Essay Example on Maximizing Value & Profit Through Lean Supply Chain Management

Lean supply chain management principle focuses on maximization of customer values and profits for organizations through waste elimination across every level of commerce and execution of business strategies which permits constant and sustainable amelioration everywhere in the supply chain. The field of the supply chain is currently considered as an important entity to corporation's performance evaluation and metrics and is attracting the focus of many researchers and organization managers (Daud & Zailani, 2011). A supply chain is an interconnection of associations that links the supplier to customers, via several stages like production, warehouse and distribution process. Supply chain management leads organizations to embrace cooperation that focuses on a typical objective to upsurge the general sales and profits instead of advancing competition for a larger portion of fixed profitability. The principle of lean management is the one strategy that companies have selected to guide them in coordination while focusing on obtaining effectiveness, alleviating wastage or overburden and creation of value in products.

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The lean supply chain employs constant amelioration efforts that focus on the alleviation of waste or non-value steps throughout the supply chain. Lean thinking focuses on abrogating waste while enhancing material and data flow within the chain. In other words, it is the maximization of value for customers with minimization of waste (Agus & Hajinoor, 2012). Here, waste is described as something that interrupts smooth production, which may including producing more, waiting, transference, processing more, untapped worker creativeness, excess inventory, locomotion and faults (Jacobs & Chase, 2018). The final goal of a lean company is to offer proficient value to consumers via an infallible value generation process that has no waste at all. For lean to be successful, the focus of the management should change from the optimization of separate technologies, assets as well as perpendicular departments to the optimization of the flow of services and products via the whole value streams flowing horizontally across technologies, assets and departments to consumers (Daud & Zailani, 2011). Abolishing waste all through the supply chain rather than at set points generates processes that require less workforce, space, cash, and timeframe, making the process less costly and with few faults. This enables organizations to react to the shifting consumer needs with higher variety and quality, cost-effectively and with increased throughput time. The success of lean supply chain is obtained from the ten basic lean principles which include: focusing on the supplier network value streams; eliminating waste; synchronizing flow; minimizing production and transaction costs; establishing collaborative associations while maintaining the balance amid cooperating and competing; ensuring visibility and openness; developing quick reaction ability; managing risks and uncertainty; aligning core competencies and complementary abilities; and fostering innovation and cognizance-sharing (Agus & Hajinoor, 2012).

Organizations adopt the lean supply chain to remain competitive, while continuously improving current processes to eliminate any non-value added steps (Agus & Hajinoor, 2012). To sustain relevance in the current world that is experiencing increased demands for fast production and improved quality, firms should adhere to the principles of the lean supply chain (Agus & Hajinoor, 2012). By applying lean supply chain principles, fast-food restaurant Chipotle might be able to ameliorate its operations effectively, with minimal waste, and increased value for the customers. Bhattarai (2018) highlights that all Chipotle's 2,408 restaurants wash and prep their ingredients at all individual locations when instead they might have improved their operations if they did this at a central location and later distributed to all their local restaurants. If the prep work is centralized, it would mean that some employees would be laid off implying increased profitability or that there will be increased workforce at the restaurants who would help in managing orders thus increased consumer satisfaction (Bhattarai, 2018). Further, Bhattarai (2018) articulates that the newly appointed CEO at Chipotle wishes to add breakfast to the chain's options. The addition of breakfast and some other meals to the menu will attract more new customers to the restaurant since it will provide more options to the customers. The other meals added to the menu will be prepared using the same ingredients and this will abolish waste. Chipotle markets itself for the provision of fresh food and antibiotic-free meat. The company openly posts when certain ingredients are out of stock, thus risking the loss of profit and disappointing their consumers. While some customers may be fascinated by that kind of honesty, others may take it to be arrogance in business. Proverbs chapter 16 speaks of righteousness and wisdom that leaders should cultivate within them and their subordinates. Telling the truth about the lack of stock is honesty that God wishes every man to possess and practice while serving fellow men. Proverbs 16:8 says that "Better is a little with righteousness than great revenues with injustice". Announcing that you have run out of stock would probably attract less revenue but it is better than using dubious means to obtain the stock and get great revenue. Chipotle was struck by the outbreak of foodborne diseases but is slowly bouncing back. However, adopting a lean supply chain would ensure that it realizes rapid growth since it will add value for customers and reduce waste.

References

Agus, A., & Hajinoor, M. S. (2012). Lean production supply chain management as a driver towards enhancing product quality and business performance: a Case study of manufacturing companies in Malaysia. International Journal of Quality & Reliability Management, 29(1), 92-121. DOI:10.1108/02656711211190891

Bhattarai, A. (2018, February 14). 4 ways Taco Bell's CEO could improve Chipotle. The Washington Post. Retrieved from https://www.washingtonpost.com/news/business/wp/2018/02/14/4-ways-taco-bells-ceo-could-improve-chipotle/

Daud, A., & Zailani, S. (2011). Lean supply chain practices and performance in the context of Malaysia. Supply Chain Management-Pathways for Research and Practice, 1-14.

Jacobs, F.R. & Chase, R.B. (2018). Operations and Supply Chain Management. New York, NY: McGraw-Hill.