THE FACTORS OF LEAN MANUFACTURING RELATES WITH DEMAND UNCERTAINTY

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Assemble-to-Order

When decoupling point moves between manufacturers and assemblers, the supply chain strategy called as Assemble-to-Order. This supply chain strategy react to diverse customized or standard products ranges. Substantial amount of lead time is reduced and confined against the risk of obsolescence.

Make-to-Stock / Ship-to-Stock

These supply chain strategies deals with standard product ranges but Make-to-stock cope with in different locations whereas Ship-to-Stock strategy cope with in fixed locations. Expertise in forecasting is necessary for both strategies in order to minimize the risk of stock-outs and overstocks. Since demand is even and products are standard at upstream level of supply chain so lean approach can be applicable. Whereas when demand is variable and products variety is more than agile approach is applicable (Naylor et al., 1999). Prince and Kay (2003) believed that lean concept should be implemented at upstream of the decoupling point whereas agile concept should be done at downstream level. Both concepts go together in order to improve performance and profitability of the organization at the operational level. Postponement is the term which is related with positioning of the decoupling point increases the efficiency and effectiveness of the supply chain. Risk of stock-outs and excess stocks are reduced with postponing product differentiation (Towill 2000). Postponement strategies also related with effective buffer stock and are typically experienced with short life cycle products by manufacturers of wide range of products (Prince and Kay 2003). By implemented decoupling point divergence in the way of leanness and agility takes place (Towill 2000).
THE FACTORS OF LEAN MANUFACTURING RELATES WITH DEMAND UNCERTAINTY Figure 4.1 The factors of lean manufacturing relates with Customer‟s demand uncertainty

Just In Time

In order to satisfy the customer requirements, work processes should be conducted by systematically without unnecessary or non-added value activities for whole system. Basically when the non-value adding activities are eliminated, clear picture is emerged internally for producers. Customer uncertainty appears due to the unclear or unexpected situations in absence of internal or external system factors consistency. Another expression can be stated that uncertainty occurs when external and internal factors do not meet totally for whole system. In this matter, the crucial thing is only replenishing what the customer needs and when the customer needs it. (Goldsby and Martichenko, 2005) “”Customer” can be internal which means a work cell on the shop floor or a distribution center within the company‟s logistic networks or an external customer.” (Goldsby and Martichenko, 2005, p.227)
Demand Uncertainty occurs due to the unknown demand variation or fluctuation that the firms tend to produce depending on the forecast. In this manner, make-to-stock can be appropriate since stock is held in order to response to the customer requirements however there is also risk regarding the obsolescence issue if the products are not sold accordingly. Nevertheless, delivery is an important point which effects demand uncertainty that delivery speed, accuracy and reliability meet with customer satisfaction. Just-in-Time (JIT) is a concept which ideally seeks to deliver product neither too early nor too late. (Zäpfel, 1998, p.700) Even though product life cycle and differentiated product embraces the demand uncertainty, just-in time approach is appropriate as a target of delivery on time. It is perceptible that difficulty occurs and JIT cannot be successive 100% efficiency. According to (Naylor et. al, 1999) “In pure lean supply chain there would be no slack and zero inventory. It would be very impressive if zero inventory throughout a total supply chain was achieved.” (Naylor et. al, 1999, p.110-111) The idea is emerged that firms can strive to be in Just-in-time approach that provide to stay in leaner concluding more efficiency and reduced cost going by iteratively. Each iteration converts the firms to stay in more Just-in-time approach and makes them more responsive to the market demand also provides gaining more effective delivery for speed, accuracy and reliability perspective by conclusion of more competitiveness in the market.

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Elimination of Waste

Elimination of waste is the aim of lean that achievement point is the cost reduction which takes an important part for company competitiveness and sustainability in the market. Besides the integrated supply chain also can be accomplished accordingly. Naylor et. al (1999) states that “The elimination of all non-value adding processes will inevitably reduce the cost of product.” p.111 Basically there are two concepts that are more considerable regarding demand uncertainty rather than others, through 7 waste issues which are inventory and overproduction in the system. Inventory can be necessary in some situations when product variety is high and cycle life is short. In lean, adoption of stable demand is essential. Commodities are basic products such as tinned soups, have relatively long life cycles and have low demand uncertainty and driving force for basic product supply chain is therefore cost reduction. (Jones et. al, 2000a) Hence in lean “the focus is on elimination of waste and achieving low cost delivery of standard and stable product. “ (Stratton and Warbutton et.al, 2003, p.184)

1 INTRODUCTION
1.1 BACKGROUND
1.2 PURPOSE AND AIMS
1.3 DELIMITS
1.4 OUTLINE
2 RESEARCH METHODOLOGY .
2.1 METHODOLOGY APPROACH .
2.1.1 Qualitative Approach (Inductive approach for analysis)
2.2 RESEARCH TECHNIQUES
2.3 RESEARCH PROCESS
3 LITERATURE REVIEW .
3.1 MARKETING .
3.2 DEMAND UNCERTAINTY
3.3 LEAN MANUFACTURING
3.4 LEAN SUPPLY CHAIN
3.5 AGILE MANUFACTURING
3.6 AGILE SUPPLY CHAIN
3.7 LEAGILE
3.8 DECOUPLING POINT
4 Analysis .
4.1 THE FACTORS OF LEAN MANUFACTURING RELATES WITH DEMAND UNCERTAINTY
4.2 PARAMETERS OF CUSTOMER‟S DEMAND UNCERTAINTY.
4.3 PARAMETERS RELATES LEAGILE SUPPLY CHAIN & CUSTOMER‟S DEMAND UNCERTAINTY
5 DISCUSSION, CONCLUSION & FUTURE RESEARCH
6 REFERENCES
7 ATTACHMENTS