Supply Chain

Continuous process improvement in supply chain management

Kaizen, a Japanese term that means ‘continuous improvement’, is a business philosophy that focuses on the importance of making small, but significant, improvements to systems and processes over time. Kaizen aims to involve all the employees of an organisation to create a culture of continuous improvement through collaboration and innovation, with the final goal of improving quality, boosting efficiency and reducing waste of any kind. Rather than making large-scale changes, Kaizen focuses on making small incremental changes that are easier to implement and are less likely to trigger resistance. Complex problems can be broken down into smaller, manageable parts and improvements can be incorporated swiftly too.

The concept of Kaizen was first incorporated into the business world by the Japanese after WWII and over the years, it has become a global business philosophy. The principles of Kaizen are simple and powerful, and they are applied in a variety of settings including the manufacturing industry, services industries, healthcare, education and more.

Kaizen in supply chain management

In supply chain management, Kaizen can be used in every aspect — from procuring raw materials, delivering finished goods and identifying and eliminating wasteful practices, to identifying and managing supply chain risks. Supply chain management involves coordination between many departments and chances of errors are usually high. Kaizen’s principle of making small changes on a continuous basis can help make processes more and more error-free and efficient.

The principles of Kaizen are centered around three key principles:

  1. Housekeeping
  2. Known as the ‘5S’, housekeeping in Kaizen includes five steps - Sort, Set in order, Shine, Standardise and Sustain. Each step is designed to build and nurture a clean, safe and organised workplace that promotes efficiency and productivity.

  3. Elimination of waste
  4. In Kaizen, waste can be in many forms, such as product defects, overproduction, unused talent, unnecessary movements, excess inventory and long waiting times. The goal of Kaizen is to identify and reduce, or eliminate, waste in every form and boost quality, productivity and customer satisfaction, and reduce costs.

  5. Standardisation
  6. Kaizen focuses on standardising processes to reduce variability and promote consistency. When all employees follow clear work instructions and procedures, and uphold similar standards, there is sure to be improvement in quality and efficiency.

While the principles of Kaizen can be implemented in many environments, at the crux of it, Kaizen relies on the PDCA concept - Plan, Do, Check and Act - the four repetitive steps that control and improve the supply chain and many other processes.

The benefits of incorporating Kaizen in supply chain management include:

  • Boost in efficiency
  • By identifying and eliminating waste in all processes, Kaizen can help improve efficiency and lower costs.
    For example, warehouse operations can be streamlined by eliminating waste such as excessive handling and extra inventory. Implementing standardised work procedures, visual management systems and improved communication can all help achieve higher efficiency and lower lead times.

  • Improvement in quality
  • Efforts to continuously improve processes lead to improvement in service and product quality, thereby boosting customer satisfaction and loyalty. When all the employees of an organisation are included in the quality improvement processes, and there is a constant lookout for opportunities to improve, there is bound to be a significant reduction in defects and improvement in quality.

  • Drop in lead times
  • Kaizen promotes streamlining of all processes and that can help organisations respond to customer demands faster. Lead times are effectively reduced.
    For example, when each supply chain step, from procurement to delivery, is analysed and improved, wait times are reduced and excess inventory can be minimised faster.

  • Improvement in safety standards
  • By identifying and eliminating workplace hazards, Kaizen helps boost safety in the workplace.

  • Increase in employee engagement
  • Employees feel more involved, engaged and satisfied when they are included in the efforts to promote continuous improvement in the business. They feel motivated when their insights are considered. Kaizen encourages every employee to identify opportunities for improvement. Frontline workers usually have the most practical ideas and suggestions about any process because of their proximity to the process and their insights should be tapped.

  • Improvement in supplier relationships
  • Suppliers can be involved in the improvement process too. By using Kaizen principles, organisations can work collaboratively with suppliers to identify and reduce waste, share best practices and relevant information, and thereby reduce supply chain risks and improve supplier performance.

  • Improvement in transportation and logistics
  • The principles of Kaizen can be implemented to improve processes such as routing, scheduling and delivery too. Transportation costs can be reduced by adopting standardised work procedures, optimising routes and improving coordination and communication. On-time delivery performance and customer satisfaction are sure to both increase.

Risks of using Kaizen in supply chain management

Although the risks are very low, it would be worth mentioning a few potential risks.

  • Many employees may resist change and that can make it difficult to retain Kaizen effectively
  • Setting unrealistic expectations for improvement can discourage employees when expectations are not met
  • If organisations implement Kaizen with the sole purpose of reducing costs, there are chances of early disappointment and possibly a drop in quality which would only lead to losses in the long term.

Kaizen is a mindset

Over time, Kaizen becomes a way of thinking and operating within an organisation. And when Kaizen becomes a mindset, it becomes easier to adapt to changes in market conditions, stay ahead of competitors and deliver exceptional value to customers. Small changes are usually easier to implement.

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