A recent article in Logistics Management raised my ire a bit. The title is The Downside of Lean Logistics, but the author completely misses his own point, therefore the title itself is way off base.
“Drewry argues that international sourcing has introduced in global business more and higher risks related to transport and logistics, and that these risks are often more complex and more significant than in the past but are still misunderstood,” said Philip Damas, director of Drewry Supply Chain Advisors.
For example, the dilemma with lean international supply chains, coupled to lean manufacturing, is that they can become more vulnerable to risk factors. If the supply chain becomes longer (due to outsourcing the supply or manufacture) this vulnerability can increase. Vulnerabilities commonly would include stock-outs when lead times become extended to such a degree that variations in the supply and demand that are unpredicted (perhaps due to deficiencies in the demand and supply forecasts), cannot be accommodated without building into the supply chain some slack – or buffer inventory – which is in itself an anathema to the “lean” ethos.
By now you probably see the issue... although no company can or should be completely vertically integrated, international outsourcing is usually not part of a true lean manufacturing operation. The best lean manufacturers move overseas for only one reason: to be closer to a market. Long supply chains by definition create more inventory, more inventory consumes cash and creates potential hidden quality risk, and reduces overall agility. All costs, whether they show up on a P&L or not.
But the other, and perhaps more important issue, is that this portrays lean as reactionary instead of proactive. A "lean" supply chain that falls apart due to disruption is not a robust supply chain, lean or otherwise. Robust does not necessarily mean inventory buffers, but could include internal agility to adjust product mix to a change in incoming raw material sequencing, additional backup suppliers, assembly alternatives, and the like.
Perhaps a better title could have been "The Downside of Long Convoluted Supply Chains."