The Path to Peak Supply Chain Performance

For nearly two decades, some of the world’s best minds have been devoted to the practice of supply chain management. Still, a large percentage of manufacturing companies struggle to optimize supply chain operations. In fact, IDC Manufacturing Insights, a leading industry analyst firm, recently concluded that there is currently $900 billion of waste in global manufacturing supply chains.

There are many reasons for this staggering level of inefficiency, starting with the simple fact that running a supply chain with numerous moving parts—material, equipment, people, etc.—scattered about the globe is a complex undertaking. In recent years, manufacturers have made great strides in improving supply chain performance through the adoption of lean manufacturing and other cutting-edge management principles. Yet the ultimate goal of a low-cost supply chain that delivers the perfect order on time, every time remains elusive for many manufacturing enterprises.

Achieving that goal requires something that many early lean practitioners opposed: using information technology to automate those well-crafted lean processes. Companies that follow lean principles like building to actual customer demand—rather than adhering to forecasts—and bringing material to the plant only when needed, as opposed to keeping large stockpiles on hand, operate with extreme efficiency when business conditions are stable. Customer demand is predictable, raw material prices are stable, and suppliers are always reliable, making it easy to map and execute streamlined production processes.