Are consumer demands leading to the end of lean?

In the early 1900’s the Ford Model T was introduced to the American market with Henry Ford famously proclaiming that consumers could have “Any colour as long as it was black”. The foundations of automotive manufacturing were thus built, bringing the automobile to the mass market for the first time. Since then businesses have built on these foundations and developed business theory to differentiate through manufacturing excellence and lower costs.

Lean manufacturing is a term coined across the supply chain as firms seek to reduce production costs through waste minimisation. A major factor within this, is the management of stock levels to ensure production meets demand without carrying a high level of stock, in order to decrease stock expenditure. The theory was initially devised in in the automotive sector but has since been rolled out across industries ranging from pharmaceutical to retail.

Globalisation has led to businesses being able to exploit markets on a new scale to that what wasn’t possible in 1908 and continues to develop today. Simple economics tells us that with a higher demand comes a higher supply hence competition in larger markets is often more intense. Therefore the power is back in the consumer’s hands. Henry Ford was able to minimise the products he offered because he had something that no one else did. However, in the modern day there are endless lists of companies all vying for the mass market.

While price is a qualifying value for the mass market, in the world of globalisation customisation is often what drives purchasing decisions. A lean organisation will aim to have the “Right part in the right place at the right time”. However if the right part can only be forecasted based on fluctuating consumer demand, then businesses must mitigate there risks through carrying higher levels of stock, leading to a higher level of potential wastage and shift away from lean principles.

There’s always an answer to any supply chain issue, it’s just about ensuring the working is correct. In the automotive world, for example, firms have begun to review their upstream supply chain in order to reduce lead times and increase supply chain visibility through the sharing of information. This can ensure firms mitigate risks of carrying lower levels of stock through decreasing response time to meet changing consumer demands.

This is just one way of how businesses have developed the supply chains in order to cope with increased competition and changing demands of the consumer.

Lean is not a dying principle in the mass market, simply a qualifying factor. To truly differentiate corporations need to look at how to incorporate lean alongside customisation in their supply chains to maximise customer appeal.

14th October 2015