Cost-saving measures like lean manufacturing are dead, according to a leading expert.
Lean manufacturing, which is also referred to as just-in-time manufacturing or just-in-time production, has long been a popular production method for manufacturers. It not only reduces time in the production cycle but in response times from across the supply chain down to the customer.
It is supposed to be an efficient method of production. Products are received only as needed. This reduces inventory costs and potential waste. Productivity and profit get a boost.
But COVID-19 has shown significant cracks in the foundation of lean manufacturing to the point where Tom Cook, managing director at supply chain consultancy Blue Tiger International, believes it is a dead concept.
“Lean manufacturing, lean inventory, just in time is gone. Doesn’t exist anymore,” he said during the Automotive Aftermarket Suppliers Association’s 2022 Global Summit. “It’s gone. Doesn’t exist. And I’m not sure it’s going to come back.”
That’s because lean manufacturing relies on accurate forecast demand. Delays in the supply chain can cancel out any benefits.
“We have to rethink this whole system and this process. That’s part of what’s going on now,” Cook observed. “We’re working with Corporate America in thinking through what they need to do. Not just [for] the balance of 2022, but beyond that point in time [and] how they’re going to distribute [goods].”
What is happening now is more companies moving to nearshoring. So instead of having manufacturing operations overseas, they’re bringing that process closer to home. Given the delays in getting products to ports in North America, this is an obvious solution to Cook.
“A lot more companies are what we call the nearshoring, which is they’re bringing a lot more of the manufacturing here, or closer [such as to] Mexico, Canada, other countries, because of the exposures,” he said.
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I disagree. The false assumption is to stay that Lean is defined as no inventory, that is not a true statement. Like any business system it has to adapt to the changing market conditions. Inventory is not bad, it has to be managed appropriately to the markets that you are serving. Lean can still be part of that plan, but to say it is dead due to supply chain interruptions is a misstatement to what lean flow is. Like any “tool” you have to apply Lean appropriately to the market conditions. It is “not” one size fits all. Lean is not dead, but evolving.