The Essence of a Lean Supply Chain

A lean strategy focuses on optimizing the efficiency and performance of the entire supply chain. A lean supply chain helps managers enhance their company’s operational efficiency by: 

• Reducing wastage in resources, time, labor, and inventory
• Enhancing supply chain collaboration and communication between all parties involved
• Implementing supply chain optimization strategies
• Analyzing and predicting customer requirements and developing appropriate strategies to address them

Modern companies need a lean supply chain to create and sustain a competitive advantage in the industry. Given the substantive reputational and financial damages of supply chain disruptions, every savvy business leader knows that running a lean operation is life-saving in the face of supply chain uncertainties.

Lean supply chain management is premised on the following core principles.

Pull-System Production

A lean supply chain utilizes the pull-based model, in which production is based on actual customer demand instead of demand forecasting. A pull system follows the just-in-time production model, in which goods are manufactured to satisfy existing demand, not anticipated demand. It helps you optimize your inventory levels, leading to lower warehouse and inventory handling costs.

Continuous Improvement

In a lean supply chain, leaders, employees, and other concerned stakeholders continuously seek opportunities to optimize their processes. Therefore, companies can achieve maximum operational efficiency by making constant tweaks over time. 

Cost Savings Through Waste Reduction

Any process or activity that doesn’t add value to your supply chain operations or enhance your overall customer satisfaction is considered wasteful. Waste includes: 

• Excess inventory
• Overproduction
• Logistical inefficiencies leading to longer transit times
• Product defects

A lean supply chain focuses on eliminating these and other systemic inefficiencies that frustrate supply chain operations.

Customer Focus

All of the principles of lean supply chain management culminate to advance customer satisfaction. By optimizing your supply chain operations, you can efficiently meet customers’ expectations and offer superior customer service.

Implementing lean supply chain management requires a well-defined strategy encompassing all aspects of your supply chain operations, from lean inventory management and procurement to supply alignment. An experienced lean supply chain consultant such as Incito is best placed to design a road map for successfully deploying a lean supply chain strategy by tapping into predictive AI analytics.

The Power of Predictive AI Analytics

Predictive AI relies on historical data and machine learning to forecast customer demand, identify risks in supply chain and inventory management, and predict market trends. Thanks to ever-growing sources such as smart pallets, web user data, and radio-frequency identification (RFID) tags, modern logistics companies produce crucial supply chain data in support of predictive AI analytics.

These are the mainstream uses of predictive AI analytics in supply chain management.

Demand Forecasting

By leveraging predictive analytics and other AI technologies, such as natural language processing and machine learning, supply chain companies can forecast customer demand for their products and services.

These AI solutions can pool all of your customer-generated content, such as product reviews, ratings, comments, and community discussions, and analyze the data to predict market trends. The insights derived from the data analysis combined with those derived from studying customer behaviors will help you forecast product demand more accurately. 

In turn, you can make the necessary adjustments in your supply chain beforehand to satisfy future demand without disruptions. Data-based, AI-driven demand forecasting is more accurate and convenient than traditional forecasting methods, such as running market surveys.

Streamlining Inventory Management

Predictive analytics help businesses optimize their inventory levels while avoiding common challenges such as overstocking and understocking. By analyzing past and current inventory data, historical sales data, and consumer behaviors, predictive AI can forecast the sufficient inventory levels for a certain period. 

Your predictive AI solution can issue instant notifications when your inventory levels fall beyond expected levels or when it predicts a supply chain disruption. This ensures you always have enough inventory to satisfy current and future demand and can outlive a supply crunch. This way, you avoid unnecessary inventory costs, such as carrying costs resulting from excess inventory and forgone sales due to stock-outs.

Working with a resourceful supply chain consultant such as Incito helps you implement AI-driven inventory management solutions that are in line with your lean supply chain strategy.

Enhancing Supplier Collaboration

Predictive AI analytics foster supply chain visibility among all parties involved. With easier data sharing between companies and suppliers, all parties have access to rich data-driven insights. This free flow of information supports collaborative decision-making among companies and suppliers. 

For instance, by analyzing your historical data, a supplier can leverage predictive analytics to predict the quantity of goods and supplies you’ll need in the future and ramp up production accordingly. The supplier can also analyze your seasonal demand shifts and use machine learning to predict when issues may crop up. 

Achieving Operational Excellence

Using artificial intelligence in the supply chain is an authentic way to achieve operational excellence. AI helps you root out existing operational inefficiencies and predict future risks that may impede your supply chain operations. Analyzing your supply chain data using AI solutions makes your warehouse operations, transportation management, and route optimization more efficient. With relevant data, you can develop foolproof plans, ensuring your supply chain operates at optimal efficiency.

Tyson Foods is one of the top brands that have successfully implemented predictive AI analytics in their supply chains. Tyson leverages Power BI, a business analytics solution from Microsoft, to optimize its inventory levels and minimize its time, resource, and labor wastage.

How to Build Resilience in the Supply Chain With AI

To build a strong supply chain that stands the test of time, you need a solid strategy that involves the following best practices: 

• Have an experienced supply chain expert on your team or consult a seasoned supply chain consultant such as Incito.
• Build more personal relationships with your suppliers.
• Engage different suppliers to get a second option in case of a disruption.

Understandably, building a lean supply chain centered on predictive AI analytics is a complex undertaking. But when you partner with experienced lean consultants, implementation and maintenance can be fast and efficient. 

Contact Incito today and begin your journey toward a lean supply chain.