In logistics, waste significantly impacts the bottom line. Whether it’s in using inferior materials or inefficient manufacturing processes, wasted resources need to be identified, and resolved for a company to be profitable. This is where lean and agile manufacturing comes into place. Determining the source of waste and then activating a lean or agile manufacturing process can save any company money, resources, and increased profitability.
Let’s take a look at the differences between lean and agile manufacturing – and how companies can apply it in their day-to-day operations.
As the name implies, lean principles within a supply chain are the process of reviewing all aspects of manufacturing and removing anything not needed. In most situations, items removed are those that are deemed to have no positive impact in manufacturing. A great example of this is what many automotive manufacturers are doing in the creation of their production vehicles. It was common not too long ago, where an automotive manufacturer required redundant human quality control checks to comply with SFI and other regulatory body rules. However, as technology has improved, new computer equipment has been installed that removes the need for that second set of eyes.
In the supply chain, lean principles review unnecessary steps in shipping commodities. The problem with trying to activate a lean program is that all contributors to the supply chain must also operate ‘lean and mean’ in order for the process to work correctly.
While lean manufacturing focuses on removing waste and ‘dropping weight’, agile is more focused at using the current resources intelligently and that the organization has the right data to implement changes in manufacturing. Accurate data is vital to making changes in manufacturing. By being agile or flexible, a company has the potential of fine-tuning their manufacturing – but more importantly and applicable to logistics, making changes based on evolving changes in the industry.
When you look at lean and agile manufacturing practices, there are several similar concepts and procedures they both follow. Ultimately, these programs are intended on increasing financial stability of a manufacturing company. Generally, both are enacted for similar reasons as well. Some of those reasons include:
• Reducing expenses during downturns in business. As the old saying goes, when business is good – things are smooth in the operation of a company. Changes in manufacturing or supply chain operations happen when business slows – or more accurately, sales are not as expected. In either case, when there is a downturn in business, many companies will either lean-down their manufacturing procedures or turn to agile procedures. The benefit of an agile manufacturing program is that the company can scale their operations back up when business improves. A lean manufacturing program tends to be harder to rebuild.
• Both rely heavily on statistics, forecasting and proactive planning. Like any change in operation, the more information you have, and the more accurate that data is – the better results will be achieved. Case in point, many manufacturers use CRM tools and other resources to analyze their manufacturing procedures and review areas that are non-efficient.
Certainly – as a matter of fact, there is a word for that – Leagile. The Leagile manufacturing process is a hybrid of both systems. This process takes some elements of the lean and some of agile and infuses them into a rather effective process that can be followed in multiple industries – including the supply chain. There are generally three phases to Leagile manufacturing:
• Activate a flexible production capability to meet with spikes in customer demand.
• Creating multiple manufacturing programs that can be activated without removing too much equipment or removing resources from the business.
• Establishing preliminary manufacturing schedules based on forecasting – then activating a final assembly process when the orders arrive.
The general benefit to a leagile manufacturing process is that a company has the flexibility to scale their procedures to match with the ebbs and flow of today’s unpredictable marketplace. The key for any business is to find a manufacturing procedure that fits their business best – and gives them the opportunity to improve bottom-line profits without having to make too many difficult cuts.