The second industrial revolution established in the early 20th century introduced large-scale production to the world. Mass production and enormous industrial compounds created a whole new economy in addition to new business doctrines and ideas. Although the industry changed tremendously over the last century, and we’re now in the fourth industrial revolution, some imperatives remain the same.
One of them is the constant effort to make the production process more efficient, faster, cheaper, and resistant to any problems. Numerous companies and business analysts tried to achieve just that by introducing different concepts. In modern industry, especially the automotive sector, lean supply chain management has proven the most effective. Let’s look at the benefits of lean supply chain management in the automotive industry in more detail.
What Exactly Is Lean Supply Chain Management?
Lean supply chain management (LSC) is based on the lean logistics doctrine, which originated from the Japanese industry in the second half of the 20th century. The idea behind this approach was born out of observing the modern production process, which consists of the main production facility and numerous suppliers, cooperating that provide parts and components needed to complete the final product. The traditional production doctrine included obtaining enough parts and materials for months in advance.
This approach might have some logic, but it results in overcrowded stock, and the need for enormous warehouses, storage and supply management. It makes the production process slower and more expensive, which results in a higher cost of the finished product and lower profit margins. The lean supply doctrine is the polar opposite. It minimises time, effort, and materials by providing just enough components, parts, and materials for flawless production without overstocking it. It means that LSC is characterised by “just-in-time” deliveries of the components and following the schedules, which results in faster production processes, better efficiency and quicker response to potential problems and production issues.
The Benefits Of LSC Management in the Automotive Industry
Since the automotive industry is one of the most complicated production cycles in the world with numerous components and different materials needed for completing one car, LSC management has had profound results. Japanese manufacturers first accepted it, and it has now become the industry’s standard worldwide. The benefits are diverse, and here are the most significant ones:
Higher Efficiency Rate – When the production facility is not clogged with excessive stock, it can produce goods faster and more efficiently. It will minimalise production costs and ultimately improve profits.
Improved Quality – Perfecting the production process and relying on a constant stream of components will improve the finished product’s quality.
Reduced Costs – If the factory is dependable on daily deliveries of components and materials from contractors, there is no need for expensive warehouses and stock management. This way, factories can employ fewer people, which significantly reduces costs.
Risk Mitigation – The reality of large-scale production is the technical difficulties and problems. In such a case, a facility operating on LSC principles can easily switch its output to another product or part. At the same time, the company will not be stuck with an unusable stock of parts or materials, which will eventually go to waste.
Environmentally Friendly – The facility that only assembles the final product pollutes the environment far less than the facility, making every nut and bolt. In modern times, environmental concerns are one of the most important aspects of any production doctrine.
Lean Supply Chain Management and Automotive Fasteners
Interestingly, automotive fasteners are among the best examples of lean supply chain management in the car industry. There are over 30,000 nuts, bolts, pins, springs, washers and clips in an average modern vehicle, and it would be insane to have billions of fasteners in stock in every factory in the world. That is why all world manufacturers use the LSC approach with regular deliveries according to a precisely established schedule. Since fasteners are extremely important for production and the vehicle cannot be completed without them, the supply chain must be perfect and dependable to run smoothly.
AFL exists to connect with its automotive customers as a partner, not just a parts supplier. Our aim is to really understand the problems you are facing, to collaborate with you and to help you solve that problem. AFL supports both automotive OEM and aftermarket customers across a whole range of segments including car, truck, commercial, motorcycle, construction and defence.
We capitalise on the benefits of global fastener sourcing in order to meet the highest quality OEM standards at the most competitive prices. The business model we employ has proven to be a major benefit to our OEM and 1st tier customers, including Volvo, Bentley, VW, Scania, Zf, Magna Powertrain and Triumph to name just a few! Our clients reduce their number of suppliers, reduce costs and improve service whilst still maintaining the highest quality standards needed in the industry.