Lean manufacturing refers to a focus on eliminating as much waste as possible. Unnecessary movements, redundant processing steps, and excess inventory in the supply chain are targets for improvement in the research process. Lean manufacturing may be one of the best tools available to implement green strategies in manufacturing and service processes.
Building a lean supply chain uses a systems approach to integrate partners. Supply must be coordinated with the needs of manufacturing facilities, and production must be directly linked to customer demand for products. The importance of speed and consistency in meeting actual customer demand cannot be overemphasized.
When talking about the lean supply chain model, we cannot help but mention the essential components of the chain. These are:
First, specialized plants, small specialized plants rather than large vertically integrated factories, are important. The lean philosophy cannot be tied to the cumbersome operations and bureaucracy inherent in the model that is too large because it is difficult to manage optimally. Plants need to be designed for a purpose that can be built and operated more economically. Plants need to be linked together so that they can be synchronized with one or more other plants and must be suitable for the needs of the market. Speed and responsiveness to change are the keys to the success of the lean supply chain.
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Second, cooperation with suppliers is a very important issue in supply chain management and development. If manufacturers share their plans for expected demand with suppliers, they will have a more comprehensive view of long-term demand in the entire system, thereby being able to proactively plan production and distribute raw materials to manufacturers. In addition, taking advantage of information technology, manufacturers and suppliers can easily share information with each other.
It can be said that the credibility in the supplier's delivery commitment allows for maximum inventory reduction and maintaining inventory at a lean level.
Third is building a lean supply chain. A supply chain is the total combination of businesses participating in that supply chain, including suppliers of raw materials to manufacturing operations and finally aiming at perfect distribution, delivering the final product to consumers. In the “Lean Thinking” seminar series, Womack and Jones (Lean Thinking (New York: Simon & Schuster, 1996), p.277) gave guidelines for using lean supply chains effectively:
- Value must be defined generally for each product family along with cost indicators based on the customer's view of value.
- All companies on the value stream must have a return on invested capital that is relevant to the value stream.
- Companies must work together to identify and eliminate waste.
- Once cost targets are achieved, value stream companies immediately perform new analyses to identify remaining waste and set new targets.
- Each participating company has the right to examine every activity in every company involved in the value stream as part of a common study of waste.
1.1.4. The role of supply chain in operations
1.1.4.1. The role of supply chain management in the economy
According to Hamed Shakeriana, Hasan Dehghan Dehnavia and Fatemeh Shateri (2016), supply chain and supply chain management are increasingly important in the global industry and competition and are likely to be a major factor in global competition. The global economic crisis with an increasingly competitive environment makes supply chain optimization clearly show its role. When profits decrease, costs
As costs increase, new factors emerge, supply chain models are required to evolve to facilitate decision making and maintain competitive advantage.
According to Ignas Masteika and Jonas Cepinskis (2015), nowadays, businesses no longer compete on separate entities and links but compete on supply chains and apply analysis to supply chain control decisions. A company no longer controls all the resources needed to meet market demand, in order to streamline business operations it must synchronize with suppliers and customers, and work towards a higher level of flexibility than a single company and gain competitive advantage.
Supply chains and supply chain management play an increasingly important role in the economy of each country and the world economy. It can be said that the supply chain is the soul of all activities, the condition for optimization, taking advantage of each country and each region, helping the economy operate continuously and create the most surplus value possible. Among them, we can mention:
Firstly, supply chain and supply chain management support transaction flows in the economy by providing specific concepts and theories about supply chain and supply chain management. In addition, the current development trend, the more popularization of supply chain in world economic activities, encourages more and more businesses and countries to participate in the world supply chain, making the world flatter and more strongly developed. It can be said that the developed world supply chain is a great tool and catalyst to link and form investment and business supply chains, cooperate and share orders. This is a favorable condition for businesses to support each other to develop, optimize operations and minimize risks in business.
Second, supply chains help improve the efficiency of the economy as a whole.
Third, the supply chain is a tool to help businesses and countries increase the integration capacity of the economy.
Fourth, the supply chain helps the economy use its available resources more efficiently. This is an activity that helps take advantage of each region and area. The supply chain can take advantage of the cheap raw materials of one country, the abundant and appropriately qualified labor of another country, or the distribution advantages of a region to optimize the operation of the supply chain.
Fifth, the supply chain contributes to the formation of a comprehensive cooperative culture in business. The supply chain is a factor that helps gradually eliminate national borders, helping businesses in the global supply chain take advantage of each other's advantages, creating an optimal chain and developing a cooperative culture, supporting each other's development.
Sixth, the supply chain contributes to improving customer service, making consumers in general the center of production and business activities... Optimizing each link of the supply chain will gradually stabilize the quality of products and services. Activities to collect customer information about product needs will help businesses and supply chains change in the direction of creating products that are more suitable to market needs.
In short, from an economic perspective, supply chain management provides a healthy business environment, with a win-win philosophy, maximizing the use of social resources, both human and natural, thereby improving the overall efficiency of the economy.
1.1.4.2. The role of supply chain management for businesses
Supply chain management is extremely important in business operations, because it runs through almost all business operations, from which raw materials to buy? from whom? how to produce? where to produce? how to distribute? … Optimization
Each of these processes will help businesses reduce costs and improve competitiveness, a vital requirement for every business operating in production and business.
