Nigel Southway is a productivity consultant and the co-author of Cycle Time Management, a guide to applying lean thinking to organizations to maximize efficiency. His perspective is informed by his first-hand observations of economies in Europe and China, as well as in the NAFTA region.
I first contacted Southway for his insight on 3D printing and manufacturing in Canada (see 3D Printing Might Bring Manufacturing Back to Canada), and then followed up with further questions on his expertise on sustainable supply chains. He contends that the global supply chain has to evolve by adopting lean principles in order to be sustainable.
According to Southway, "Lean thinking is recognized as the main continuous improvement mechanism in business, and after almost four decades it is still a hot implementation topic for most management teams." For manufacturing it is used "to assist with innovation and improved product lifecycles." That goal of keeping processes as economical and efficient as possible should also shape the global supply chain. But that is where, he says, "we appear to have lost the plot."
How did we lose the plot?
Southway explains, "we forgot about the need to balance national trade and manage hidden business costs associated with extended supply chain." As a result, the supply chains did not only fail to live up to the principles of lean and sustainability but actually damaged "economic stability." To get back on track, countries like the USA and Canada need "to return to a lean NAFTA business model." You can't sustain a service economy without a manufacturing component because of the ratios of the economy. Each "manufacturing job creates the need for 3 service jobs," so a cut in the former translates into a triple loss in the latter with devastating effects on a nation's economy
Globalization and waste
Lean thinking is all about eliminating as much waste as possible from a business. For many businesses, though, globalization has "added intrinsic waste to our business processes." Southway says that currently the waste measurements sometimes amount to as much as 90 percent, which is the very antithesis of a "lean solution" or a "sustainable supply chain." While we see the term "sustainable" thrown around as a value, applying it in practical terms calls for "a 'lean rethink' of what we are doing."
Sustainable for the planet
Sustainability for supply chains is mandated both by "social and ecological" concerns. For example, "physically shipping raw material and semi and finished product around" the world to take advantage of lower labor costs may cut one type of expense but causes great harm to the planet. He points out that taken together the travels of container ships "pollute six times as much as all the automobiles in the world!"
Lean Thinking at the Warehouse
Source: University of Michigan
Shorter is better for greater sustainability
The key to a sustainable supply chain, according to Southway, is keeping it short. The way he puts it is "in principle long supply chains are bad, short supply chains are good, and this is a mantra that is driving the huge re-shoring activity within NAFTA as well as reacting to the future angst on sustainability driven by these long supply chains." He predicts that lean practices will move business in that direction, with far less movement of products made abroad.
The role of legislation and education in sustainable supply
Among the things that are needed to reorient businesses is "education on the issues behind sustainability" and government support. As Southway sees it, "Flat global growth and over capacity will force national governments to look inside the national economies for the solutions and sustainability and the lean supply chains will resonate." He believes that the government and public opinion have to help speed up the process for the supply chain set on a sustainable track.
The vision of a sustainable future
Southway envisions a future with far fewer "container ships and far more internet bandwidth." That's because ideas and software can travel across the globe quickly and efficiently over the Internet. "Only essential non-available raw materials or strategic products with technology that cannot be local supported will be physically transported." Technological innovations, like 3D printing, will contribute to achieving this vision of a sustainable future. But in order to get there, people have to come out of their complacency and get motivated to attain this vision.
Southway does admit to being rather pessimistic about arrival in the near future, though. What do you think about achieving a sustainable supply chain in the near future?