Through conversations with our clients and partners looking ahead toward 2021 two challenges continue to emerge.
Supply chains will continue to be stressed
There will be lingering effects of the supply chain issues in 2020 that will continue to impact supply chains in 2021. This will be caused by a number of contributing factors including the imbalance that was been introduced into the transportation and logistics networks. Supply chains will see increased inventory levels forced into the supply chain to account for the network volatility and as hedge against the stock-outs experienced in 2020.
Even in the face of these challenges, supply chains will be expected to deliver more product faster, as customers have come to expect “prime” delivery standards. The stressed supply chains will result in problems that companies will need to address including increased volumes, more warehouse space, capacity constraints, and operational bottlenecks.
Competitive Labor Market
In addition to stressed supply chains, companies will be faced with a highly competitive labor market driven by an increased demand for qualified human resources. The high unemployment rates will begin to improve as the vaccine rollout continues. This coupled with political pressure for higher minimum wages will increase turnover and make retention of key assets more difficult.
The loss of key resources will threaten operational performance, making it even more difficult to deal with the emerging supply chain issues.
These increases in wages will impact structural costs putting pressure on profit margins.
At Lean Quest, we have been helping clients with these types of challenges for over 20 years. Applying key Lean principles and practices to create a culture that drives improved performance is our specialty. These are the solution sets that can be applied to address the challenges of 2021.
• Process Design – Maximize through-put, capacity, and productivity. As transaction volume and delivery expectations raise, bottlenecks and capacity limits will develop within your operations. Using Lean methods like layout design, cell design, Just In Time processes and value stream mapping, your operation can be optimized to meet the elevated demands of your customers.
• Storage Design and Slotting using the Lean Storage Techniques – Maximize density and productivity. Whether you are trying get the most out of your existing facilities or plan a new facility, storage is the key. It has a significant impact on all key metrics within the inbound and outbound value streams.
• Standardized Work – Capture the know-how in your organization, improve your quality and consistency, and create a effective process for onboarding new staff. This will help create a world class management system, based on standardized work, that documents best practices, sustains your gains, and creates a foundation for future improvements. The impacts of high turnover are minimized through Standardized Work.
• Continuous improvement capability – Improve your performance and engage your workforce. Create a problem-solving culture that drives continuous improvement by identifying and solving the problems that create frustration and destroy productivity. As the stresses increase in the operation, your ability the solve problems quickly and effectively will dictate your success.
While we are all happy to see 2020 in the rearview mirror, the challenges of 2021 may be just as significant if ignored. Successful supply chains must be able to anticipate, adapt and deliver. Preparation now, using the solutions outline above, can reduce your risk and create a competitive advantage for your organization. Lean Quest is positioned to help supply chains overcome these challenges.