On the other hand, in supply chain management, supplier management and input material quality management also help businesses control output quality better. The information system helps businesses more conveniently manage products in each shipment, allowing businesses to promptly handle product traceability when problems arise in product quality, design, packaging, etc., so that timely solutions can be proposed and adjusted.
Sustainable development depends on significant improvements in supply chain resource utilization and efficiency. It requires a comprehensive global life cycle perspective from producer to end consumer, especially in a closed-loop fashion (Ghadimi et al. 2019). A major emerging trend in the service and manufacturing industries is the widespread adoption of information and communication technology in the supply chain. Supply chain functions including procurement, production, and distribution have become increasingly automated, leading to another paradigm shift known as Industry 4.0.
The Industry 4.0 environment includes digitalization and computer-controlled machines connected via the Internet. Real-time information supporting precise and accurate management of operations and production processes is also at the core. These advances provide tremendous opportunities for supply chain intelligence and autonomy to set the stage for the Industry 4.0 supply chain (Kamble et al., 2018).
1.1.5. Factors affecting supply chain efficiency
A supply chain is a chain consisting of many small links combined together, coordinating to optimize production and distribution activities based on the strengths of each link to bring about the highest possible efficiency.
Globalization and liberalization of international trade are posing challenges for businesses in controlling and integrating the flow of goods, information, and finance effectively. Requiring businesses to build a fast, highly adaptive, and innovative supply chain to enhance their competitiveness in the market.
Since joining the World Trade Organization (WTO), Vietnam has been implementing its WTO commitments and integrating more and more deeply into the global supply chain. However, the supply chain of Vietnamese enterprises is facing problems and challenges that reduce the efficiency of chain operations. Therefore, to help enterprises maximize their potential, turn potential into competitive advantages, and easily overcome competitors, there must be a smooth coordination between activities inside and outside the enterprise.
1.1.5.1. Production
When it comes to production, we are talking about the production capacity of the supply chain, including factories, warehouses and machines that support this activity. Investment in building factories and warehouses must be consistent with the actual needs of the supply chain as well as future market needs to optimize resources and match market needs, avoiding excessive surplus, making production activities less effective.
Production is an important link in every supply chain for businesses, because this is the decisive activity, strongly influencing the activities of the remaining links. In a large supply chain, production is almost considered the central activity, so this link is a combination of the linking process between importing raw materials, manufacturing, processing, packaging and packaging into the final finished product.
1.1.5.2. Inventory
Inventory is an important issue in the entire supply chain, including input materials, semi-finished products, finished products and storage of manufacturers and distributors in the supply chain. Keeping a certain amount of inventory within the allowable limits of the business and the entire supply chain will help respond quickly to changes in market demand. To achieve the highest efficiency, the cost of inventory must be as low as possible.
With frozen pangasius and basa fish, inventory is inevitable, and the amount of inventory is even quite large due to the characteristics of raw fish harvesting and the key export season. For this reason, inventory is an inevitable factor in the pangasius and basa fish supply chain. Departments coordinate in regulating inventory to suit customer needs as well as achieving optimal export prices when the price fluctuation factor of this item is quite high, depending on the "demand season" in each market. Therefore, businesses in the supply chain need to have an optimal inventory arrangement plan with the lowest possible cost.
1.1.5.3. Transportation
Transportation is the intermediary between the links in the supply chain, helping to move raw materials to the manufacturing plant or semi-finished products to the processing stage into finished products, from finished products to distributors and finally to consumers. In transportation, it is necessary to consider the factor of quickly meeting demand with efficiency in choosing the most suitable transportation method for each link.
In transportation, there are often cases where the fast shipping method is very expensive, while the appropriate cost does not meet the timeliness factor in the chain. Therefore, choosing a shipping method requires balancing the cost factor and the efficiency factor, balancing and arranging the method to best suit each specific supply chain.
In the supply chain of pangasius and basa fish, the transportation of raw fish to production plants is mainly done by specialized boats, minimizing the rate of dead fish and suffocation during transportation. In addition, for finished fish exported to other countries, sea transport is considered an optimal method because frozen pangasius is a rather bulky, heavy item, difficult to preserve if the storage temperature is not met. However, especially for markets bordering Vietnam such as China, Cambodia, Laos, businesses can use refrigerated containers by road as an optimal solution.
1.1.5.4. Information
Information is the element that connects the links in the supply chain together, and is the decisive factor in the efficiency of the supply chain. Depending on the activities of each company, there will be a way to choose a suitable method of management and information transmission, choosing between quick response to demand or efficiency in the chain. Accurate, complete and timely information will help businesses be proactive in planning short-term and long-term strategies for the business.
In addition, businesses can manage the amount of information that can be shared and the amount of information that cannot be shared with other businesses. In fact, information about raw material supply, market demand forecasts, and requirements for each market, businesses can share information with each other to quickly respond to market demand and prepare optimal strategic plans. Information exchange and the level of sharing should be considered before implementation to avoid competitors taking advantage of this information, negatively affecting the strategic plan as well as the effectiveness of the business supply chain.