Can Minimalism Work In Supply Chain?
CAN MINIMALISM WORK IN SUPPLY CHAIN?
How we helped a commercial transportation OEM simplify their supplier pool.
If supply chain were to be described with a single word, it would be anything but “minimalistic.” However, for some organizations, minimalism is not just a good idea, it’s a powerful strategy for improving efficiencies and reducing administrative expenses.
What Is Minimalism?
Because there is no single dictionary-style definition of minimalism, most people think of it as trendy or describe it as a movement. At its core, minimalism is a concerted effort to simplify the complicated, untangle the chaos, and let go of the irrelevant.
Minimalism’s purpose, then, is to bring a sense of relief and ease to people, environments, processes, and organizations.
In our role as supply chain experts and thought leaders, we’ve defined minimalism like this:
“Minimalism is a strategy for streamlining supply chain in order to create more efficient, effective, and harmonious operations.”
– MES, Inc.
Benefits of Minimalism in Supply Chain
For our clients and for us, supply chain minimalism is doing the most with the least. Take, for example, one of our customers, a globally recognized leader in transportation plastic products and assemblies.
Using minimalism, MES helped them downsize their supplier pool to a more appropriate and cost-savings level while also increasing their ability to plan, manage, and warehouse their product for JIT delivery.
The benefits of minimalist for them (and potentially, you) include:
- Fewer disruptive, costly, and unnecessary supplier interactions
- Enhanced workflow processes and reduced complexities
- Improved time management
- Better and more relevant supplier interaction
Action Plan: Implementing Minimalism in Supply Chain
For lifestyle minimalists, the “what” and “how” of minimalism boils down to personal preference. It may include defining what minimalism means for the home and family. It may involve decluttering or downsizing. It may mean rethinking how much and the way time is spent on certain tasks or activities.
In order to reap the benefits of minimalism for supply chain, however, it takes more than a simple desire to simplify. It takes an organized, step-by-step approach like the one that follows, which, as it happens, is the one we took with our customers to resolve their supplier issues and more.
Step 1: Shift Your Mindset
Change is never easy, even when you know it will result in something beneficial to your business. The first step, then, is five-fold:
- Acknowledge that things need to change.
- Recognize that change may cause temporary issues, concerns, or disruptions.
- Encourage others to embrace change while understanding they may experience short-term frustration or confusion.
- Make change an organizational-wide priority.
- Remind yourself and everyone else involve why you’re making the change.
Fueled by significant price increases from their previous supplier, our customer was wide open to change. Though they’d already done most of the mindset work outlined above, there was one area they needed our help with; they were stuck seeing only the short-term view so we showed them the long-term one. This opened us – and them – up to see multiple solutions to what seemed like a single challenge.
Step 2: Focus On One Thing at a Time
Change is a process that is best accomplished in phases. While you, like our customer, may need to change your supplier, you also may want and need to change other things, too. We worked with our customers to step through the change process logically and methodically. Ultimately, we ended up changing more than their suppliers; we also minimalized and streamlined the way they negotiate price and receive supplier invoices, as well as how they forecast, plan, warehouse, and manage their inventory.
Not only does focusing on one thing at a time reduce the potential discomfort with doing something differently, but it also helps you make more information (aka better) decisions about any other changes that may or may not be needed.
Step 3: Assess the Challenge
Naturally, it helps to have an understanding of the challenges. It also helps to develop a framework before implementing any changes. With this particular customer, MES determined that their pool of suppliers for one product was six suppliers deep. That meant more costs, more time, and having to pay six invoices instead of just one.
We also discovered that with each transaction, a dollar amount was attached to it. Transactions included the usual and customary, such as issuing a PO, receiving a product, and inspecting the product. These per-transaction costs were really adding up. When they understood that multiplying these costs by six suppliers, it became very clear how costly and convoluted things had become.
Step 4: Establish Outcomes
Armed with insight, the next step is to determine the best solution. Our experience has shown us that it’s best to take a “begin with the end in mind” approach. With this particular customer, we not only wanted to save them money, but we also wanted to deliver peace of mind along with more effective and efficient purchasing, planning, warehousing, and inventory management.
So, we set about setting goals and establishing outcomes, including:
- Keep large volumes of inventory while freeing up space at the customer’s warehouse facilities.
- Leverage a just-in-time (JIT) delivery system that guaranteed product shipment in under five days.
- Provide a strong cost position that saves the customer money.
With specific goals set, we then began to implement a more effective program that now includes:
- Delivering inventory reports and planning forecasts to the customer.
- Ensuring a healthy inventory of parts prevents running out of stock.
- Providing dedicated supply chain and planning services that align with desired outcomes.
- Saving time, budget, and headaches with world-class supply chain services
Step 5: Evaluate, Refine & Repeat
Once everything is in good working order, it might be tempting to rest on your proverbial laurels. But don’t. We continue to assess the minimalist-inspired changes we made for this customer, as well as refine our processes to keep costs in check and continue to deliver world-class supply chain services.
Using minimalism, MES literally transformed the way this customer handles manufacturing purchasing, supply chain, planning, inventory management, warehousing, and price negotiations. Not only did we help them reduce six costly suppliers down to one for a single component, but we also duplicated the process and now do the same for multiple castings.
Supply Chain Meets Minimalism in the Real World
So, what happens when you make a solid commitment to supply chain minimalism and implement a strategy to make it happen? The same thing that happened to our customer: Everything changes.
The way you think about supply chain changes.
The way you analyze each aspect of supply chain changes.
The way you manage supply chain changes.
The money wasted on supply chain changes.
And when you allow supply chain minimalism to change the way you do business, you empower yourself to improve, refine, and evolve your business in profound and impactful ways.
Do you have questions about supply chain minimalism or need some guidance in developing your own strategy? We can help.
The MES Solution At-a-Glance
Industry: Transportation – Heavy-Duty Truck
Company Type: Commercial Vehicle OEM
Size/Rank: Global Provider of Components & Assemblies
Challenge: Nobody likes price increases. That’s especially true for a global OEM of commercial truck components and assemblies who was facing significant increases from suppliers. That, combined with an elaborate system of per-transaction expenses that had to be checked and balanced, proved far too costly and time-consuming to put up with.
Solution: The OEM wanted and needed to reduce their bloated supplier pool and the corresponding high costs. So, we implemented a minimalism strategy that reduced six costly and disparate suppliers down to one comprehensive and capable supplier – MES. We also provided them with a stocking program that ensures a healthy inventory now and for the long term.
Results: MES’s supplier consolidation program was a game-changer for this customer. Not only did we reduce headache-inducing interactions and invoicing for the customer, we improved their cost position, giving them significant savings across the board.
Services:
- Manufacturing Purchasing
- Supply Chain
- Planning
- Inventory Management
- Warehousing
- Price Negotiations
