On the way out?
COVID-19 identified significant gaps in lean manufacturing that have caused manufacturers to reconsider this methodology. Lean manufacturing is built on forecast demand which, while reliable in the past, has now become more unsure. This is because forecast is based on historical data, but unpredictable socio-political upheavals mean that this data can no longer be trusted.
Brexit, lockdown and the conflict in Ukraine have left supply and production in a state of flux, making it impossible to predict when delays may occur or end. While the current situation cannot be changed overnight, there are a few strategies to prevent stockouts.
What comes next?
Manufacturers are now seeking alternatives to ensure components are in steady supply. Traditional methods such as just-in-case (JIC), where manufacturers create a stockpile of components, also provides their own set of challenges. Businesses are instead seeking a middle ground — an alternative that offers reliability without reducing profits.
One solution is moving to nearshoring. Instead of having manufacturing operations overseas, businesses can bring them closer to home and reduce delays. The issue of shipping parts to where they are needed has always hindered faster cycle times, and relying on suppliers overseas can add shipping time and coordination complexity. A supplier closer to where production is can greatly reduce replenishment times and deliver parts faster at times of need.
Manufacturers can also implement a supply chain that acts on a global level but adapts to local demand — a global supply chain. At EU Automation, we rely on a diverse and reliable network of global suppliers and work with international sales experts that speak more than 20 languages to overcome linguistic and cultural barriers. Operating from four different locations — the UK, the US, Germany and Singapore — we offer manufacturers both the knowledge of global demand and local markets to ensure the right quantity of stock is delivered on time.
Emerging automation technologies can also help manufacturers reduce lead times and stay afloat during unexpected events by offering complete visibility over production. This allows manufacturers to target specific areas of the production process that may need improving. Knowledge of a component’s journey throughout the warehouse also offers insight into waste and consumption rates.
Automated replenishment allows businesses to manage assets both inside and out of the warehouse. Automated devices detect components in short supply and automatically reorder them from the distributor, to help production managers keep up with demand without the worry of component shortage.
While the hope is that supply chain difficulties and component shortages will eventually die down, disruptions are likely to affect manufacturing for many months to come. It’s crucial for manufacturers to adapt their stock management to avoid downtime and reduce delays wherever possible.