Limitations of lean manufacturing

Many recent events have led to supply chain disruptions. These disruptions have resulted in bottlenecks in the delivery process as well as component shortages. As a result, manufacturers are facing increased pressure to keep 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?

Toyota first developed just-in-time (JIT) manufacturing, also referred to as lean manufacturing, in 1970. They created it as a means of cutting down on the costs of inventory and potential waste. Lean manufacturing has been a popular method for manufacturers to ensure products are received only at the time needed. This saves space in their inventories and reduces time in the production cycle.

Now, manufacturers are under pressure to keep up with demand despite raw material and product shortages. It is now more difficult than before to get parts when they are needed. Supply chain disruptions affecting replenishment put manufacturers at risk of delaying production because of stock shortages.

Is lean manufacturing 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 uncertain. One reason for this is that the forecast relies on historical data. However, the trustworthiness of this data is undermined by unpredictable socio-political upheavals.

Brexit, lockdown, and the conflict in Ukraine have left supply and production in a state of flux. As a result, it is hard to forecast when delays might develop or when they will cease. While the current situation cannot be changed overnight, there are a few strategies to prevent stockouts.

What comes next to reduce component shortages?

Manufacturers are now seeking alternatives to ensure components are in steady supply. Traditional methods, just-in-case (JIC) manufacturing, where manufacturers create a stockpile of components, also provide their own set of challenges. Instead, firms are looking for a suitable balance to lessen the impact of component shortages. This is a solution that will offer reliability without reducing profits.

Benefits of nearshoring

Moving to nearshoring is one answer to the problem. Instead of having manufacturing operations overseas, businesses can bring them closer to home and reduce delays and supply chain disruptions.

Shipping parts to where they are needed has always been a challenge, causing slower cycle times. Additionally, relying on suppliers overseas can further complicate matters with shipping time and coordination. A supplier closer to where production is can greatly reduce replenishment times and deliver parts faster at times of need.

Beyond just reducing shipping times, there are many other benefits of nearshoring.  For instance, it can simplify communication and collaboration with suppliers. This is because of shared time zones and potentially similar cultural backgrounds. This can lead to fewer mistakes and a more streamlined workflow.

Additionally, nearshoring can potentially mitigate some of the risks associated with intellectual property theft. This can be a concern when working with overseas suppliers located in countries with weaker intellectual property protections.

Glocal Supply Chains

Manufacturers can also implement a supply chain that operates globally while still being responsive to local demand. This is known as a glocal supply chain.  Glocal supply chains achieve this balance by strategically leveraging a network of international suppliers. This allows them to access a wider range of resources and potentially reduce production costs.

However, glocal supply chains also recognise the importance of maintaining a strong regional presence. Manufacturing companies stand to benefit a great deal from a regional focus. This approach enables them to stay attuned to the specific regulations, cultural preferences, and logistical needs of each market. This, in turn, enables them to deliver products and services that resonate most effectively with local consumers.

At EU Automation, our success is built on a strong and diverse network of global suppliers. We also have a team of international sales experts who are fluent in more than 20 languages. This allows us to effectively overcome linguistic and cultural barriers.

We operate from four different locations: the UK, the US, Germany, and Singapore. This allows us to offer manufacturers the advantage of understanding global demand and local markets. Our goal is to ensure that the right quantity of stock is delivered on time. 

Industry 4.0

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. These automated devices are able to detect components that are in short supply. Following that, they will automatically place a new order for these components with the distributor. This helps production managers to keep up with demand without having to worry about running out of components.

While the hope is that supply chain disruptions and component shortages will eventually die down, difficulties are likely to affect manufacturing for many months to come. Manufacturers must prioritise adapting their stock management to prevent downtime and address limitations in lean manufacturing. This is crucial for optimising efficiency and productivity by reducing delays.