Supply Chain Lessons from the Automotive Industry

The new Lean

Faced with unprecedented levels of cost in the supply chain the automotive industry has reacted through the implementation of lean techniques to maximise efficiencies.

In global firms such as Toyota, Ford and Jaguar Land Rover this ‘lean’ approach has been an unprecedented success.  However, critics claim that such drastic inventory measures simply push the inventory back up the supply chain and can only be implemented when the customer holds more power than the supplier.

Sharing information and collaborative relationships key to success

Jaguar Land Rover recognised this in 2008 and chose to partner with logistics provider DHL. “Its knowledge and experience of operating would add value by bringing new ideas and concepts that would help us drive out inefficiencies and costs and make our supply chain a much leaner and more streamlined affair,” said Kevin Wall, MP&L Director at JLR.

Essential to the implementation and benefits of lean is developing a collaborative supply chain which builds on the strengths of partners rather than pushing a company’s problems up the supply chain.

Through a collaborative effort and the sharing of KPI’s and forecasts the supply chain can become more efficient and beneficial to all parties. Lean itself may not fit all businesses in terms of their volatility of demand. However, through the sharing of information firms can significantly increase the efficiency of the supply chain through limiting that volatility and being able to forecast demand and supply more effectively.

Minimise weaknesses through learning and sharing information

There is no question that firms now have a high level of data available, however using the data in the correct manner is not always possible. Though increased visibility in the supply chain firms can contextualise data and deliver improved decision making and superior businesses. The opportunity to transform supply chains across industries lies within this collaborative effort.

A supply chain should not be seen as a bridge between sole entities but rather a circle of products and information building higher value for the end customer whilst maximising its efficiency in the manufacturing, handling, distribution and sales.