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Industry 4.0, Automotive industry, Supply chain

What is Lean SCM? Benefits in the automotive industry

22 June 2021

Lean Supply Chain Management is getting more and more attention among those interested in optimising production-related processes in the automotive industry. Lean SCM offers a number of real advantages.

What does Lean Supply Chain Management mean?

Lean Supply Chain Management is a method based on the implementation of a few simple principles. The basis here is the elimination of every possible loss occurring in the various stages of execution. Lean SCM therefore aims to reduce production and distribution costs as much as possible while supporting logistics. In order to achieve the principles of the Lean SCM model, it is necessary to ask which processes should be improved or eliminated – the ultimate goal is to minimise the space between the customer and the product. As a result, manufactured solutions are to be delivered quickly, without waste and with a flexible approach to implementing new solutions. This is also a way to meet the demands of a dynamically changing market.

Lean Supply Chain Management can also bring ecological benefits. This is not only an opportunity to improve production profitability and order fulfilment rates, but also to fulfil the goals of CSR – Corporate Social Responsibility. The lean supply chain model eliminates redundant processes and streamlines key operations to maximise effectiveness, efficiency and performance.

This is a particularly good solution for companies in the automotive industry. This market sector is characterised by fairly stable demand from end customers and the introduction of new solutions at relatively short intervals. It is also important that products will typically be used for many years – both for individual components (excluding small products that are subject to rapid wear and tear) and for complete vehicles.

Foundations of the Lean SCM approach

Lean supply chain management is based on several foundations that address separate stages of the entire process of getting a product to market. Here are the individual parts that Lean SCM addresses:

  • Production – activities that are primarily intended to lead to the creation of a finished solution, but also involve the preparation of the production line itself and issues such as creating moulds and refining designs. The lean model operates here especially in the areas of potential production errors, which must absolutely be eliminated. It is equally concerned with the lack of appropriate efficiency (it is necessary to focus on meeting market expectations) and dynamics and flexibility (introduction of subsequent solutions should be fast and simple).
  • Logistics – a process that allows effective supply chain management. Ultimately, it should be possible to cope with potential overproduction and temporary problems with the supply of components. It is important that the entire logistics network is properly managed to meet requirements for flexibility and efficiency.
  • Distribution – finished products must be distributed to end customers in an appropriate manner. Care must be taken to ensure that logistics and production are responsive to current market needs, while meeting organisational objectives. The distribution process must be legal and tailored to meet the expectations of the product's target group, while supporting the organisation's profit generation.

See also: How to reduce cost of production in automotive industry? 

How to implement Lean SCM in an organisation's strategy?

There are several ways to adapt Lean Supply Chain Management to the structures of an organisation. It is a good idea to start by mapping out the key directions of supply chain tasks. We need to know how the system has worked so far, where any bottlenecks are and which procedures are absolutely unnecessary. A good understanding of how the current supply chain works and an analysis of the individual processes paves the way for further action. It is also important to note that Lean SCM is not only intended to meet organisational goals, but also customer needs and expectations. During the analysis, what has so far provided the greatest value for customers should also be determined.

If we know the dynamics of the market and can afford to develop appropriate solutions to deal with its challenges, it is worthwhile to carry out the process of designing ways to manage variable demand. The key here is to get to the bottom of how to do business in a flexible way while ensuring stability at every level of the supply chain.

When implementing new solutions, it is definitely worthwhile to measure their effects on an ongoing basis. Conducting case studies and continuously monitoring what generates the most value for your organisation is the key to getting better at dealing with future challenges. Implementing a process of learning and deepening your experience opens up new opportunities for further improvements – and not just in the supply chain arena.

See also: Quality control and continuous improvement in automotive industry

Lean Supply Chain Management requires a trusted partner

Companies that decide to implement the Lean Supply Chain Management model in their strategy should develop relationships with trusted partners who are able to deliver on this type of collaboration. Knauf Automotive is one of the companies in the automotive market that fully meets these requirements. Through mutual understanding of Lean SCM principles and their joint implementation, it is possible to improve each process – from production, through logistics, to distribution. Our extensive knowledge and experience allow us to work together in a way that benefits both parties. Lean Supply Chain Management is an integral part of our production of car components and logistics ethos.

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