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Lean Thinking for Sustainable Supply Chains

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.

Lean thinking
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

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?

12 comments on “Lean Thinking for Sustainable Supply Chains

  1. Himanshugupta
    August 28, 2014

    I do not want to question the comment that flow of raw material, semi finished and finished product across the world pollute the planet six times than all the automobiles in the world. However, what if we cut the unnecessary trade flow then what would be the pollution? Is it 2 times or 3 timer or more. I guess, not much difference as today most of the manufacturin/assemble/service is concentrated in Asia and design/development/research is concentrated to Europe/US. The raw material is spread across the globe. The consumers are also spread around the globe. So, i do not see how we can reduce pollution by constricting today's supply chain.

  2. Ariella
    August 29, 2014

    @Himanshugupta The pollution of cargo ships was noted a few years ago. I saw some articles on the subject written in 2009. I'd give you the link, but the comments with links don't appear to be posting. Just do a search for it and you'll find a number of articles, and they all link to a Guardian one posted on April 9, 2009.  

    What Southway proposes is cutting back on that by keeping imports to a minimum. So each area would manufacture as much as possible to serve its own local needs.

  3. Nigel Southway
    August 30, 2014

    Himan

    Your comment…”The consumers are also spread around the globe. So, I do not see how we can reduce pollution by constricting today's supply chain.”

    You answer is contained in your question.. Long Global supply chains are a direct indicator of pollution and waste.. So if we rethink these supply chains and have more regional or trade bloc manufacturing where possible we move toward a more sustainable model in all terms.

    Many case studies show that local manufacturing close to the consumer is more effective in so many ways… there are materials that need to be transported across borders but not at the damaging and unnecessary levels we now are experiencing… we even have food products moving between borders and across seas that reside in the receiving country… why?…  

    It is also fair to say that emerging economies were not entitled through skill, technology and environmental focus to become the world's manufacturers and support environmental sustainability… just look at the pollution in china today… cheap product and rapid growth mainly through wealth transfer at the expense of very costly environmental results…

    We have followed an unsustainable model for our global economy and it needs a rethink.. That's the point ..I am not saying all trade is bad or a global economy is not needed or an intrinsic benefit to mankind but we need through better control, balance and direction to change the model and re-set the plot!

     

     

     

  4. Taimoor Zubar
    August 31, 2014

    “The consumers are also spread around the globe. So, i do not see how we can reduce pollution by constricting today's supply chain.”

    @Himanshugupta: That's what I believe in too. I don't think you can bring about sustainibility by reducing trade and commerce. What can really bring about sustainibility is the use of alternate forms of energy that can reduce carbon emissions.

  5. Taimoor Zubar
    August 31, 2014

    “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”

    @Ariella: I think sustainability and the concern for the environment have to be looked from a holistic perspective. You can say that 3D printing will reduce the need for components to be transported and hence lead to less fuel consumption and carbon emission, but what about the components being used to make these 3D prints? Are they made of recycled material? Is that causing any harm to the environment? That also needs to be considered.

  6. ITempire
    August 31, 2014

    Nigel, I do agree with your point but not all places in the world have natural resources required to produce items of essential needs. So import becomes imminent there. And these are not exceptions. But yes, we can reduce long distance imports atleast by buying from or manufacturing in places near the destination. But that's a long term and difficult solution.

  7. ITempire
    August 31, 2014

    TaimoorZ, you are right. Every thing involves some form of raw material and this solution will barely reduce the need for import. Essential needs of life are still not every country's game that is where cross-border trade initially got introduced.

  8. Nigel Southway
    August 31, 2014

     

    WasqasAltaf

    I disagree its a difficult solution , but I do agree it may be a tad longer term.

    Its also common sense and essential if we want a much more stable and sustainable global economy.

    A good analogy is this… we may all own cars that can reach speeds of more than 100 miles per hour (166km/hr.) but we have sensible rules that limit this activity due to social safety. It's the same with global supply chains we have IT and transportation capable of supporting absolute globalized trade transfer but we need rules to limit this for social and environmental  safety..

    I do see a move in the correct direction, but raising awareness of the alternative to just a focus on efficient supply chains and also making them more effective for all is the game we must learn.

    Linking national economics with supply chain management must become an integrated science.

    I have many examples of wasteful global sourcing strategies that could be easily avoided..

     

     

  9. Ariella
    August 31, 2014

    @TaimoorZ He's referring here to 3D printing enabling manufacturing in places where it is currently now very strong. Even if the machines used for 3D printing do not use recycled materials, just shortening the supply chain will reduce pollution by a very significant amount. Aside from that, 3D printing can actually be very green, as demonstrated by the research of Joshua M. Pearce of Michigan Technological University. I'd give you some links, but the system isn't posting any comments with links, so just Google his name and put in “the recylcing project.” You can also see an article I wrote about his findings in 3Dprintingindustry.com

  10. Ariella
    August 31, 2014

    @Nigel thanks for stepping popping over for the comments. 

  11. Houngbo_Hospice
    August 31, 2014

    Consumers around the globe can be taught how to reduce pollution. I think that is a global probem that should be understood by every consumer.

  12. ITempire
    September 13, 2014

    Nigel,

    “Linking national economics with supply chain management must become an integrated science.”

    I agree that this is the ideal solution and the ministries must work with a collaborative effort. It can happen that the ministry looking after production is working on a product which the shipping ministry doesn't know and when the product gets launched, the logistics to transport the goods become a problem.

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