THE ERA OF LEAN MANUFACTURING

Companies around the globe have been focusing on making supply chain effective and efficient
for years now. The techniques now known as Lean manufacturing were first introduced at
Toyota motors in 1980’s which were later accepted and copied by all the other companies
which were of the same mind. Because of Toyota Production System (TPS) which we now know
as Lean manufacturing techniques today—made Toyota a pioneer in waste elimination from
production. Prior to this approach companies considered they were efficient when all the
machinery ran at max capacity but in contrary to the belief Toyota taught them to product the
amount needed at the time it is needed, “Over Production” was considered as waste.

As a result of TPS the customers ordered triggered production which is known as the pull
system. Before TPS companies would focus on Vertical integration where they would produce
all the assemblies and parts that would be required to produce their finished product. The main
focus would be cost reduction but Toyota focused on efficiency and technology.

A third trend is supply base rationalization, an effort to determine the “appropriate” number of
suppliers a company should have. Many large firms have thousands of suppliers. However, the
rationalization concept says that better supplier relationships can be developed when there are
fewer suppliers to manage, and costs will be reduced when a smaller number of suppliers have
higher production volumes. These trends—lean manufacturing, reduced vertical integration,
and supply base rationalization—have been implemented by manufacturers in a number of
industries over the past 30 years and have resulted in higher efficiencies and reduced cost.

Toyota, which has led many of these supply chain trends, is now planning to lead the way in
reducing supply chain risk. In September 2011, they announced plans to create a robust supply
chain that would recover within two weeks in the event of another massive disruption.

Overall Lean manufacturing has been a game changer in the industry. It kept companies from
depleting resources at a rate much faster than now and it also kept them from force selling
their product to some extent.