Abstract

This article explains how a systems approach to analyzing an entire supply chain to determine nonvalue-added activity — some of which is introduced through the pursuit of low-cost suppliers — can help to optimize and rationalize a supply chain and result in cost savings and efficiency improvements. To understand the supply chain, the authors recommend evaluating and understanding eight characteristics of products and services, known as the eight rights, in a lean environment. While there isn’t a one-to-one relationship between the eight rights and the seven supply chain wastes, the supply chain wastes collectively can be seen as root causes of poor performance on the eight rights. The most common tool used to address the eight rights is a plan for every part (PFEP). It is a holistic tool in which all supply chain performance characteristics of a purchased component are documented. The article discusses the use of value stream mapping (VSM) and plan-do-check-act (PDCA) in supply chain analysis.