Lean Supply Chain Planning: A Performance Evaluation through Simulation

Politecnico di Milano, Management Engineering Department, Milano, Italy

Abstract

Nowadays companies look more and more for improving their efficiency to excel in the market. At the same time, the competition has moved from firm level to whole supply chain level. Supply chain are very complex systems and lacks of coordination among their members leads to inefficiency. Supply chain planning task is to improve coordination among supply chain members. Which is the best planning solution to improve efficiency is an open issue. On the other hand, Lean approach is becoming more and more popular among managers. Lean approach is recognize as efficiency engine for production systems, but effects of Lean implementation out of single firm boundaries is not clear. This paper aims at providing a theoretical and practical starting point for Lean implementation in supply chain planning issue. To reach it, a DES simulation model of a three-echelon and multi-product supply chain has been set. Lean management is a very broad topic and this paper focuses on two principles of “pull” and “create the flow”. Kanban system and setup-time and batch-size reductions are implemented in the lean-configured supply chain to apply “pull” and “create the flow” respectively. Lean principles implementations have been analyzed and compared with other supply chain planning policies: EOQ and information sharing (Visibility). Supported by the simulation study, this paper points Lean supply chain planning is a competitive planning policies to increase efficiency.