SUPPLY CHAIN

Implementation of Lean Management in Dairy Industry

Implementation of Lean Management in Dairy Industry

Introduction

The definition of SCM, according to Hugos (2006), is “[the coordination of] production, inventory, location, and transportation among the participants of the supply chain to achieve the best mix of responsiveness of efficiency for the market being served. The theory of Supply Chain Management (SCM) emerged in the 1980s. Before then, the approach was classified as a part of the operations and logistics portion of the organization. Among the founding theorists who formed the ideas incorporated in what is known as SCM, Porter (1985) stands out, having laid the foundation upon which all others have built. With the introduction of the theory of the value chain, Porter began a movement that would span three decades, transforming the method of using the supply chain to increase profits. SCM can be broken down into five key areas that the manager must understand and guide (Butt, 1985, pp. 78).

Production

In SCM, production breaks down into two areas—production design, which requires an understanding of the product method and the intended use of the product, and production scheduling, which requires the SCM team to have a clear understanding of supply and demand and order fulfillment.

Inventory

Inventory serves to establish a cushion of material needed in SCM to complete any section of the production procedure. The importance of inventory can lead to a sustained investment in raw materials, and requires a tracking method that preserves acceptable inventory levels. Recent SCM advances have focused on creating a lean approach to the practice.

Location

Managers must focus on where production and supplies should be placed, using efficient models that lead to a high-performing SCM. The premier practice of the “just-in-time” or “build-to-order” supply chain was developed in the technology industry. In that model, supplies are ordered as needed from companies whose warehouses are near the manufacturing plant (Carroll, 2002, pp. 212).

Transportation

Playing an important role in SCM, according to Hugos (2006), transportation is the process by which the product is sent from one production warehouse to another or is sent to a seller. To be successful in this area, one must provide the most efficient means of access possible while ensuring cost control and production efficiency.

Information

With good, timely information, a leader can effectively coordinate product decisions based on supply-chain needs. Each of these key functions has helped develop SCM to the next level. Understanding each step of the supply chain allows leaders to decide upon production design. Leaders who follow Porter's values change can ensure expansion of the company's profit margin. These steps also help leaders fully direct the standard SCM approach toward a green supply-chain management approach.

Green Supply-Chain Operations

Companies implementing GSCM face internal and external constraints when trying to integrate the approach into daily operations (Ravi et al., 2005), as well as trying to understand how implementation of GSCM is affected by environmental issues. Türkay, Oruç, Fujita, and Asakura (2004) concluded that design, return, and supply-chain motivation are essential to the operations ...