Each step taken to deliver products to your customers is a link in a chain. The chain stretches from the consumer through your company to suppliers. Each link represents steps that either add or subtract value from the products that follow the chain.
The purpose of a value chain is to get the required product or services to the consumer in the most efficient way, on time and with minimum inventory. The links of the chain are in flux due to changes in consumer demand and supply performance. A Lean Value Chain synchronizes all the links to maintain consistent high quality, cost and delivery performance.
Lean leaders pursue a fully synchronized and optimized value chain because it gives them a competitive advantage. This task is not easy as it requires companies to move "outside their four walls" and address many different functions. The chart below depicts the key focus points and the detailed elements for each that must be addressed as you move towards synchronizing and optimizing your value chain ... creating a Lean Chain.
Companies who engage in lean value chain improvement change the game for themselves and for their competitors. Customer service is the result of total value chain performance.
| Virtues | Values |
|---|---|
| Customer Service Levels | 95% - 99% |
| On-time delivery | Greater than 99.5% |
| Customer Retention | 90% or more |
| Service Lead Times | 1/4 to 1/2 the industry average |
| Finished Goods Inventory Turns | More than 24 per year |
| Finished Good Inventory Accuracy | Over 98% |
| Raw Material Turns | More than 24 per year |
| Carrier Routing Compliance | Greater than 98% |
| Forecast Accuracy Improvement | 10%+ per year |
| Supplier Annual Productivity Improvement | 5%+ per year |
| Supplier Defects Per Million | Less than 200 |
