A global medical device company was unable to supply its products to the market because of delivery failures from vendors.
The company was so frustrated, it was considering building a brand-new, giant warehouse facility to hold stock of the offending items. However, this strategy was fraught with issues such as cost of buildings, increased stock holdings, increased transport costs, effect on cash flow and profit and the time taken to plan and build.
After conducting a Lean Assessment, Explic8 consultants introduced Lean Manufacturing concepts and disciplines and then hosted a Strategic Supply Chain Conference to define USA division’s Lean Supply Chain strategy.
The conference was originally designed by the client to decide the physical location of this new facility, ideally placed to serve all distribution networks. Fortunately, this option was rejected when analysis revealed that the cause of the delivery failures was incorrect data and supplier performance.
The output of the Strategic Supply Chain Conference was very different from the client expectations because after being exposed to Lean Thinking, the strategy group, instead of recommending the ideal location for the new warehouse recommended to scrap the idea and introduce better vendor management and collaboration programmes.
The company was delighted with its cost avoidance results because it did not incur the predicted cost of buildings, increased stock holdings, increased transport costs and negative effects on cash flow and profit.
