As the impact of the coronavirus on supply chains continues, advice is coming in from Lean Six Sigma practitioners on ways the methodology can help organizations weather this unprecedented crisis.
Much of it mirrors what you can learn in Lean Six Sigma professional training or in advice from experts in applying Lean to supply chain. The obvious difference is that supply chain leaders are focusing on this specific crisis, a “black swan” event that has impacted every industry in every corner of the world.
Supply Chain Issues Exposed By Coronavirus
Warren Buffett once famously said that “you only find out who is swimming naked when the tide goes out.” He meant it as a colorful way to show that a sudden shift in global markets or an economic crisis can expose those who have not invested wisely.
The coronavirus has been a bit like the tide going out on supply chains.
According to research from the University of Northern Colorado, the virus has exposed supply chain issues that include long lead times, a lack of flexibility, a shortage of local suppliers and complexity in the system. All of this “makes our supply chains act like a house of cards,” they wrote.
Of course, demand has been unexpected. For example, toilet paper sales increased 213% year-over-year during one week in March, according to research by Nielsen. Other items that saw jaw-dropping sales increases in recent weeks including the following. The percentage equals the increase over the same week in 2019 and is from the period in the past few months that represented peak sales.
- Hand sanitizer (755%)
- Pure grains (132%)
- Mashed potatoes (140%)
- Rice (118%)
- Bouillon/Soup (64%)
- Baby diapers (44%)
University officials warned that so much risk has accumulated in the global supply chain that changes will be needed post-pandemic. They also suggest that “supply chain strategy development and execution” will be sought after skills.
Advice From Lean Six Sigma Practitioners
Those who use a combination of Lean and Six Sigma practices in the supply chain or as part of overall operations have started to offer ways they are trying to address coronavirus-related issues.
For example, Chicago-based FourKites recently released data about dwell time issues for the company in making shipments in Europe and the United States. They reported a 24% increase in dwell time, which they defined as “time spent waiting at facilities for pickups and at intermediate stops.”
As part of the strategy to address the issue, the company plans to use Lean Six Sigma to document the end-to-end process, find areas of waste and address them. The company reported that the continuous process improvement effort is a great way to get employees involved, maximize their skills and help them feel accountable to the overall process.
Writing in The Times of India, Genpack CEO Tiger Tyagarajan wrote that the coronavirus has made business leaders realize that “the way their organizations deliver work – and specifically knowledge work – must evolve to confidently withstand such major shocks.”
He listed three pillars that businesses must establish if they have not already: scale, scope and skills. He cites the “enormous impact” of Lean Six Sigma in contributing to the fact that “thousands of people already follow standardized processes.” He also writes that more employees need training in important skills that can help make organizations more efficient and effective, something Lean and Six Sigma practitioners strive to accomplish.
“How companies navigate their organizations through uncertainty will separate the successful from the rest,” he wrote.
The Agile Mindset of Lean
Michael Ballé, writing in Industry Week, defended the Lean approach to supply chain. Some have argued that Just In Time manufacturing, with its low levels of inventory, make it difficult to adjust during a crisis. Ballé argues that just the opposite is true.
“Lean thinking is about training to solve small crises – problems – daily,” he writes. “When the real tsunami hits, mental habits about reacting and learning from one’s reactions, relationships and coordination reflexes are in place to better deal with outage and its consequences.”
He emphasized that a Lean mindset can help businesses weather the crisis, suggesting they should first understand human nature and how they will react to the crisis, then come up with a sensible reaction and then learn as they go, making changes as needed.