Sustainable Solutions for SCM

• Product development and commercialisation – includes processes which

provide the structure for developing and bringing to market products jointly

with customers and suppliers.

• Returns management – includes processes by which activities associated with

returns, reverse logistics, gatekeeping and avoidance are managed within the

firm and across key members of the supply chain.

1.3 Lean supply chain management

Supply chain management as a systematic approach to delivering customer value

from the extraction of raw-materials to delivery of semi-final products to the final

customer was originated in the mass-production era to increase competitiveness due to

the coordinating flow of resources of all chains in the supply chain during the 1990s.

Emphasising the management of the flows or resources through the supply chain, not

only particular parts, is the critical assumption to create the value for final customers.

However, this flow was driven by the needs of producers to increase production volumes

to improve the economic results in initial severe global competition at the end of 20th

century.

At approximately the same time, the MIT international research of automotive

producers discovered that the mass production principles governing the 20

century

would be challenged by the fundamentally different business system developed by the

Japanese automotive producer, Toyota Motor Corporation. International Motor Vehicle

Program was the largest and most thorough study ever undertaken of any industry – five

years over fourteen countries. The whole study described in The Machine That Changed

the World, discovers the efficiency and effectiveness of the Toyota Production System.

The most important differences from the previous mass production era are [62]:

• Direction of resources flows.

• Cooperation in supply chain.

• Production smoothing.

• Defect management.

Producer-driven flow should be replaced by customer driven flow, and intensive

cost pressure and limited integration is replaced by collaborative cooperation and sharing

profits and losses. Production smoothing substitutes the production volumes as much

as possible based on the availability of resources rather than cooperation with suppliers,

while also sharing information and keeping the production volume and structure as

constant as possible. Defect management could be solved either with the help of high

stock level and quality checks at the receiving dock in the supply chain or with the help

of close and intensive cooperation, sharing information and without any reserved stock.

The second attitude focuses on defect resolution of causes, rather than postponing the

solution and mainly solving effects.